Canuto, Kimberly Anne V.

IV-BMA

How does Covid-19 affects the International Trade?

The Covid-19 and the necessary public health response are causing the largest and the
fastest decline in the modern history. As we have experienced, Covid-19 has a major effect in
our economy like the unavoidable declines in trade and output will have painful consequences
for households and businesses, on top of the human suffering caused by the disease itself. No
one is prepared for this kind of pandemic, every country suffers from this problem that we have
facing of. Even the European countries which dominate the overall rankings in the Global
Competitiveness Index, has also faces from the adverse impact of the global pandemic which is
the Covid-19. United States is also one of the epicenters of the global pandemic. Dollar shares
insights on which industries have been hit hardest, how the recession will alter the U.S. trade
deficit and the phase one trade deal with China, and the likelihood American companies begin
reshoring their manufacturing and value chains. Here are the other effects of corona virus in
the world international trade.
The economic shock of the COVID-19 pandemic inevitably invites comparisons to the
global financial crisis of 2008-09. These crises are similar in certain respects but very different in
others. As in 2008-09, governments have again intervened with monetary and fiscal policy to
counter the downturn and provide temporary income support to businesses and households.
But restrictions on movement and social distancing to slow the spread of the disease mean that
labor supply, transport and travel are today directly affected in ways they were not during the
financial crisis. Whole sectors of national economies have been shut down, including hotels,
restaurants, non-essential retail trade, tourism and significant shares of manufacturing. Under
these circumstances, forecasting requires strong assumptions about the progress of the disease
and a greater reliance on estimated rather than reported data.
According to the Economic Commission for Latin America and the Caribbean (ECLAC),
the volume of global trade in goods fell by 17.7% in May 2020 compared with the same month
in 2019 The drop in the first five months of the year was widespread, although it particularly
affected exports from the United States, Japan, and the European Union. The economic
contraction in China was smaller than the global average, as that country controlled the
outbreak and reopened its economy relatively quickly. Latin America and the Caribbean is the
most affected developing region.
Lastly, there are also a lot of articles said that Covid-19 might be a silent trade war
between US and China. Not all subsidies will have an impact on international trade. Consumer
services such as hairdressing and cultural activities have been particularly affected by
lockdowns and ongoing social distancing measures. Where subsidies are targeted towards
these industries, the risks to international trade are low. It identifies thousands of traded
products which are affected by new subsidies, around 3% of world trade in total. This is like the
share of trade affected by the US-China trade war. Based on the effects of subsidies introduced
in the financial crisis, the potential hit to trade is similar to the net losses to date from the trade
war between the US and China.
Canuto, Kimberly Anne V.
IV-BMA

References:

http://www.oecd.org/coronavirus/policy-responses/covid-19-and-international-trade-issues-
and-actions-494da2fa/

https://www.wto.org/english/news_e/pres20_e/pr855_e.htm

https://www.forbes.com/sites/sarwantsingh/2020/03/02/impact-of-the-coronavirus-on-
business/#15d6d2294414

https://think.ing.com/articles/world-trade-from-subsidies-covid-19-war-recession-support