Impact of US-China Trade War on Middle Eastern Markets: A Looming Flood of Chinese Goods
The US-China trade war may result in a flood of inexpensive Chinese goods in the Middle East, impacting local manufacturing efforts in nations like Turkey and Saudi Arabia. As these countries face increased imports, they may need to adopt protective measures similar to those seen in Southeast Asia. The situation presents both challenges and opportunities for the region’s manufacturing sectors.
The ongoing trade war between the United States and China poses the risk of inundating the Middle East with inexpensive goods from China, as noted in a recent Bloomberg analysis. President Trump has levied 20 percent tariffs on all Chinese imports, alongside additional tariffs on goods from Mexico, Canada, and the European Union.
Chinese manufacturers, facing higher tariffs on their exports to the United States, are likely to seek alternative markets, particularly in the developing regions of the global south. This scenario echoes Trump’s previous concerns regarding Chinese subsidies affecting American manufacturing, which may now extend to countries like Turkey and Saudi Arabia that are endeavoring to enhance their own manufacturing sectors.
Turkey, which aims to establish itself as a manufacturing hub, could be significantly impacted by an influx of lower-cost Chinese products. Historical data indicates a dramatic increase in Chinese exports to Turkey, surging from $23.8 billion in 2017 to $45.1 billion by 2023. Additionally, Saudi Arabia has faced a corresponding rise in Chinese imports, with a notable increase of 9.6 percent from 2017 to 2023, as the nation attempts to leverage its affordable energy to catalyze domestic manufacturing.
While wealthier nations like Saudi Arabia may effectively manage a new wave of Chinese imports, lesser-developed Arab nations like Egypt could struggle to compete. Countries such as Morocco are striving to establish themselves as manufacturing centers for vehicles destined for Europe, thereby creating vulnerabilities in local markets. Moreover, the region, including Saudi Arabia and the UAE, has already observed significant increases in imports of Chinese machinery and vehicles.
Saudi Arabia has particularly embraced Chinese electric vehicles, participating in a $5.6 billion partnership with Chinese automaker Human Horizons to boost local production. This development raises questions regarding the balance between domestically manufactured EVs and those imported from China, especially as Saudi Arabia collaborates with American luxury EV manufacturer Lucid to produce 300,000 cars annually for export, including to China.
Turkey’s aspirations in manufacturing are, however, hindered by a currency crisis that makes the importation of raw materials and components costly. Should the Middle East be overwhelmed by Chinese goods, nations may need to adopt protective measures to safeguard their emerging industries, a strategy reminiscent of Trump’s economic policies.
Countries neighboring China, such as Malaysia, have already implemented measures such as a 10 percent sales tax on low-value online goods. Vietnam has enacted a ban on Temu, a Chinese e-commerce platform. Meanwhile, India has initiated investigations into potential dumping of solar cells and other goods by China in an effort to establish itself as a high-tech manufacturing alternative.
The ramifications of the U.S.-China trade war could significantly reshape the Middle Eastern market, leading to an influx of cheaper Chinese imports that may disadvantage local manufacturers. As countries like Turkey and Saudi Arabia attempt to enhance their manufacturing capabilities, they must navigate challenges posed by increased competition from Chinese exports. Protective measures similar to those seen in Southeast Asia may become necessary to sustain developing markets and local industries.
Original Source: www.middleeasteye.net
Post Comment