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With less than six months to go before the US presidential election, leading Democratic and Republican presidential candidates Joe Biden and Donald Trump have both campaigned on the campaign to take tougher measures against China.
Biden and Trump are once again facing off for the presidency of the United States
Still, the Economist Intelligence Unit (EIU) wrote in a note on Tuesday that China will likely expand its influence in global supply chains.
The Economist Intelligence Unit (EIU), which believes that Biden will remain president of the United States, expects that no matter who wins the election, economic and diplomatic relations between China and the United States will "continue to deteriorate" during this decade.
"Either president would justify future trade and investment restrictions on China based on national security concerns, and will pursue policies aimed at putting further pressure on China's tech sector," analysts at the Economist Intelligence Unit wrote. ”
In April, Biden called for a three-fold increase in tariffs on steel and aluminum imports from China in an effort to compete with former President Donald Trump, who vowed to massively increase tariffs on Chinese goods once he took office again.
Mr. Trump said in February that if he was elected, he would impose tariffs of more than 60 percent on Chinese goods.
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If Biden wins the presidential election, he is expected to continue working with so-called like-minded administrations.
Analysts at the Economist Intelligence Unit (EIU) wrote, "In Biden's diplomatic agenda, U.S. security and economic goals will remain to ensure some collateral damage to economies that have deep trade and investment ties with China." ”
They added that if Trump wins the presidential election, he could take a "more hostile approach" to the U.S.-China relationship, which could be at greater risk of collateral damage to third-party economies.
Analysts at the Economist Intelligence Unit wrote: "This will bring bilateral diplomatic and trade relations back to the volatile state of his first term." ”
However, the Economist Intelligence Unit said it did not expect neither Biden's nor Trump's trade policies to significantly reduce China's role in the global production network.
Instead, it expects China-linked supply chains to expand through "capital-hungry markets" in Latin America and Southeast Asia.
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Analysts at the Economist Intelligence Unit added: "These same dynamics will ultimately leave many emerging markets vulnerable to escalating trade hostilities with the United States." ”
In fact, Chinese manufacturers may already be circumventing sanctions, using Mexico as a backdoor to export to the United States.
Even Chinese manufacturers are shifting Chinese production to other low-cost manufacturing hubs in Asia, including Vietnam and Bangladesh, to avoid geopolitical risks.
China's footprint in global supply chains will grow no matter who wins the US presidential election: analysts. By Huileng Tan on Business Insider, May 7, 2024.
The US presidential election is less than six months away, and Democratic and Republican presidential nominee frontrunners Joe Biden and Donald Trump have both vowed to get tough on China.
Despite this, China will likely extend its reach in the global supply chain, the Economist Intelligence Unit, or EIU, wrote in a note on Tuesday.
The EIU, which is expecting Biden to retain the US presidency, expects "a sustained worsening" in economic and diplomatic ties between China and the US over this decade — regardless of who wins the election.
"Either president will pursue policies aimed at exerting further pressure on China's technology sector, while also justifying future trade and investment restrictions based on national security concerns," wrote the EIU analysts.
In April, President Biden called for a tripling of tariffs on Chinese steel and aluminum imports, echoing former President Donald Trump's levies on a range of goods from China.
Trump said in February he would slap tariffs of over 60% on Chinese goods if he's elected.
Should Biden win the presidency, he is expected to continue to continue working with like-minded governments.
"The primacy of US security and economic goals in Mr. Biden's diplomatic agenda will still ensure a degree of collateral damage to economies that have deep trade and investment linkages with China," wrote the EIU analysts.
They added that if Trump wins the presidency, he is likely to take a "much more antagonistic approach" to the US-China relationship, which risks collateral damage to third-party economies.
"This would return bilateral diplomatic and trade relations to the state of volatility that characterized his first term," the EIU analysts wrote.
However, the EIU said it doesn't expect either Biden's or Trump's trade policies to reduce China's role in global production networks significantly.
It is instead expecting the extension of China-linked supply chains via "capital-hungry markets" in Latin America and Southeast Asia.
"These same dynamics will ultimately make many of these emerging markets vulnerable to an escalation of trade hostilities with the US," EIU's analysts added.
As it is, Chinese manufacturers may already be skirting sanctions by using Mexico as a backdoor to get exports into the US.
Even Chinese manufacturers are shifting their production out of China to other low-cost manufacturing hubs in Asia, including Vietnam and Bangladesh, to avoid geopolitical risks.