Fighting protectionism and liberalism. Who will suffer in trade wars?

Fighting protectionism and liberalism. Who will suffer in trade wars?


The rhetoric in the commercial confrontation has been simmering since the beginning of the year, periodically sharpening because of the decisions of the parties.

In Sunday’s interview with CNN Advisor to the President of the United States Donald trump Lauren, Kudlow accused China of collapse of the system of international relations. According to him, the one not playing by the rules and that the injustice of the current administration is trying to fix.

Just a few days earlier at the BRICS summit in South Africa, the President of China, XI Jinping called for an end to the trade wars and reminded that all countries must observe international law “regardless of their size”.

“Victim” and collateral damage

Anyway the introduction of new fees would hurt all the countries concerned — to a greater or lesser extent. To such conclusion analysts of Fitch in a recently published forecast. According to the Agency, the escalation of world trade confrontation will lead to a slowdown in global growth from 3.2 to 2.8%. The Russian direct investment Fund (RDIF) about the same assessed the possible consequences.

Most of all, according to experts Fitch, will get the United States, Canada and Mexico. The GDP growth of the first two countries are at risk to decline by 0.8% and 1% in 2019 and 2020, respectively. And Mexico’s economy could lose 1.7% and 1.5% growth for the same two years.

However, the EU and the most vocal opponent of the U.S. in this confrontation — China is getting away with it, according to the Agency, the easiest. The European economy in 2020 will be able to boast growth.

There were also the first company that announced the impact of the new American duties on their activities. So, Coca-Cola announced a price increase for its core beverages in response to the increase in metal prices due to the imposition of U.S. duties on aluminium, from which are produced the banks for the famous soda. This TV channel CNBC reported CEO James Quincy. “Duties on metals — one of the few factors because of which we were forced to announce price increases in the middle of this year,” he said.

But senior researcher at the economic policy Institute named E. T. Gaidar, Sergei Zhavoronkov does not agree with the conclusions of the rating Agency and believes that China will suffer the most.

“Chinese products exported to the United States, remains low quality. And because it is easy to substitute local goods and goods from other countries. The China against American exports won’t refuse. Although it is much smaller, but has two important articles — high-tech products and soybeans. The latter by and large except the United States and Brazil, where few are produced and are food for very popular in China pigs”, — explained the expert.

Own shirt closer to the body

Fitch estimates that the rate of growth of the Russian economy may fall by 0.6% in 2019 and 0.7% in 2020. Sergey Zhavoronkov called the most serious consequence for the domestic economy — impact on exports of aluminium.

Agency ACRES predicts the fall of the Russian export of aluminum in 2018 by 5-10%. But this will happen under the influence not so much the new duties, but because of the sanctions imposed against “RUSAL”.

Professor of the Institute of trade industry, HSE Vladimir Zuev considers that it is early to assess which countries and how trade will suffer in confrontations: “the Situation is still very ambiguous. It is difficult to make any calculations. We see that applications are constantly changing, which means that countries have no established policy on a particular line of conduct.”

He noted the actions of USA rational. “Developing countries have traditionally received more preferences from developed in the trading regime. China now no longer a developing country. But it is convenient to consider itself as such to enjoy all the same privileges,” — said the expert. He noted a real need to revise the terms of relations of developed countries with supposedly still developing, which is pushed first to their own markets.

However, in Fitch explained that the forecast is based on the assumption that the introduction of new fees USA.

Partial readiness for dialogue

While the world fears the introduction of new fees USA, the country has shown a willingness to meet the individual international partners.

So, earlier it became known that the United States promised not to impose new duties for the EU, which said Donald trump, during peregovorov on steel and aluminum. At Friday’s meeting between us President and head of the European Commission (EC) Jean-Claude Juncker last week, the parties agreed to begin work on the mutual abolition of the duties and trade barriers on the creation of the working group on issues in trade and evaluation of existing tariffs. In exchange for these concessions, the EU agreed to increase the import of American liquefied natural gas and agricultural products, particularly soybeans.

With Chinese partners such concrete yet. Earlier, the representative of the state Council of China Guo of Weimin reminded of the openness to international cooperation: “We are committed to economic globalization and trade freedom, we are against trade protectionism”. And although China wants a trade war, he is ready to defend himself, the politician stressed.

Sergey Zhavoronkov predicts that with Canada, the United States also would be logical to negotiate. However, he does not expect any global disruptions and crises due to the current US actions, as the American duties are at historically low levels.


Fitch forecasts and statements of the US administration on new agreements with the EU have fallen exactly to the beginning of the tenth summit of BRICS, which took place July 25-27 in Johannesburg. However, in the final Declaration of the meeting of the 102 points in any not mentioned neither the United States nor trump.

Participating countries of the organization noted its commitment to WTO rules in solving international disputes. During the summit, “sent a strong signal regarding the preservation of the WTO against protectionism and changes in trade regulations,” said the President of Russia Vladimir Putin after the visit to South Africa. Earlier, Russia has already complained to the WTO on the duty of States followed by China, India, Canada, Mexico, Norway and the EU.

During the summit, XI said the possibility of the BRICS to work together to create a new system of international relations. The Chinese President paid special attention to the fact that the state of the organization “must adhere to the principles of multilateralism (organization of international relations based on mechanisms that allow each country to enjoy the privileges in relations with all partners — approx. in trade and principles of the UN, international law and the foundations of interstate relations”. Touching upon the issues of trade-economic interaction within BRICS and in the international arena, XI Jinping stressed the need to “liberalize trade and investment and rejection of protectionism”.

See also

Fighting protectionism and liberalism. Who will suffer in trade wars?

Putin summed up the results of the BRICS summit and spoke about the relations with the United States

According to Vladimir Zuev, now there is a very paradoxical situation. “The United States, which traditionally advocated the liberalization of foreign trade, was on the side of the protectionists. And Russia and the BRICS partners, who have always acted for the protection of their young, immature markets, by contrast, are on the side of those who favor the liberalization of international trade. The world turned upside down. I wonder how consistent will now be their position. This is important because if the BRICS start to defend liberalization, it would dramatically increase the chances of the overall liberalization of world trade”.

Director of the Center for Asian strategy of Russia of the Institute of Economics Georgy Toloraya called the summit a demonstration of the unity of new centers of power in terms of the split between the countries of the West. He was confident that the BRICS will strengthen the role of the rostrum to Express the interests of all developing countries. “I think this is largely consonant with the approaches and interests of Russia. For our country it is important that BRICS begins its new decade in a time when Russia is in a difficult relationship with the West. This organization is becoming dependable in our relationship with the United States,” concluded Colora.

Arina Ruxin

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