Since the beginnings of his administration, US President Donald Trump has expressed chauvinistic rhetoric around American trade with China, emphasizing his intention to “get tough” on the country so often that it became a running joke to many.
Currently, the US and China are in the early stages of a full-blown trade war, with the first shots fired by Trump after he imposed tariffs worth US $34 billion on Chinese goods on Friday, July 6th, with another US $16 billion expected to go into effect before July’s end. Meanwhile, on July 10th, Trump threatened China again, this time with another US $200 billion in tariffs.
While Trump has praised the trade war as saving the American economy and “putting America first,” most experts are pessimistic about likely outcomes. Prominent economist Stephen Roach says its likely the US will lose the trade war, with devastating effects for the economy. “Trade wars are not easy to win. They’re easy to lose, and the US is on track to lose this [one]” Roach stated in an interview with CNBC.
The US has also instigated a trade war with Canada, alienating its long standing ally, which subsequently imposed its own retaliatory, dollar-for-dollar tariffs targeting US $16.6 billion in US imports.
However, it’s not all bad news, at least not for Argentina, which stands to benefit from the Trump administrations’ squabbles.
With China and the US both announcing hundreds of billions of dollars worth of tariffs on each other’s goods, Argentina is in line to profit from a growing demand for Argentine exports as China moves to substitute American goods.
A key benefactor would be Argentina’s agricultural sector. China is the world largest importer of soybeans, and until now, the US was its second largest supplier. However, with China recently slapping a 25 percent tariff on American soybeans, a key door has opened for a new soybean exporter to fill the gap left by the US. Argentina, the world’s third largest soybean exporter, is well-positioned to take on this role.
China also announced tariffs on US meat imports, including pork, beef, chicken, and duck. Thus, Argentina, which already exports a variety of meat to China, could also see an increased Chinese demand for Argentine goods in this area. Argentine meat exporters thus also stand to benefit from Trump’s trade wars.
Meanwhile, Argentina could also gain from trade deals with Canada as the US alienates its long-standing ally. Trade between Canada and Argentina recently shot up 17.6 percent from 2016 to 2017, totaling roughly US $2.2 billion by the end of the year. Canadian imports from Argentina accounted for a little over half this amount, standing at US $1.8 billion in 2017.
Due to Canada’s significant presence in Argentina’s mining sector, the vast majority of Argentine exports to Canada, roughly 76 percent, were metals. Given that Canada imposed 25 percent tariffs on American steel, aluminum, and iron products, this is a great opportunity for Argentina to increase its metal exports to meet Canada’s demands.
All in all, when it comes to American trade wars, it seems that when one door closes for the US, another one opens for Argentina.