• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Europe Has A Lot to Lose in U.S.-China Trade War

Europe Has A Lot to Lose in U.S.-China Trade War

Europe Has A Lot to Lose in U.S.-China Trade War
December 19, 2018
Bloomberg

Europe will be a loser should U.S.-China relations deteriorate further, even if some companies stand to benefit.

The administrations of both President Donald Trump and his counterpart Xi Jinping have signaled they’re willing to ramp up tariffs on each other in the event that a 90-day truce to negotiate doesn’t produce results.

Goldman Sachs Group Inc. said this week that Europe might boost sales to China if the Asian nation turns against the U.S. The bigger problem is that Chinese factories and consumers are now a key piece of the global economy.

“We would anticipate a negative impact on European trade through lowered final demand and broken supply chains, with only a partial possible benefit of increased exports to China,” Huw Pill, Goldman’s chief European economist, said in a note. “Even that partial benefit could be offset completely if China were to offload products in Europe, hurting producers, as the EU Commission claims they did in July 2018."

Here are some of the key linkages that will be affected:

Denting Demand

The U.S. and China are the two biggest destinations for European Union exports outside the 28-nation bloc, and German carmakers including Volkswagen and BMW have already been hurt by weaker demand this year. Manufacturers highlighted declining sales to China in a recent business survey.

According to Goldman, most European countries have exposure to China and the U.S. of around 1 to 2 percent of output each. Mounting uncertainty means businesses will be reluctant to invest and expand, said Ricardo Garcia, chief euro-zone economist at UBS Global Wealth Management.

Chain Effect

A significant portion of European businesses manufacture in China for U.S. customers. As a result, they are also hurt by Trump’s tariffs, according to the European Union Chamber of Commerce in China.

“They hate the uncertainty,” said Carlo D’Andrea, the chamber’s vice president. "It’s the sword of Damocles dangling over their head. "

Substitution

Europe and the U.S. export similar goods to China — medical appliances and integrated circuits, for example. If tariffs stay in place or rise, European manufacturers — particularly those in Germany and the U.K. — are set to benefit because American goods will become more expensive. They’d suffer from a truce in which China would probably promise to buy more from the U.S.

Siemens Healthineers plans to keep production in China despite trade uncertainty. According to Leon Lei, a market specialist at China Med Device, a Boston-based consultancy which helps foreign companies to access the Chinese market, European makers of devices such as X-ray contrast agents, imaging equipment and MRIs will gain. Medical devices "are more like the aircraft industry,” he said. “If Boeing fails, Airbus will proceed.”

Market Access

Even the limited tariffs so far have “tilted the playing field” toward European companies, said Gabriel Felbermayr, director of the Ifo Center for International Economics. “If you order machines and the machines are tailor-made, it takes six months to a year to deliver, you don’t want to find yourself in a situation where you have to pay 25 percent punitive tariffs.”

European politicians may finally be gaining the clout to force China to address some much-criticized practices: market restrictions, intellectual-property theft and favorable treatment of state enterprises.

“Perhaps it’s a chance for Europe to negotiate and get a deal on some of these things for European companies,” said Guntram Wolff, director of the Bruegel think tank.

RELATED CONTENT

RELATED VIDEOS

Global Supply Chain Management Global Trade & Economics Regulation & Compliance Supply Chain Security & Risk Mgmt Automotive Healthcare Industrial Manufacturing Pharmaceutical/Biotech
KEYWORDS Automotive China Europe Global Supply Chain Management Global Trade & Economics healthcare Industrial Manufacturing North America Pharmaceutical/Biotech Regulation & Compliance SC Security & Risk Mgmt
  • Related Articles

    China Has a Big Weapon That It Hasn’t Used in the Trade War Yet: Tourists

    Airbus CEO Warns of ‘Lose-Lose Game’ in Trade War Over Jetliners

    U.S. and China Got Into a Trade War, and Mexico Won

Bloomberg

Amtrak Bottleneck Turns Biden’s Focus to His Favorite Rail Route

More from this author

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • A MAN IN A SUIT SHAKES HANDS WITH A WOMAN IN A HARD HAT, NEXT TO A STACK OF CONTAINERS

    Three Procurement Technology Evolutions for 2023

    Sourcing/Procurement/SRM
  • DOCUMENTS BEARING THE INSIGNIA OF US CUSTOMS AND BORDER PROTECTION LIE ON A TABLE

    New CBP Regs Call for Greater Diligence by Brokers in Reporting Security Breaches

    Freight Forwarding/Customs Brokerage
  • The blank stare of a child's eye who is standing behind what appears to be a wooden frame

    The Alarming Continued Rise of Modern Slavery in Supply Chains: How Procurement Can Help Reverse the Trend

    Sourcing/Procurement/SRM
  • A GROUP OF WORKERS RANGED IN AN OFFICE, OF DIVERSE RACE, GENDER, AGE AND PHYSICAL ABILITY

    Podcast | The Supply Chain Workforce of the Future Is Already Here

    HR & Labor Management
  • A WORKER IN A WAREHOUSE, SUPERIMPOSED WITH GRAPHICS SHOWING SUPPLY NETWORK

    Enabling Intelligent Visibility With Supply Chain Analytics

    Data Management (Big Data/IoT/Blockchain)

Digital Edition

Scb nov 2022 sm

2022 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing