A study conducted by United Nations Conference on Trade and Development (UNCTAD) shows the countries that are expected to gain from the United States (US) and China trade tariff war. Trade diversion occurs when tariff agreements cause exports to shift from a more efficient exporter towards a less efficient one.

Chart 1 describes that the Philippines will stand to gain an additional 3.2% of its total exports due to the US-China tariff hikes of 25.0% applied as of September 2018. However, the Philippines estimated gain will only be equivalent to less than US$10 billion, which is not very large in comparison to total global trade of about US$17 trillion in 2017. Note that the basis for the trade diversion values were 2017 trade data.

Similarly, an Asian Development Bank (ADB) study stressed that the Philippines also stands to gain from the US-China trade tensions with Philippine manufacturing potentially seeing a boost of 0.4-0.7%, particularly in the electronics sector.

Indeed, the Philippines and its neighbors are touted to gain from the continuing trade tensions between the US and China. However, the costs of protectionism seem to outweigh the benefits of free trade, with the recent global economic growth downgrades by the World Bank (WB) and the International Monetary Fund (IMF). Both WB and IMF have lately flagged the US-China trade tensions as a huge threat to global trade, and therefore, economic growth.

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