China Research

It finally came true: President Trump has now published his devastating list on tariffs for American imports from all countries. This is terrible news to all countries in the world – in my view the U.S. included! Both theory and practical experience reject trade protectionism as extremely harmful and underline that the American president does not understand macroeconomics – or does not care about it.

Not all emerging markets are major importers of the U.S. – but quite a number of them are indeed. The biggest are by size (in USD and the percentage of Trump’s new tariffs):

                                       Volume (in bill USD)                              Tariff (in %) *

Mexico                        510.0                                                                no new tariff, already targeted

China                          462.6                                                                34  (54 including previous tariffs)

Vietnam                     142.5                                                                46

India                               91.2                                                                26

Thailand                       66,0                                                                36

Malaysia                      53.9                                                                 24

Brazil                             44.2                                                                 10

Indonesia                    29.6                                                                 32

Colombia                    18.4                                                                 10

Chile                              17.4                                                                 10

South Africa               14.8                                                                  30

Philippines                  14.6                                                                 17

Cambodia                   13.4                                                                  49

Costa Rica                  12.0                                                                  10

Peru                                10.0                                                                   10

Source: Country list of the White House, https://www.newsweek.com/trump-reciprocal-tariff-chart-2054514 and Trading Economics. However, the list of the White House is not quite transparent and obviously based on uneven criteria.                                                                                                                                                —————————————————————–

Conclusion:  The table above should indicate clearly that the high new tariffs set by the U.S. will have considerable direct negative effects on exports from many emerging markets to the United States. But there will also be strong indirect negative consequences on many emerging countries because of dampened total global demand. Thus, emerging markets must find new market alternatives for their exports to countries outside the U.S. Candidates for this changing focus are obviously other emerging markets and hopefully the EU. It also will be interesting to see how China and Russia will react on this new situation.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University