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Best images, video from around the U. These trade measures will have negative repercussions for both China and the U. Although it will take time for the full effect to show up in the data, many businesses have already started to feel the impact of higher costs for inputs, and will ultimately raise higher prices of final goods for consumers by , too.
The impact of the trade war at the local level in China may be even more pronounced. We expect to see disruption in a number of provinces that rely heavily on trade for economic growth, including Guangdong, Jiangsu, Shanghai and Zhejiang. In addition, although the external sector occupies a smaller role in these provincial economies when compared to a decade ago, trade growth remains an important pillar of economic activity: In the key export centres of Guangdong and Jiangsu, shipments to the U.
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For Guangdong specifically, the large amount of transhipments to the U. Even in provinces where exports as a percentage of total GDP are relatively low, exposure to U. Many of these provinces are uncomfortably vulnerable to the escalation of the U.
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In highly exposed provinces like Guangdong, Jiangsu and Zhejiang, a large proportion of exports are in the electronics and machinery industries — both of which sit squarely in the cross-hairs of U. The Economist Intelligence Unit has found a similar situation in terms of trade exposure and export composition across a number of largely coastal prefectures as well, including Dalian, Foshan, Fuzhou, Guangzhou, Shenzhen and Xiamen, among others.
The impact of the trade war on business sentiment will also be an important factor for companies operating in these regions, particularly in consumer-facing sectors.