How developing countries can navigate the US-China trade war

The US-China trade conflict, characterized by escalating tariffs and economic friction, has far-reaching implications not only for the two superpowers but also for developing nations caught in the fray. As these countries often have economies reliant on trade with both the US and China, they face a complex landscape of vulnerabilities and opportunities. Analyzing the multifaceted impact of this conflict on developing nations reveals critical insights into how they can navigate these turbulent waters and minimize adverse effects.

The trade conflict began in earnest in 2018, with the US imposing tariffs on Chinese imports in a bid to rectify trade imbalances and address intellectual property concerns. China implemented its own tariffs in response, creating a tit-for-tat escalation that has disrupted global trade dynamics. As the conflict continues, developing countries find themselves in a precarious position, balancing their economic ties to both the US and China while grappling with the uncertainties that arise from this geopolitical tension.

The imposition of tariffs and trade barriers presents several challenges for developing nations. For instance, countries that export raw materials to China may experience reduced demand as China’s economy slows due to the trade conflict. On the other hand, nations that import manufactured goods from the US might face increased costs, straining household budgets and undermining consumer confidence.

Moreover, the conflict disrupts global supply chains, leading to uncertainties that can deter foreign investment, which is crucial for economic growth in developing regions. Delays in investment can stall vital projects, hindering job creation and infrastructure development. Yet, amid these challenges, opportunities do arise. Some developing countries may fill the gaps left by products subject to tariffs, provided they can quickly adapt and enhance their production capabilities.

They can adopt several strategic approaches, including diversifying trade partners and strengthening regional alliances

Dr. Turki Faisal Al-Rasheed

The International Monetary Fund has issued a cautious economic outlook for regions like the Middle East and North Africa, indicating that US-China trade tensions will have significant repercussions. The IMF’s growth projections for MENA have been revised downward, with an expected growth rate of 2.6 percent this year and 3.4 percent in 2026. These adjustments reflect anticipated declines in the global economy driven by US tariffs and countermeasures.

The impact of the trade conflict varies significantly across different economies and sectors. Oil-exporting countries such as Saudi Arabia and Iraq may experience modest growth, while oil-importing nations like Egypt and Morocco might see stronger economic performance. This divergence underscores the need for tailored strategies that acknowledge the unique circumstances of each country.

To navigate the challenges posed by the US-China trade conflict, developing countries can adopt several strategic approaches.

Firstly, diversifying trade partners. Expanding relationships beyond the US and China can enhance resilience against economic shocks. Engaging with emerging markets and established economies can foster a more balanced trade ecosystem, reducing dependency on any single partner.

Secondly, strengthening regional alliances. Forming regional trade agreements can enhance trade prospects and provide collective bargaining power. Initiatives such as the African Continental Free Trade Area and the Regional Comprehensive Economic Partnership can solidify intraregional trade and investment, empowering countries to better navigate external pressures.

Thirdly, investing in technology and infrastructure. Prioritizing investments in these areas can bolster competitiveness. Enhanced logistics, more efficient production methods and access to cutting-edge technology foster resilience, allowing countries to better absorb external shocks.

Fourthly, policy and regulatory reforms. Creating favorable business environments through regulatory reforms can attract foreign investment. Streamlining processes, safeguarding property rights and enhancing transparency encourage businesses to invest in developing countries, mitigating the adverse effects of the trade conflict.

Finally, leveraging international support. Engaging with international organizations like the World Bank and IMF can provide opportunities for technical assistance, capacity building and access to new markets. Such partnerships bolster the ability of developing countries to adapt to changing trade dynamics.

While the risks associated with reliance on superpowers are substantial, these strategies can create pathways toward growth

Dr. Turki Faisal Al-Rasheed

A pertinent example of regional solidarity is Malaysian Prime Minister Anwar Ibrahim’s call for Southeast Asian nations to unite in the face of US tariffs. His advocacy for a collective stance highlights the strength of regional alliances in countering external pressures and maintaining economic stability. By fostering collaboration among neighboring countries, developing nations can create a unified front that enhances their negotiating power on the global stage.

In conclusion, the US-China trade conflict presents a complex array of challenges and possibilities for developing countries. While the risks associated with reliance on these superpowers are substantial, strategies such as diversification, regional cooperation and investment in infrastructure can create pathways toward sustainable economic growth.

The ability of these nations to navigate the intricacies of global trade dynamics will ultimately determine their economic trajectories in an increasingly interconnected world. By fostering a collaborative environment and remaining adaptable to change, developing countries can pursue greater stability and prosperity amid global trade uncertainties.

In navigating this complex landscape, it is crucial for developing nations to adopt a balanced approach that not only addresses immediate challenges but also capitalizes on emerging opportunities. By implementing the strategies outlined above, these nations can better position themselves to mitigate negative impacts and enhance their economic resilience in the face of ongoing global shifts.

• Dr. Turki Faisal Al-Rasheed is an adjunct professor at the University of Arizona’s College of Agriculture, Life & Environmental Sciences, in the Department of Biosystems Engineering. He is the author of “Agricultural Development Strategies: The Saudi Experience.” X: @TurkiFRasheed