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Impact Of Trump’s Tariff: According to a report by Fitch, US trading partners, especially emerging market economies, could be in trouble because of the Trump administration’s new trade plans. These plans focus on making tariffs more equal between the US and other countries. If US exporters face higher tariffs than those charged on US imports, these countries might be at risk of new tariffs. The goal is to make trade “fair” by ensuring both sides pay similar tariff rates. Countries with uneven tariffs could face major trade disruptions, which could affect their economies and trade relationships with the US.
Fitch Ratings expects the US administration’s tariff review, effective April 2, to lead to higher tariff rates.
What Is The Risk?
“There is a high risk that tariffs ensnare many U.S. trading partners, particularly those emerging market economies where the tariff rates faced by U.S. exporters exceed those charged on US imports from these countries,” said the global rating agency.
This could impact countries where U.S. companies face tougher tariffs than what the US charges on their goods. As a result, these countries might face new trade challenges, especially those in emerging markets that rely heavily on exports to the US.
Which Countries Are At Risk?
Countries like India, Brazil, Thailand, Malaysia, South Africa, Turkey, Vietnam, and Indonesia charge much higher tariffs on goods coming from the US compared to what the US charges on imports from these countries, according to the rating agency. This difference in tariffs puts these countries in a tricky spot, especially with the US planning to review its trade policies. The agency warns that these nations could face new challenges if the US pushes for equal tariff rates, which could mess with trade between these countries and the US.
Fitch has compared tariff rates faced by US exporters in trade partner markets in 2023 with the tariff rates paid by US importers on goods sourced from those trade partners.
What Other Risks Are At The Edge?
Fitch has also said these trade partners of the US are at risk of President Donald Trump’s reciprocal tariffs plan.
Beginning April 2, the Trump administration intends to implement reciprocal tariffs on trading partners as part of the “Fair and Reciprocal Plan”.
Since assuming office for his second term, President Trump has reiterated his stance on tariff reciprocity, emphasising that the United States will match tariffs imposed by other countries, including India, to ensure fair trade.
The US and India, however, are currently negotiating a broad-based trade agreement, taking into account the entire trade relationship rather than individual products.
India’s Commerce Minister Piyush Goyal was in the US earlier this month. That followed Trump-Modi’s plans to negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by the fall of 2025. The two leaders had committed to designating senior representatives to advance these negotiations.
(With Inputs From ANI)
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