With China taking the brunt of the escalating trade war, we have identified several economies that could benefit from China’s loss (assuming that President Trump continues to focus on China and does not pursue blanket tariffs on all exporting nations). To gauge this, we use data from UNCTAD on individual good exports from 50 major economies to construct an export similarity index (top chart), where a value of 1 indicates an identical export basket. On this measure, the export mix of Czech Republic, Vietnam, and Thailand is most similar to China, suggesting that these economies could pick up some of the slack.
We have also used the data to show the proportion of exports of individual goods going to the US (bottom charts). The charts essentially show, for 250 categories of goods for each country (plotted on x-axis), what percentage of total exports the US accounts for. This is a proxy for dependence on the US market. We can see that the structure of exports to the US is very similar in Vietnam, Thailand and China, where the US is a critical market for many goods, whereas for the Czech Republic, Italy and Poland, their US exports are more evenly distributed by type of good exported. These countries thus have fewer weak points when it comes to their reliance on the US; however Vietnam and Thailand may find their lopsided profiles are to their gain.
(Click on image to enlarge.)
Source: Bloomberg, Macrobond and Variant Perception