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Analysis: Will the Gulf States be affected by the global trade war?

From: Mahmoud Jamal

DUBAI (Reuters) – Tensions between the US and China have risen sharply in the past year following the failure to reach an agreement and President Trump's announcement to impose more tariffs on Chinese imports from China from May answered.

This trade war can have a negative impact, not only on the parties involved, but also on different countries around the world.

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"For the GCC and the region in general, there will be no direct and significant impact of the trade war on the region," said Mubasher & Mubasher's chief economist.

Dr. Saadi explained that the region is not directly involved in these current conflicts. The Gulf countries are mainly imported, often dependent on oil exports.

Therefore, there are no reasons for other countries to impose customs duties on exports and there is no reason for the region to impose customs duties on its imports.

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4 factors

He pointed out that the Gulf States will be somewhat influenced by the effects of the response to these conflicts through some channels, which are summarized in the following four points::

First, if global growth is damaged, demand for oil will fall and prices fall, which could cause some oil-producing countries to lower production. In addition, China and other Asian countries are major oil importers and the most affected by trade conflicts, which will put oil prices under pressure.

Secondly, the increase in rates will lead to higher prices in most countries with a trading partnership, in particular America. Given that the Gulf States import many commodities, in addition to linking their currencies to the dollar, this will reflect the level of inflation in the Gulf States, which will require a series of restrictive policies with negative effects and opposed to growth.

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Thirdly, if inflation rises in America due to high rates, albeit moderately strong economic indicators, the Fed will have to raise interest rates, prompting countries in the region to raise their interest rates due to the need to adjust the exchange rate to the US dollar hold in the absence of No controls or restrictions on capital.

Fourth, uncertainty and risk arising from trade disputes can lead to emerging capital from emerging markets to the safer and more stable developed markets. Where capital flows to the Gulf region can fall, especially under these stressful circumstances.

In the same vein, the International Monetary Fund (IMF) has long noted that the current economic war will affect everyone: global markets are expected to be affected by the waves of rising prices and inflation, affecting international interest rates and consequently the growth rates of the associated economies.

"Small fight"

Hours ago, when he left Washington for a visit to Louisiana, the US president sent reassuring messages, saying that the escalating trade war between his country and China was just a "small fight," stressing that the two countries still had a reach an agreement that puts an end to it.

Interestingly, the US President continues to appreciate the additional customs duties imposed on Chinese exports by his administration, with Beijing taking a similar step, stressing that these fees fill the state's treasury, although those paying the increase ultimately importers and consumers from the United States.

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History of war

The United States is trying to attack the Chinese giant, not only in the United States but also through its trading partners worldwide, which makes China more alarming in its economic war.

In March 2018, US President Trump started the war by imposing tariffs on imports of steel and aluminum into his country. Trump wrote in his Twitter account that the United States lost billions of dollars in its trade relations with other countries, that trade wars were good. and America was easy to win. China has imposed countermeasures.

In a subsequent period, Washington imposed a 10 percent rate on customs duties, which eventually increased 25 percent to Chinese goods worth $ 200 billion. Trump hinted at $ 325 billion in rates, including around 1,000 items, especially electronic components, tools, and machines. In response to an action in the US, the Chinese Ministry of Commerce immediately announced a "necessary response"".

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Beijing has simultaneously imposed customs duties of 25 percent on $ 110 billion of imported American goods. The United States accuses China of conducting unfair commercial practices and violating intellectual property rights, in particular of the Chinese giant Huawei, who in the digital age economy has become a symbol of the dragon.

The war spread to an American threat to impose customs duties on the import of European and Canadian goods, in return protection taxes will be imposed from the affected countries and China has wars with Europe in the solar and information technology sectors, which all have an impact on the global economy. Increasing fear of a trade war between & # 39; the world's largest nations.


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