The much awaited ‘by country score card’ of US tariffs is finally out overnight (see article 1). What is clear is the US’s determination to level the playing field, as it has been ‘ripped off’ by trading partners which have far more punishing trade duties/barriers than US: The distribution of the tariff rates can be seen from article 1 as well, but here is the global distribution from low tariffs (green) to high (red) – it is obvious that the whole Asian export complex is hit, even US’s traditional allies S Korea and Japan: Most hurt of course are the SEA nations which have received much offshoring and reshoring investment in recent years. But what the currency markets have reflected are positive surprises for Japan and Switzerland (blue circles), while Thailand and S Africa (red circles) may have been more punished than expected: Whilst not surprising, the US also closed the loop on China’s small parcels route to exporting given earlier brief tariff imposition which was quickly reversed. To show how big the Chinese parcel export industry has become, this is an excellent chart: Yes you got it right, out of top 20 cities that sell on Amazon, only 7 cities are non-Chinese, which take the top 4 spots by a wide margin… By trade bloc impact assessment Below we have broken down the impacted nations by trade blocs – OECD (orange), SEA (blue), and N Asia (green): reference to nations’ response are given at the end The key impact columns are 4th from right, indicating which country is hit hardest within that bloc: EU was punished hardest in OECD, while Cambodia/Laos/Vietnam hurt most in SEA, and China/Taiwan both are bruised more than peers. On a total economic materiality basis (5th column), top 3 hit countries are Cambodia, Vietnam, Taiwan. The latter being the most surprising entry in our study… Obviously this is just Trump’s opening salvo, and as the ‘Art of the Deal’ requires, give and take will eventually result in a quite different set of results from this announcement. We await the wide ranging negotiations to begin from today… obviously the more flexible the country is in its executive decision making, the quicker they will reduce the impact of these reciprocal tariffs… Our guess is that most SEA nations fall into this category. Response above are from these sources: A) Japan – Seeking exemptions and negotiating with U.S. counterparts. B) European Union – Postponed counter-tariffs and prefers a negotiation. C) Canada and Mexico – Exempt from baseline tariff but concerned about broader impacts. D) China – Retaliatory tariffs and suspended export permits for certain U.S. soybean producers. Article 1 President Trump’s “Liberation Day” (April 2, 2025) marked the announcement of unprecedented reciprocal tariffs, including a 10% universal import tax and country-specific rates (e.g., 34% on China, 24% on Japan, 20% on the EU). These measures aim to address perceived unfair trade practices, raising the average U.S. tariff to 12.5%—the highest since 1940. Combined with existing levies, total tariffs could surge to 29%, costing American businesses and consumers $880 billion annually. Economists warn of recession risks, inflationary pressures, and retaliatory measures from trade partners, though exemptions and negotiations might mitigate impacts over time. Article 2 Trump signed an executive order ending duty-free treatment for low-value imports from China and Hong Kong (effective May 2, 2025), targeting the “de minimis” loophole. This move aims to close a gap exploited for tax-free shipments, aligning with broader efforts to reduce the U.S.-China trade deficit and enforce stricter trade policies. Article 3 Morgan Stanley highlights China, India, and Vietnam as most exposed to Trump’s reciprocal tariffs due to high trade surpluses and existing barriers. China faces strategic hurdles (e.g., security concerns), while India’s “very high” tariffs on food/textiles complicate negotiations. Vietnam, reliant on a $124 billion U.S. surplus, risks economic headwinds. The analysts stress indirect impacts—eroded corporate confidence and investment delays—posing greater long-term risks to Asian economies than direct tariff hits. — policymakers and analysts have scrambled to quantify what it means for domestic economies. So far, Asian leaders have made a range of promises to the US administration, from purchasing more US goods to removing some tariff barriers. |
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