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Former US President Donald Trump, who looks set to return for a second term, is expected to drive a hard bargain on import tariffs, leading to volatility in export-led Asian economies.
Why Asian trade economies are bracing for uncertainty after Donald Trump’s win. (Photo credit: PTI)
New Delhi: US presidential election trends indicate that Republican Party candidate Donald Trump is ahead of Democratic Party candidate Kamala Harris. While global markets are likely to cheer Trump’s return in the short run, his broader policy stance may lead to volatility in the longer run.
In his poll narrative, wherein he pledges to make America great again, Trump has repeated his intention to revive domestic industries by charging higher duties on imports. Trump has mentioned a duty hike of up to 60 per cent on Chinese imports and 10-20 per cent on imports from other countries.
US-China tariff wars
While China is a manufacturing powerhouse and the tariff wars are part of larger geopolitical tensions with the Middle Kingdom, Trump’s emphasis on duty hikes is likely to result in complexities for smaller Asian countries that have also ramped up exports to support their economy.
Outgoing US President Joe Biden maintained the $380 billion worth of tariffs that were introduced by Trump during his presidential tenure. To be sure, smaller Asian nations that are part of the ASEAN grouping have benfited from these tariff wars. Their trade to GDP ratio was almost double the global average at 90 per cent, Al Jaeera reported, citing the Singapore-based Hinrich Foundation.
According to the US-based think tank Brookings Institution, the trade to GDP ratio of Emerging East Asian countries stood at 105 per cent. However, Trump’s new proposed policy on import tariffs is likely to skittle the gains of smaller Asian countries from the US-China tariff wars.
Non-China Asia’s exports are forecasted to decline by 8 per cent, and their imports may fall by 3 per cent, according to projections by Oxford Economics. To be sure, Trump’s elaborate plan for comprehensive tariffs is also meant to counter China’s attempts to escape higher duties by shifting production to other Asian countries such as Vietnam, Malaysia and Thailand, Al Jazeera reported, citing Nick Marro, principal economist for Asia at EIU.
What is Trump’s metric for trade tariffs?
Trump assesses the need for higher trade tariffs based on the US’ trade deficit with partner countries, Al Jazeera reported, citing Hinrich Foundation’s head of trade policy, Deborah Elms. This means that countries such as Taiwan are also on Trump’s radar for allegedly taking away the semiconductor chips business from the US. While Biden has not been far behind Trumo in terms of trade tariff imposition, his stance has been less aggressive.
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