Asian Economy Scramble to appease Trump as the US President ratchets tariff threat

As Donald Trump’s mutual tariff ghosts loom, some Asian economies enjoy substantial trade surplus with Washington negotiate a positive solution with the US president to prevent slaps at higher obligations I’m in a hurry to do it.

Trump said Friday that each country will announce obligations consistent with the obligations imposed on U.S. goods, in order to come into effect immediately on Tuesday. Trump did not specify which countries will be hit, but showed that it is a broad effort that will help eliminate the US trade deficit.

Details remain unknown, but “US import duties are likely to increase in most emerging Asian economies,” a team of Barclays analysts said on Monday, with the exception of Singapore and Hong Kong.

Based on World Trade Organization estimates, most economies in Asia apply higher average tariffs on imports compared to the US as of 2023. India led by a simple average of 17% The rate of countries with the most preferred country status; Compared to the US, which collects 3.3%. The US enjoys MFN status in most major economies except Russia.

China surpassed its trade surplus with the US last year by $29.55 billion, followed by Vietnam’s $123.5 billion, Taiwan’s $74 billion, Japan’s $68.5 billion, and South Korea’s $66 billion. According to the US Census Bureau.

“Just because these economies are avoiding tariffs for now, doesn’t mean they can breathe easily,” Stephen Anglick, a senior economist at Moody’s Analytics, told CNBC, “Washington.” The mood of the person may change and tariffs may be imposed later.

These countries except Vietnam have spared Trump’s opening tariffs salvo thanks to deep security with Washington and massive investment in the US, Anglick said, but “they should be too comfortable.” Not that,” he said.

Vietnam’s trade surplus with the US has skyrocketed nearly 18% a year Last year’s record high. Country Simple average tariff rate According to WTO data, MFN partners were 9.4%.

Beverages and tobacco imported into the country face tariffs of up to 45.5% on average, but categories such as sugar and sweets, fruits and vegetables, clothing and transportation equipment are exposed to tariffs of 14% to 34%. Masu.

Trump called Vietnam in 2019 “largely Single worst abuser“ Of his trade practices, he has not made any public comments about the country since being re-elected in November.

Hanoi has worked to find a compromise with Washington in trade in recent months. In November, the country vowed to buy more. Aircraft, Liquefied Natural Gas, Other Products From the US

Vietnam’s Prime Minister, Prime Minister Pham Minh Chin I asked the cabinet members to prepare for an impact. The possibility of this year’s world trade war.

Vietnam was the major beneficiary of the trade barriers Trump imposed on Beijing in his first term, which spurred manufacturers to shift production from China. As a result, Southeast Asian countries have become one of the biggest recipients of foreign direct investment from China.

The US could double the tariffs in Vietnam by 8% if it implements MUFG Bank’s senior currency analyst Michael Wan. I said in a note Monday. That said, he expects the US extreme stance on the country, with the likely “customs inherent in some sectors.”

New Delhi The union budget earlier this month reduced tariffs A wide range of products, including motorcycles, electronic products, important minerals, lithium-ion batteries. Treasury Secretary Tuhin Kanta Pandi I said in the interview “We are letting the news that India is not the customs king.”

That’s what India’s Prime Minister Narendra Modi Reportedly ready to discuss further Tariffs will buy more energy and defense equipment from the United States in a meeting with Trump later this week.

India’s surplus with the third largest trading partner, the US Last year it reached $45.7 billion. In particular, the country’s imported agricultural products were exposed to a large 39% job.

During Trump’s first term he had a warm relationship with Modi, but during his campaign for reelection, Trump had Called India “a very big abuser” With customs duties.

In a call with Modi last month, Trump highlighted the importance of India buying and reaching more US-made security equipment.Fair bilateral trade relationships“According to a White House statement.

Some market watchers have raised the idea that both sides could resume their long-awaited debate. US India Free Trade Agreement. The Joe Biden administration had it reportedly rejected India’s interests Local Indian media reported in an investigation into the free trade agreement, citing the country’s commerce and industry ministers.

“Trades like this would require significant tariff cuts from New Delhi, as they have far higher tariff rates than Washington. Trump believes in some degree of mutuality.” At the Diplomatic Council.

India also said it could offer to shift oil imports from Russia to the US, consistent with Trump’s plans to boost oil and gas exports.

Japan appears to have secured positive ties with Trump, and as Prime Minister Ishau, analysts said it could be protected from higher tariffs “for now.” We concluded our whirlwind visit to Washington On the weekend.

Tokyo will maintain it About 3.7% tariffs are relatively low In countries with MFN status, according to WTO data. “There is little scope for a significant increase in tariffs on Japanese goods,” Nomura’s President of Japanese Economics Kyoto Morita Kyoto Morita said in a memo on Monday.

During last week’s summit, Japan We agreed to import more natural gas The US has expressed interest in a project to provide LNG through a pipeline from northern Alaska.

The two leaders also agreed to a compromise in exchange for Japanese Nippon Steel, which instead of “a heavily invested” in a US company, to acquire US steel. Japan will provide technology to US steel to manufacture better quality products in the US, Isba said.

Japan, that was it The largest foreign investor in the US For the fifth consecutive year, He also promised to expand its investment. From $1 trillion 2023 $78.33 billion.

“While Japan does not avoid all the impacts of future US tariff policies, Tokyo may avoid targeted treatments found in countries such as Canada, Mexico and China,” says James, vice president of Teno. – Brady said in a note on Saturday.

“We may even expect more generous trade treatment than other major economies, as it appears to enjoy one of Trump’s most preferred countries,” Brady said.

Beijing’s strict scaleS-including 15% collection of US coal, 10% duties in liquefied natural gas, crude oil, agricultural equipment, cars and pickup trucks – is considered modest and restrained.

Data compiled by Nomura shows that the tariff package is estimated to cover $13.9 billion worth of imports from the US from China in 2024.

That’s significantly lower than the $50 billion worth of US goods covered during Trump’s first term, said Tommy Xie, OCBC Bank’s Head of Asian Macro Research.

The “calibrated approach” indicates that “China is choosing a more diverse approach,” and that it also uses non-tariff measures such as export control and regulatory probes as countermeasures against US companies, while also “full negotiations” It leaves room for that,” Xie added.