No Match Found
Australian businesses can win in the US-China trade war with careful planning and execution of their trade strategy according to economic modelling released today by PwC Australia.
PwC’s modelling finds Australian technology businesses stand to gain the most from the trade war if proposed restrictions on Chinese investment in US technology companies are implemented. Australia’s manufacturing sector is predicted to see increases of 5 percent in investment and 20 percent in exports, which will result in a AUD1.1 billion increase to Australia’s GDP over the next 12 months.
The Australian mining and resources sector will be the second biggest winner in the trade war according to PwC’s modelling, with income predicted to increase to AUD 766 million over the next 12 months as US steel and aluminium tariffs lead to increased investment and trade opportunities with China.
PwC’s modelling finds education comes in at third place, with Chinese students preferences predicted to move away from the US by 5 percent and towards Australia by 8.5 percent, leading to a 25 percent increase in education exports from Australia to China and adding AUD 102 million to annual income for the sector.
PwC Australia lead for international trade and excise, Ross Thorpe said “When you look at the macroeconomic environment generated by the trade war, there’s no doubt the outlook is bleak. We started by modelling a modest 5 percent decrease in economy-wide investment due to diminished investor confidence, which found Australia’s GDP could take a hit of AUD 3 billion per month; in line with findings of other analysts.
“However, when we drilled down to individual industries, our modelling revealed there will be clear winners and losers from the trade war, and that with the right trade strategies in place, Australian businesses can be among the winners,” Mr Thorpe said.
Federal Minister for Trade, Tourism and Investment Simon Birmingham said Australia’s best form of defence against current trade headwinds was to ensure Australian businesses and exporters had more opportunities and greater market access around the world.
“With the current global trade uncertainty, willing nations can work together to safeguard the multilateral trading system and continue to promote the free flow of goods and services across the globe,” Minister Birmingham said.
“That’s why as a government we’re focused on pursuing new markets for Australian exporters as this will create more certainty for businesses, further strengthen our economy and create more jobs.”
“Australian businesses cannot continue to sit on the sidelines,” Mr Thorpe added. “Worryingly, our recent CEO survey found none of the Australian CEOs surveyed had adjusted their supply chain and sourcing strategy as a result of the trade war, compared to 45 percent of their global counterparts who have made adjustments and contingencies.
“To be among the winners, Australian businesses must develop multi-faceted responses encompassing contingency plans, a thorough examination of their trade portfolios and an assessment of how vulnerable these are to protectionist tariffs and Non-Tariff-Barriers. A preparedness for disruption will be needed moving forward, one that is all to often lacking.
“It’s also important to note that as a nation we are exposed by any weakening of the international multilateral trading system we worked so hard to create and which has served our nation for 70 years. Australian businesses can't continue to be complacent and assume this system will be there forever if we don't individually and collectively stand up as a nation and defend it,” Mr Thorpe said.
The release of PwC’s economic modelling in the new report ‘What you have GoT to know about the Trade War’ coincides with the launch of a trade war simulation experience called Game of Trade where the impacts on business and government of actual, planned and threatened tariff rises and other non-tariff measures can be identified, assessed and discussed. For more information about PwC’s Game of Trade please visit https://www.pwc.com.au/trade.html
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2019 PwC. All rights reserved.
© 2017 - 2021 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. Liability limited by a scheme approved under Professional Standards Legislation.