Winners and Losers of Trump's Trade War Unclear, Panelists Say
One panelist said it will take 20 years to know who are the winners and losers of today's tariffs and export restrictions. Another panelist said U.S. factory workers making washing machines and solar panels are clearly winning from the safeguards launched nearly two years ago, as are Vietnam and Mexico. Another panelist said Vietnam and Thailand, and Mexico to a much lesser degree. As moderator Lucas Queiroz Piers said, “It is a confusing moment." The Alston & Bird legal consultant was coordinating a panel called "U.S. Sanctions and Trade War: Winners and Losers," at an American University Washington School of Law International Trade Symposium on Nov. 5.
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John Magnus, president of TradeWins, agreed, "It’s a tumultuous time." Magnus noted that before the solar cell safeguards, there was virtually no domestic manufacturing of solar panels, and after the safeguards run their course, it should be about 25 percent. He pushed back against fellow panelist Otaviano Canuto, a senior fellow at the Brookings Institution, who said the benefit to solar panel workers is far outweighed by the higher cost to solar panel installers. Magnus said the price of solar panels continues to fall, even with the tariffs, which started at 30 percent and are now 25 percent.
With the trade war with China, Canuto said Huawei has been hurt, and European businesses have been hurt most of all, as they sell machinery to Chinese factories. He said U.S., Japanese and Taiwanese electronics companies are accelerating their shift out of China. "Vietnam, Thailand have been the major beneficiaries of this shift," he said. "The value chains are being reshuffled. No one expects the growing trade tensions to be reversed," he said.
Magnus said Vietnam and Mexico are where sourcing decisions are going because companies are trying where possible, to get out of China, which "doesn’t feel like a safe place to source certain things for the value chain." But Magnus said the companies that make high-tech goods in the U.S. -- the products that China wants to dominate under its Made in China 2025 -- may not benefit from the trade war, though it was undertaken on their behalf.
Ken Weigel, a partner at Alston & Bird, said U.S. exporters are the losers in the trade war, and not just the obvious commodity producers who have faced retaliatory tariffs around the world. "Export controls are becoming much more aggressively enforced, so that’s cutting down on U.S. exports," he said. More broadly, he said "maybe in 20 years we'll know" who the winners and losers are.
Pablo Bentes, a partner at Baker McKenzie who specializes in World Trade Organization cases, said sardonically that the D.C. trade bar is the undisputed winner in the trade war. "U.S. lawyers are really cashing in big time, exclusions, trade remedies, WTO litigation... . It’s a good time to be a trade lawyer in Washington, D.C."