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Tyler Cowen

The Trade War’s Biggest Losers

Smaller countries caught in the middle are being forced to choose sides.

Their dispute is causing collateral damage.

Their dispute is causing collateral damage.

Photographer: Pool/Getty Images AsiaPac

Debate continues about how much the costs of this trade war fall on China vs. the U.S., but the American contributions to that debate are overlooking some of the biggest victims: the countries “caught in the middle.” The current trade war is making it harder for many countries, and many businesspeople, to maintain even a partly pro-American stance.

Take Pakistan, for instance. It has recently been revealed that Pakistan has borrowed $6.5 billion from China this fiscal year alone, and China is also a major infrastructure supporter and Pakistan’s biggest foreign direct investor. Furthermore, China is Pakistan’s main counterweight in its rivalry with India. These are the facts on the ground.