Hellenic Shipping News: Why Taiwan Is Benefiting The Most From The U.S.-China Trade War

Economists often say there are no winners in a trade war, but that’s not entirely accurate. A recent report by the United Nations Conference on Trade and Development (UNCTAD) says that Taiwan is gaining the most “trade diversion effects” with a windfall of $4.2 billion, which is higher than any other market.

Taiwan gained the most business in office machinery and communication equipment, the U.N. trade and investment agency says. Office machinery including tech hardware made up just over $2.8 billion of the total.

The island that became a manufacturing powerhouse decades ago is absorbing an extra hefty share of diverted capital because of its mature tech industry, with ample local talent, and historic business ties to China, including a shared supply chain, analysts say. A number of Taiwanese firms were already shifting operations back to Taiwan from China before the trade dispute erupted.

“Taiwan is in a prime position to benefit from the trade diversionary effects of the U.S.-China trade war,” says Edward Gardner, economist with European forecasting firm FocusEconomics. “This is partly because of its geographical proximity to, and close trade links with, mainland China.”

Taiwan edges out the rest of the world

UNCTAD says the trade dispute has caused $35 billion in losses of Chinese exports to the U.S. market, and 63% of that total was diverted to other countries and territories. The rest was either lost outright or absorbed by American producers, UNCTAD says. It put Mexico in second place after Taiwan, with trade diversion there worth $3.5 billion, and the European Union in third place with a diversion sum of $2.7 billion.

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