Supply Chain Reconfiguration Amidst US-China Trade Tensions

The flare-up of trade tensions between the United States (US) and China since 2018 has contributed to pressure on global trade and supply chains. It has heightened uncertainty and added to trade costs. Global trade growth has moderated amidst US-China tensions and anti-globalisation sentiments in major advanced economies. The weakness in global trade and pressure on supply chains have been exacerbated by the onset of the COVID-19 pandemic. As the US and China are both major economies, deterioration in US-China trade relations have far-reaching implications on economies around the world given the integrated nature of global supply chains. This article explores US-China trade tensions’ effect on Singapore’s supply chains.

Global trade has been weak and exacerbated by the COVID-19 pandemic

Since the start of US-China trade tensions, US’ imports from China have seen a decline

Between January 2018 (start of US-China trade tensions) and March 20201, US imports from China fell by 58 per cent, attributable to the tariffs imposed by the US on products such as electronics, machinery, chemicals and manufacturing products.2 In tit-for-tat measures, China imposed tariffs on agricultural and chemical products from the US, ranging from soybeans to beef and liquefied natural gas. As a result, China’s imports from US also experienced a dip of 29 per cent between January 2018 and March 2020. This stabilised with the signing of the Phase 1 Trade Deal between the US and China in January 2020.

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