U.S. and China Trade War Opens Doors Elsewhere

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Last Saturday, I adopted Sweden as my favorite team in the FIFA World Cup Rusia 2018 during its game against England; I was trying to get the bad taste of my home country defeat last Tuesday. Nonetheless, my archenemy was undoubtedly better than Sweden in the field, and two headers gave England the victory.

However, besides the goals scored in Russia, there is a playing field developing with a lot of potential for Latin America, especially for Colombian exporters and entrepreneurs.

The trade war between the world giants, the United States and China, became official last Thursday, July 5th. The Trump Administration imposed tariffs on $34 billion worth of goods coming from China, which reciprocated by imposing its own tariffs on $34 billion worth of American goods.

According to the New York Times, the numbers are anticipated to be increased on both sides, keeping economists and trade experts on the edge. Nevertheless, there are many other pundits who have placed the variables in perspective escalating back the anxiety for the American business owners and consumers.

The data from the Office of the United States Trade Representative (USTR) indicate that in 2016 the trade interchange between the two nations totaled an estimated $648.5 billions of dollars.

Exports from the U.S. to China equaled $169.8 billion, and exports from China to the U.S. were $478.8 billion. The trade deficit of goods and services between the two countries were $385 billion.

In other words, while the United States is the number one market of China (19% of all exports,) China is the number three market for the American exports. So, I ask, which needs which the most?

By no means am I diminishing the severity of what is going on and its implications around the globe, but clearly the data shows that China is playing defense. For decades, the Panda nation has flooded the U.S. with knock-offs and replicas of products that people buy because they are cheap and the buyers have known it.

But, with a growing economy and higher spending power, I for one, am ready to pay a little more for products that sport a beautiful “Made in America” label, or in my case “Made in Colombia.”

According to the department of revenue and customs (DIAN-DANE) data, published in the June report, Colombia exported 19.8% of manufacturing goods and 19.2% of agricultural goods, which are the commodities included in the trade war. The vast majority of my country’s exports is related to fuel and extraction industries, 58%, and these are not included in the trade war.

For example, Colombia’s agriculture products that increased exports in 2017 were fruits and vegetables, raw and refined vegetable oils, raw animal and vegetable products. (If you know me you probably already heard me saying that there is no tastier produce in the world than the Colombian.) In manufacturing, the products that increased exports were iron and steel, construction vehicles, primary plastics, fertilizers, and non-metallic minerals.

Even though the United States is Colombia’s number one client–more than 1.000 million dollars in April 2018–guess which country increased their demand for our products compared to 2017? Yes, China, by a staggering 162%

In other words, Colombia is “away from good and evil,” as my Granny says, and it is there where the opportunity awaits. The smaller economies and developing countries have a golden chance to sell their goods and services to replace the ones from either the U.S. or China all over the world. They just need to learn to play with the big boys.

Thanks for reading and sharing.

Xiomara Spadafora

This column was sponsored by Zellner Insurance Agency. Many things in life don’t have insurance. For everything else call Zellner (888) 208-8119

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