A brewing U.S. trade war with China could upset the Russian economy and hit steelworkers, as demand for traditional export goods to China might decline, Nezavisimaya Gazeta reports.
According to the newspaper, customs duties on Chinese goods might spark a catastrophic retaliation against U.S. exporters, including American farmers, who rely on China as the main market for the sale of soybeans, pork and a number of other products. The surge of U.S. trade barriers on Chinese goods would also redirect these products to third countries, analysts say.
Supplies of raw materials and metals from Russia would come under additional pressure, says Professor Sergey Orlov from the Plekhanov Russian Economic University.
“The metal export sector would feel some jitters, in particular, ferrous and non-ferrous ores exports from Russia to China. But at the same time, this is just the kind of product that sells well in the world market during an upswing, which is occurring right now,” he says.
“In the event of another trade war, steel prices may be put under pressure, which affects the interests of Russian steel producers,” Managing Director at BCS Ultima Oleg Safonov told the paper.
According to Roman Tkachuk, a senior analyst at the Alpari investment company, global trade wars are an absolute negative for the export-oriented Russian economy. According to the expert, duties for Russian exporting companies could be increased, and it will be more difficult to compete in foreign markets.
“In addition, global prices for commodities may be under pressure, which will also hurt the financial results of companies,” he said. What’s even worse is if these worldwide trade wars drag on. “In that case, the largest players in the world market will protect domestic producers and displace outsiders. The Russian economy is growing at a slow pace, and replacing the loss of imports by an increase in domestic demand will not work” the expert pointed out.
