The Impact of Trade Conflict on Developing Asia

44 Pages Posted: 22 Feb 2019

See all articles by Abdul Abiad

Abdul Abiad

Asian Development Bank

Kristina Baris

Asian Development Bank

John Arvin Bernabe

Asian Development Bank

Donald Jay Bertulfo

Asian Development Bank

Sheila Camingue

Asian Development Bank

Paul Neilmer Feliciano

Asian Development Bank

Mahinthan Mariasingham

Asian Development Bank - Economic Research and Regional Cooperation Department (ERCD)

Valerie Mercer-Blackman

Asian Development Bank - Economic Research and Regional Cooperation Department (ERCD)

Date Written: December 14, 2018

Abstract

This paper analyzes the effects of the current trade conflict on developing Asia using the Asian Development Bank’s Multiregional Input–Output Table (MRIOT), allowing us to calculate the impact on individual countries and on sectors within countries. The analysis estimates the direct impact on all tariff-affected goods; uses input–output analysis to estimate indirect effects on gross domestic product (GDP), exports, and employment; and allows for redirection of trade toward other producers using the approach of Feenstra and Sasahara (2017). A full escalation of the bilateral United States (US)–People’s Republic of China (PRC) trade conflict would shave 1% off PRC GDP and 0.2% off US GDP. The rest of developing Asia could see small net gains thanks to trade redirection, particularly in the electronics sector. A trade war in autos and parts would hurt the European Union and Japan. The conflict has substantial negative effects on PRC and US employment, but only minor impacts on current account balances.

Keywords: exports, input–output, international trade, tariffs, trade conflict, trade redirection

JEL Classification: E00, F13, F14, O47

Suggested Citation

Abiad, Abdul and Baris, Kristina and Bernabe, John Arvin and Bertulfo, Donald Jay and Camingue, Sheila and Feliciano, Paul Neilmer and Mariasingham, Mahinthan and Mercer-Blackman, Valerie, The Impact of Trade Conflict on Developing Asia (December 14, 2018). Asian Development Bank Economics Working Paper Series No. 566 (December, 2018). Available at SSRN: https://ssrn.com/abstract=3339178 or http://dx.doi.org/10.2139/ssrn.3339178

Abdul Abiad

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Kristina Baris

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

John Arvin Bernabe

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Donald Jay Bertulfo

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Sheila Camingue

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Paul Neilmer Feliciano

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Mahinthan Mariasingham

Asian Development Bank - Economic Research and Regional Cooperation Department (ERCD) ( email )

Philippines

Valerie Mercer-Blackman (Contact Author)

Asian Development Bank - Economic Research and Regional Cooperation Department (ERCD) ( email )

Philippines

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