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US-China war to be an incentive for two European economies

Following Trump`s declaration of commitment to set tariffs on $300 billion Chinese import if the world’s two largest economies fail to agree a trade deal, Christian Keller, head of economic research at Barclays, says the new opportunities for the core European economies open. Primarily that concerns France and Germany.

Our comparison of China’s import structure across its main trading partners reveals that France, Germany and the U.K. are the closest U.S. proxies in terms of relative sectoral decomposition of their exports to China, Keller’s note said.

We would therefore expect these countries to win the most if China opts to shop elsewhere.

That would become the result of the trade tensions between the US and China. Barclays assumes the US would impose a 25% tariff on Chinese import while China as a response would reduce trade volumes by about 30%.

Currently import from China to US is primarily concentrated in transport equipment, electronics and chemicals areas.

According to the Barclays` note, it is estimated that 30 % US exports reduction will enable European economies to increase they share of export to China by 0.1% of GDP, particularly in the automotive and, to an extent, the chemicals sectors.

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