Trade War Background
Since 2018, a trade dispute started between the two rivals, the United States (US) and China. The beginning was with Trump administration imposing tariffs on Chinese imports worth at least USD 50 billion[1]. Correspondingly, China imposed retaliatory measures on a range of US products[2].
After the two countries launched their tariff war, prices increased, especially for American consumers, jobs were lost, and corporate profits dropped. Moreover, the two countries witnessed a slowdown in economic growth[3].
The war continued for several rounds and then eased when the two parties signed the “Phase One” deal[4]. The deal relaxed some of the US’ tariffs on Chinese imports and committed China to buying an additional USD 200 billion worth of US’ goods over two years. However, until now China did not fulfill its commitment[5].
War Effects on US-China Bilateral Trade
Currently, 66.4% of China’s exports to the US are subject to the new tariffs, which are 16.3% higher than the rest of the world. On the other hand, China’s retaliatory tariffs cover 58.3% of the US exports. The American products face tariffs that are 14.6% higher than the rest of the world[6].
The US imports of Chinese products in 42 commodity groups declined by 20.4% in 2022 compared to pre-war levels in 2017. Hence, China lost 10% of its market share for these commodity groups in the US[1].
On the other hand, American exports to China from 45 commodity groups fell by 49% in 2022 compared to 2017. This led to a 7% drop in the US’ share in the Chinese market[2].
Bystander Countries and Opportunity
The ongoing trade war created an opportunity for “Bystanders”. Imposed tariffs increased, which led consumers to look for replacement. Hence, countries like Vietnam, Thailand, South Korea, and Mexico succeeded in boosting their exports by providing substitutes for products subject to war tariffs[1].
Moreover, Bystander countries were encouraged to scale up their production and achieve economies of scale. This situation reduced the cost of production, making their exports more competitive in global markets. In this context, Bystander countries’ exports to the rest of the world hiked for products subject to both US and China tariffs[2].
This can be clearly seen in the case of Vietnam, which was one of the biggest winners from this trade dispute. Vietnam increased its exports of tires, sweatshirts, and vacuum cleaners to both the American market and the rest of the world[3].
Is There a Potential for Egypt to Benefit from Trade War?
Besides Bystanders, Egypt is among the markets that can benefit from the US-China trade war and boost its exports to both markets. However, Egypt did not make any use of this opportunity until now, as the country’s market share in the US and China remained unchanged since the beginning of the war[4].
Egypt can focus on increasing the existing exports to the US from electric and electronic machinery and equipment, apparel and footwear, fertilizers, furniture, textile, food products, glassware, vehicles, and aluminum. Egypt can boost the exports of 29 products in these sectors by USD 853 million[5].
As for China, Egypt has an opportunity to increase its export of 30 products with USD310 million in various sectors. The potential sectors include electric and electronic machinery and equipment, Optical & surgical equipment, tanning & dyeing extracts, rubber, paper and paper products apparel, textile, glassware, vehicles, iron and steel, furniture, chemicals, gold, and aluminum[6].
With the latest press release of Trump on imposing tariffs of 60% on China if he is elected in November[7], Egypt is still having a chance in this war.
Egypt’s opportunity in the US is high in fertilizers, especially urea with potential opportunity of USD 258 million. Apparel sector has a great potential, specifically in men and boys’ trousers of cotton with potential of USD 100 million. Egypt also can boost its exports of reception apparatus for television with USD 107 million.
Egypt’s Export Potential Opportunity to the US
| Sector | Product | Export Potential (USD million) | Egypt’s Competitors |
| Apparel | Men’s or boys’ trousers of cotton | 100 | Vietnam, Bangladesh, India |
| Women’s or girls’ trousers of cotton | 59 | ||
| Men’s or boys’ shirts of cotton | 17 | ||
| Electronic equipment | Reception apparatus for television | 107 | Mexico, Vietnam, Malaysia |
| Monitors | 30 | ||
| Parts of telephone sets, telephones for cellular networks | 16 | ||
| Fertilizers | Urea | 258 | Canada, Russia, Saudi Arabia |
| Ammonium dihydrogen orthophosphate | 7.6 | ||
| Electric machinery | Ignition wiring sets and other wiring sets for vehicles | 36 | Mexico, Japan, Germany |
| Electric conductors, for a voltage <= 1.000 V | 31 | ||
| Coaxial cable and other coaxial electric conductors | 18 | ||
| Footwear | Footwear with outer soles of rubber, plastics, or composition leather | 0.3 | Vietnam, Indonesia, Italy |
| Footwear with outer soles of rubber or plastics | 0.1 | ||
| Furniture | Wooden furniture | 51 | Vietnam, Mexico, Canada |
| Wooden furniture for offices | 1.8 | ||
| Wooden furniture for bedrooms | 1.6 | ||
| Food products | frozen vegetables | 18 | Mexico, Canada, Peru |
| Fresh or chilled onions and shallots | 14 | ||
| Dried vegetables and mixtures of vegetables | 9.7 | ||
| Home textile | Toilet linen and kitchen linen, of terry toweling | 9.8 | India, Pakistan, Türkyie |
| Sacks and bags, for the packing of goods | 8.4 | ||
| Spinning | Staple fibers of polyesters | 3.3 | India, South Korea, Mexico |
| Yarn containing >= 85% synthetic staple fibers by weight | 2.7 | ||
| Denim | 1.2 | ||
| Glass & glassware | glass fibers & articles | 20 | Mexico, Germany, Canada |
| Glassware of glass ceramics, of a kind used for table, kitchen | 3.1 | ||
| Vehicles | Motor vehicles for the transport of >= 10 persons, with only diesel engine | 2.8 | Mexico, Japan, Canada |
| Parts of self-propelled works trucks | 0.3 |
Source: Export Potential Map
As for China, Egypt’s greatest export potential can be seen in unwrought gold, methanol, and polyethylene with USD 176 million, USD 44 million, and USD 39 million, respectively.
Egypt’s Export Potential Opportunity to China
| Sector | Product | Export Potential (USD million) | Egypt’s Competitors |
| Electric machinery | Refrigerators or freezing equipment | 0.12 | Japan, Germany, Taipei |
| Electronic equipment | Electric conductors <= 1000 v | 6.8 | Taipei, South Korea, Vietnam |
| ignition wiring sets for vehicles | 4.1 | ||
| Switches <= 1000 v | 3.2 | ||
| Optical & surgical equipment | medical instruments & appliances | 1.3 | Japan, Germany, Taipei |
| needle & similar appliances used in medical sciences | 0.4 | ||
| Tanning & dyeing extracts | Paints and varnishes | 1.6 | Japan, South Korea, Germany |
| Inorganic or mineral coloring matter, n.e.s. | 0.8 | ||
| Glass frit and other glass in the form of powder | 0.7 | ||
| Rubber | New pneumatic tires, of rubber | 0.25 | Thailand, Vietnam, Malaysia |
| Tubes, pipes and hoses, of vulcanized rubber | 0.13 | ||
| Reclaimed rubber in primary forms or in plates, sheets or strip | 0.11 | ||
| Paper & paper products | Toilet or facial tissue stock, towel or napkin stock | 0.6 | Russia, Japan, Taipei |
| Multi-ply paper and paperboard | 0.5 | ||
| Iron & steel | Structures and parts of structures, of iron or steel | 0.5 | Indonesia, Japan, South Korea |
| Reservoirs, tanks, vats and similar containers, of iron or steel | 0.134 | ||
| Vehicles | Motor vehicles for the transport of >= 10 persons | 0.07 | Germany, Japan, Slovakia |
| Aluminum | Waste and scrap, of aluminum | 0.48 | Malaysia, South Korea, Japan |
| Plates, sheets and strip, of aluminum alloys, of a thickness of > 0,2 mm | 0.38 | ||
| Spinning | Nonwovens, whether or not impregnated, coated, covered or laminated | 1 | Vietnam, Japan, Australia |
| Woven fabrics of yarn containing >= 85% by weight of non-textured polyester filaments | 0.64 | ||
| Furniture | Wooden furniture | 1.2 | Italy, Germany, Japan |
| Upholstered seats, with wooden frames | 0.04 | ||
| Wooden furniture for bedrooms | 0.03 | ||
| Chemicals | Methanol “methyl alcohol” | 44 | South Korea, Japan, Taipei |
| Polyethylene with a specific gravity of >= 0,94 | 39 | ||
| Polypropylene | 23 | ||
| Glass | Float glass and surface ground and polished glass, in sheets | 1.6 | South Korea, Japan, Taipei |
| Rods of glass, unworked | 0.9 | ||
| Precious Metals | Unwrought gold | 176 | Switzerland, South Africa, Canada |
Source: Export Potential Map
[1] Michael Totty.2023. https://anderson-review.ucla.edu/in-u-s-china-trade-war-bystander-countries-increase-exports/
[2] Pablo Fajgelbaum, Pinelopi K. Goldberg, Patrick J. Kennedy, Amit Khandelwal & Daria Taglioni. 2023. https://cepr.org/voxeu/columns/bystander-effect-us-china-trade-war
[3] Michael Totty.2023. https://anderson-review.ucla.edu/in-u-s-china-trade-war-bystander-countries-increase-exports/
[4] Researcher calculations based on Trade Map Data
[5] Researcher calculations based on Export Potential Map
[6] Researcher calculations based on Export Potential Map
[7] Reuters.2024. https://www.reuters.com/world/us/republican-candidate-trump-china-tariffs-we-have-do-it-2024-02-04/
[1] Anshu Siripurapu and Noah Berman. 2023. https://www.cfr.org/backgrounder/contentious-us-china-trade-relationship
[2] Council on Foreign Relations. 2023. https://www.cfr.org/timeline/us-china-relations
[3] Pablo Fajgelbaum, Pinelopi K. Goldberg, Patrick J. Kennedy, Amit Khandelwal & Daria Taglioni. 2021. https://www.nber.org/papers/w29562
[4] Chad P. Bown. 2022. https://www.piie.com/blogs/realtime-economics/china-bought-none-extra-200-billion-us-exports-trumps-trade-deal
[5] Chad P. Bown. 2022. https://www.piie.com/research/piie-charts/us-china-phase-one-tracker-chinas-purchases-us-goods
[6] Chad P. Bown.2023. https://www.piie.com/research/piie-charts/2019/us-china-trade-war-tariffs-date-chart
The US imports of Chinese products in 42 commodity groups declined by 20.4% in 2022 compared to pre-war levels in 2017. Hence, China lost 10% of its market share for these commodity groups in the US[1].
On the other hand, American exports to China from 45 commodity groups fell by 49% in 2022 compared to 2017. This led to a 7% drop in the US’ share in the Chinese market[2].
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