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): 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=================== We now know the full extent of Trump's reciprocal tariffs. They’re huge. |
Please refer to the original article for complete data
Much beefier are “reciprocal” tariffs that are supposed to punish US trade partners that impose tougher barriers on imports from the United States than vice versa. To come up with those figures, Trump measured not just the taxes other nations impose on US imports but 14 categories of “nonmonetary” actions that Trump says keep American products out of foreign markets. That led to the eye-popping “reciprocal” taxes Trump now plans to impose on products from dozens of countries.
The current average tariff on imports from China, for instance, is about 3%. Trump wants to raise that to 34%. For Japanese imports, the tax will rise from 1.6% to 24%. For products from Europe, the tax will rise from the 2% range to 20%. The universal 10% tariff is scheduled to start on April 5, while the reciprocal tariffs are set to go into effect April 9. Unlike any change to income taxes or most other taxes, which require congressional legislation, Trump can impose tariffs on his own authority.
Some of the Trump taxes are “stacked,” which means that multiple new tariffs might apply to some products. The matrix of overlapping new taxes compounds the confusion businesses already have to deal with as they try to understand what costs are likely to rise and by how much.
Americans bought about $3.3 trillion worth of imports in 2024. The tariff rate of about 2.5% yielded a tariff tax bill of about $83 billion. Investing firm Evercore estimates that all the new tariffs combined will push the tax rate on imports to about 29%.
If import purchases stayed the same, that would raise the tariff bill to about $960 billion, making it an $880 billion tax hike paid by American businesses and consumers.
“It’s the biggest tax hike on Americans since the 1940s,” trade expert Inu Manak of the Council on Foreign Relations told Yahoo Finance on April 2. “The only thing these tariffs are going to do is increase costs.”
Economists are now busy trying to figure out whether the shock to corporate profits, stock values, and consumer wallets will be enough to cause a recession. Imports are only about one-tenth of total US GDP, which is nearly $30 trillion. So, as sweeping as the Trump tariffs are, they won’t affect everything in the US economy.
They will have major knock-on effects, though. When imported products get more expensive, it allows manufacturers of competing domestic products to raise prices too. It’s also a near certainty that trade partners will retaliate against Trump’s tariffs with their own punitive measures on US exports, which will dent revenue and profits for US exports and further hurt growth.
Economists have already been lowering their forecasts for economic growth and raising their inflation estimates on account of Trump tariffs. Shortly before Trump’s badly misnamed "Liberation Day," Goldman Sachs raised its odds of a US recession within 12 months from 20% to 25%. The risk of recession is certainly higher now.
They will have major knock-on effects, though. When imported products get more expensive, it allows manufacturers of competing domestic products to raise prices too. It’s also a near certainty that trade partners will retaliate against Trump’s tariffs with their own punitive measures on US exports, which will dent revenue and profits for US exports and further hurt growth.
Economists have already been lowering their forecasts for economic growth and raising their inflation estimates on account of Trump tariffs. Shortly before Trump’s badly misnamed "Liberation Day," Goldman Sachs raised its odds of a US recession within 12 months from 20% to 25%. The risk of recession is certainly higher now.
“US growth is now headed for stall speed, and maybe worse than that,” Brett Ryan, senior US economist at Deutsche Bank, told Yahoo Finance on April 2. “If not an outright recession, this certainly raises the risk of one.”
If there’s any solace for investors, it’s that Trump can put the lightning back in the bottle just as fast as he unleashed it. Some trade partners may make concessions that lead to lower tariff rates. There are also likely to be thousands of case-by-case exemptions in which the Trump administration waives tariffs for companies facing particular hardships.
Trump claims that high taxes on imports will lead to more domestic manufacturing and a revival of US manufacturing. In the best case, however, that will take years and generate uncertain results. The worst case may be what investors are facing now.
======================Article 2===================
Trump signs order that closes duty exemptions for cheap shipments from China
April 3, 2025
WASHINGTON, April 2 (Reuters) - U.S. President Donald Trump signed an executive order on Wednesday that closes a trade loophole used to ship low-value packages duty-free from China, known as "de minimis," according to the White House.
The order says Trump is ending duty-free treatment for the covered goods imported from China and Hong Kong starting at 12:01 a.m. ET (0401 GMT) on May 2, according to a fact sheet provided by the White House.
======================Article 3===================
Morgan Stanley Sees Tough Road for Trump Deals With China, India
(Bloomberg) -- As the deadline approaches for President Donald Trump’s reciprocal tariffs, economists at Morgan Stanley found it will be difficult for some of Asia’s biggest economies to reach a trade deal with the US in time.
China is the most exposed to these tariffs, followed by India and Vietnam, according to a research note sent to clients on Wednesday. These three countries could also find it more challenging than other economies in the region to sign a pact by April, according to analysts led by Chetan Ahya.
Trump last week ordered his administration to consider imposing reciprocal tariffs on trading partners, with a report from officials due April 1. India has said it is looking to conclude a trade deal with the US as soon as possible to avoid facing the impact of these levies. But the path to a deal may be complicated for the South Asian nation as it imposes “very high” tariff rates on certain products such as food and textiles, Morgan Stanley said.
For China, a “multitude” of issues — including the scale of the trade surplus with the US, strategic competition and national security concerns — could make reaching a potential deal with the White House an uphill task, the analysts said.
Smaller nations will also be tested when it comes to meeting Trump’s definition of trade fairness. Vietnam — one of the largest beneficiaries of manufacturing rerouting after the US-China trade war during the first Trump administration — relies on the US trade surplus for a quarter of its gross domestic product, Morgan Stanley found. Its surplus with the US is about $124 billion.
The economists considered a range of trade factors, including the difference in tariff rates between the US and Asian trading partners, value-added tax, the trade balance and non-tariff trade barriers as defined by the United Nations.
“President Trump’s focus on fixing the US’ large and persistent trade deficit means that Asia will be exposed,” the analysts wrote, adding that much of the risk to the region’s economies will come not just from the direct hit of the tariffs. “The indirect effects of tariffs matter more – that is, the persistence of trade tensions will weigh on corporate confidence, capex and trade.”
As Trump continues his rapid-fire tariff announcements — from reciprocal import duties to the announcement Thursday of lumber levies — 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.
