Chinese President Xi Jinping has warned that trade wars create “no winners” and that protectionism “leads nowhere” during his three-nation tour of Southeast Asia.

The visit began in Hanoi, Vietnam, on April 14, and aims to strengthen ties with neighboring countries amid ongoing trade tensions.

In an article for Vietnam’s Nhan Dan newspaper, Xi highlighted the need to protect the multilateral trading system and maintain stable global industrial and supply chains, according to Xinhua.

Vietnam, a key stop on Xi’s itinerary, is subject to a 46% tariff from the US, posing a risk to its economic growth. China and Vietnam are expected to sign around 40 agreements, including plans to develop Vietnam’s railway network.

🔗 Source: The Guardian

🧠 Food for thought

1️⃣ Trade wars typically produce economic casualties on all sides

Historical evidence consistently shows that protectionist policies hurt all participating economies, supporting Xi’s assertion that trade wars produce “no winners.”

The 1930 Smoot-Hawley Act raised US tariffs by 40-48%, triggering retaliatory measures that contributed to a 61% collapse in US exports by 1933 and deepened the Great Depression 1.

This pattern has repeated across numerous trade conflicts, from the 1960s Chicken Tariff War to the 2002 Steel Tariff dispute, where American protective measures consistently faced counteraction from trading partners 2.

Today’s tariffs are projected to reduce Vietnam’s GDP growth by 1.2 percentage points while simultaneously harming American consumers with price increases averaging $3,800 per household 3.

The current US effective tariff rate of 22.5%, the highest since 1909, particularly impacts low-income American households, who face annual purchasing power losses of $1,700 3.

2️⃣ Southeast Asia’s economic transformation now threatened by tariff policies

Vietnam exemplifies the region’s vulnerability to trade disruptions, with exports to the US accounting for approximately 30% of its GDP, a dependency now jeopardized by potential 46% tariffs 4.

The country initially benefited from the first US-China trade war as manufacturers relocated production to avoid Chinese tariffs, creating a manufacturing boom that significantly contributed to Vietnam’s economic growth 5.

This success inadvertently made Vietnam a target, as its trade surplus with the US tripled since 2018 to $123.5 billion in 2024, attracting scrutiny from US trade officials 6.