Full-blown trade war can still be averted: Analysts

PETALING JAYA: As US and China ramp up trade tensions, analysts opined that a full-blown trade war can still be averted if there is a moratorium on unilateral imposition of tariffs and both sides come to the negotiation table.
At this juncture, analysts are of the view that the threat of full scale trade war remain elevated but positive developments are expected as both parties come into terms.
“The question now is whether the two can be sensible enough to reconcile and prevent the current trade war to further escalate down the road,” Socio-Economic Research Centre executive director Lee Heng Guie told SunBiz.
“Otherwise there will be continuing uncertainty on what each side will think and do to wrought maximum damage on another’s economy,” Sunway University Business School Professor of Economics Dr Yeah Kim Leng said.
On Wednesday, US announced that it would impose 25% duties on US$50 billion (RM193.5 billion) worth of imports from China, while the latter promptly retaliated with a list of similar duties on key US imports including soybeans, planes, cars, whiskey and chemicals.
However, hours later, US president Donald Trump tweeted that the country is not in a trade war with China, citing “that war was lost many years ago” by previous US representative.

Meanwhile Yeah said, the prospect of a brewing trade war is now a great concern, especially for countries in Southeast Asia that have strong trade linkages with China and the global supply chain.
He said while some countries, including Malaysia, could benefit indirectly from a diversion of US imports from China, the dampening of overall demand, loss of investor confidence and market fears, as well as the threat of a global recession will have a greater impact on near term growth prospects.
“While the affected Malaysian industries such as the solar, steel and aluminium products can still cope with the recent hike in tariffs, we should immediately apply for exemption failing which the government should support multilateral moves to ease trade tension and forge new trade pacts to offset the expected decline of exports to the US as tariff hikes will result in higher prices and consequently lower demand in the US economy.
“The decline in Malaysia’s February exports is likely to be a one-off event due to seasonal and high base factors, but could persist in the months ahead if the trade tension escalates although this is not yet in our baseline scenario for this year,” Yeah added.
Nevertheless, MIDF Amanah Investment Bank Bhd chief economist Dr Kamaruddin Mohd Nor said Malaysia will not feel the immediate impacts from the trade tension at this point of time.
“However, if the tension escalate into full blown tit-for-tat scenarios, slowdown in global trade will eventually affect Malaysia,” Kamaruddin said.