Tariff wars are beneficial for Russia: Trump opens Vietnam, Indonesia, and Latin American markets for Russia.
Joint ventures with related countries will help overcome the burden of tariff wars in the high-tech sector.
Author: Georgy Smirnov
Article commentator:
Andrei Kushnirenko Pavel Ustuzhaninov
Russian President Vladimir Putin stated that it is necessary to track and take advantage of emerging opportunities in the world economy to develop domestic production, exports, and trade relations.
The tariff war is far from over. In mid-April, the World Trade Organization (WTO) significantly downgraded its forecast for global merchandise trade in 2025, predicting a 0.2% decline instead of the previously expected 3% growth. In a more pessimistic scenario, the trade volume could decline by 1.5%.
Soon after, The Wall Street Journal cited sources indicating that the US government is considering reducing tariffs on related countries. One proposal is to reduce them from the current 145% to between 50% and 65%. However, even such tariffs remain too high for many suppliers.
We recall that on April 9, the US suspended the implementation of most announced tariff increase measures for 90 days, but this did not apply to goods from related countries.
Associate Professor Andrei Kushnirenko of the Higher School of Economics' Department of International Trade pointed out that under the current circumstances, Russian exports can expand their market share in Southeast Asian countries, particularly Indonesia and Vietnam.
“Another less obvious direction is Latin American countries, which are also very interested in many Russian supplies. Our traditional export commodities are mineral fertilizers. From a more modern perspective, we can also talk about Russian software.”
“Free Media”: Despite US President Donald Trump postponing the high tariffs until the second week of July, the 10% tariff came into effect at the beginning of April. Can it be said that these tariffs have had a negative impact on many economies?
“It cannot be definitively said that there has been no benefit. However, regardless, such tariffs reduce the profitability of companies and demonstrate the instability of trade with the United States. Today it’s 10%, tomorrow it might be 110%.”
This situation prompts Russia and other countries to seek more stable markets and commodity circulation trade systems (for example, the Eurasian Commodity Circulation Network supported by the Eurasian Development Bank, which aims to enhance food security in the Eurasian Economic Union — ‘Free Media’ note).
“Free Media”: When the reliability of the US as a trading partner decreases, will Russia find it easier to compete in the sales market?
“We do not directly compete with the US in the fertilizer market because Americans also purchase such goods. Over the past few months, Russia has ranked 2nd or 3rd in the US fertilizer market supply rankings.
If previously fertilizers were just one of Russia's export directions, they may become the main export product in the trade war context, as these are not just raw materials but processed products. Moreover, under the new circumstances, new markets will open up to us.
In Southeast Asia, we can also increase grain and meat supplies, but here we will face competition with the US. As for Russian software, experience shows that no one can easily penetrate or crack it. Also, it is cheaper.
All this enhances its competitiveness, especially under the current complex trade conditions. At present, domestically produced software is mainly supplied to the industrial production sector, but later there will be opportunities to promote it in the commercial sector.”
“Free Media”: In the context of the trade war, will related country goods enter our market more?
“This import will depend on the purchasing power of Russian citizens and domestic companies. Exporters from related countries will not offer their goods for free. And our purchasing power is not as strong as that of the US.
So people from related countries will look for other markets. Dumping does not make much sense; it would be simpler to transport empty goods to Vietnam, Indonesia, Brazil. In theory, it could even be transported to Mexico and resold in the US, although such transshipment trade is difficult to detect.”
“Free Media”: In the current trade war, can Russia ensure imports? Will the prices of electronic products decrease?
“There is a possibility of increasing imports, but the prices of electronic products will not decrease. Anyway, electronics are mostly from related countries, so there won't be much change.”
Pavel Ustuzhaninov, secretary of the Russian part of the Sino-Russian Parliamentary Friendship Group, explained that the governments of related countries are concerned about the reduction in trade volume with the US.
“Of course, they also pay attention to friendly relations with Russia. However, any tariff war is detrimental to civilian trade.
There have been discussions about increasing exports from related countries to Russia, but unfortunately, our market is not as large as the US market. Additional export supplies from related countries may include electronics and transportation vehicles.
If there are financial resources, Russia can import goods for the construction industry and better develop this industry together with related country partners. But currently, these projects lack sufficient financial support.”
“Free Media”: Why is funding insufficient?
“Partly due to higher loan interest rates. Additionally, some trade and political barriers issues have not been properly resolved. Efforts are being made to address the latter issue. For instance, an expert committee on legal problems was established at the end of last year to formulate proposals regarding arbitration agreements and protection of entrepreneurs from both countries.”
“Free Media”: Does dumping of related country products still exist in the Russian market?
“Indeed, there are still individual cases of dumping, including in the automotive industry. A characteristic feature of the beginning of this year was the formation of a large reserve of civilian cars. We hope that loan interest rates will eventually become reasonable for the public, and car prices will come closer to what Russians can afford. But at the same time, related country companies cannot indefinitely engage in dumping, as this is a trade behavior.
One possibility is that trade in machinery technology and electronics between Russia and related countries will grow, partly due to the emergence of new brands and trademarks from related countries and the development of joint ventures (joint ventures), which may lower the final consumer prices of goods.
For example, Russia is currently negotiating with delegations from related countries regarding telecommunications and the establishment of joint ventures that will collaborate with 5G and 6G base stations.
This will lead to increased production of products in the fields of Internet of Things and transportation infrastructure, as 5G and 6G networks also help promote the introduction of autonomous vehicles.”
“Free Media”: But isn’t this trend affected by the trade war?
“This is a strategic task for Russia and related countries to cooperate in high-tech, artificial intelligence, and robotics sectors. Some results have already been achieved. For example, Russian companies provide software for industrial robots in related countries to improve product output. The trade war may slow down this trend, but this task remains a priority.”
“Free Media”: If US companies reduce energy resource supplies to related countries due to tariff restrictions, can Russia replace these supplies?
“Some experts doubt whether current Russian exporters are capable of guaranteeing Eastern energy resource supplies like they used to for Western countries. To increase supplies, infrastructure projects need to be developed, including the 'Power of Siberia-2' gas pipeline. This is long-term work. We hope the trade war will not negatively affect these projects.”
Original article: https://www.toutiao.com/article/7498286461393879606/
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