UN report warns of ‘massive’ impact of US-China trade war

A new report from the U.N. Conference on Trade and Development warns the U.S.-China trade wars will negatively impact international trade, with the two economic superpowers emerging among the biggest losers.

UN trade official has warned a US plan to raise tariffs on Chinese goods next month would have "massive" implications for the global economy.

U.S.-China trade discussions are underway. If no agreement is reached by March 1, tariffs on $200 billion in Chinese goods will increase from 10 percent to 25 percent.

The report said that Asian countries are likely to suffer most from protectionism.

The US and China are locked in a damaging trade dispute that has seen both sides levy tariffs on billions of dollars worth of one another's goods.

In December, both countries agreed to hold off on new tariffs for 90 days to allow for talks.

The UN Conference on Trade and Development (Unctad) has warned that there will be huge costs if the trade war escalates.

"The implications are going to be massive," Pamela Coke-Hamilton, UNCTAD's head of international trade, said at a news conference.

"The implications for the entire international trading system will be significantly negative."

Smaller and poorer countries would struggle to cope with the external shocks, she said.

The higher cost of US-China trade would prompt companies to shift away from current East Asian supply chains.

"There'll be currency wars and devaluation, stagflation leading to job losses and higher unemployment and more importantly, the possibility of a contagion effect, or what we call a reactionary effect, leading to a cascade of other trade distortionary measures," Coke-Hamilton said.

The higher cost of US-China trade would prompt companies to shift away from current East Asian supply chains, but the report suggests it's unlikely that US firms would pick up that business.

The study found that US firms will only pick up 6% of the $250bn in Chinese exports that are subject to US tariffs.