By Chris Adams

The trade war ignited by President Donald Trump against China has some bluff and bluster in it. But it is already registering an impact in those countries, as well as others.

“This has so many implications for so many countries in the world,” said Alicia García Herrero, chief economist for the Asia Pacific for Natixis, a French financial services firm. That is having an impact on the trade flows, and on how and where global value chains are built.

In a session with National Press Foundation fellows at a Journalist to Journalist training on international trade, Herrero described the status of upheaval in the worldwide trading system and how it has changed since the Trump administration assumed office in early 2017.

One thing Herrero (bio, Twitter) tracks is the intensity of news coverage about trade – which clearly heated up in the first half of 2019.

Herrero detailed some of the first steps of the trade war between the U.S. and China – what the U.S. had done, and whether and how China had retaliated. In March 2018, for example, the United States cited national security concerns in placing tariffs on steel and aluminum products; China retaliated by imposing tariffs on $3 billion worth of 128 products, including pork, fruit, nuts and other staples of the agricultural sector.

The trade dispute will hit Chinese companies, as they see an increasing share of their overall revenue come from overseas. And within those overall numbers, some sectors within China are hit harder: more than a quarter of revenue for the information technology and consumer durables sectors comes from overseas.

“This trade war is about manufacturing – it’s not about soy,” she said. “The auto sector is 100 times bigger than soy.”

But the impact isn’t just limited to China and the U.S., Herrero said. “Asia is right in the middle of it,” she added, citing the trade war’s crossfire.

The losers in the U.S.-China battles could produce winners elsewhere. That includes Europe: The top Chinese imports from the U.S. and from the European Union are the same, including transportation equipment, motor vehicles, medical instruments, machinery and equipment, and chemicals. As U.S.-China shipments of those goods drop, the EU could step in to take their place.

Japan could also see a benefit, as could other Asian economies – especially those with labor-intensive industries, such as Vietnam, and capital-intensive ones, such as Thailand.