Trump said Friday that he would announce reciprocal tariffs — duties that match those levied on U.S. goods by respective countries — as soon as Tuesday, to take effect immediately.
Most economies in Asia had higher average tariffs on imports compared with the U.S. as of 2023, Barclays said, citing data from the World Trade Organization.
“Just because these economies have dodged tariffs for now, [it] doesn’t mean they can breathe easy,” Stefan Angrick, senior economist at Moody’s Analytics told CNBC. “Washington’s mood could shift and tariffs could still be imposed later.”
PORTSMOUTH, UNITED KINGDOM – OCTOBER 28: The container ship Vung Tau Express sails loaded with shipping containers close to the English coast on October 28, 2024 in Portsmouth, England.
Matt Cardy | Getty Images News | Getty Images
As the specter of Donald Trump’s reciprocal tariffs looms, several Asian economies that enjoy substantial trade surpluses with Washington are scrambling to negotiate favorable solutions with the U.S president to prevent being slapped with higher duties.
Trump said Friday that he would announce reciprocal tariffs — duties that match those levied on U.S. goods by respective countries — as soon as Tuesday, to take effect immediately. Trump did not identify which countries will be hit but indicated it would be a broad effort to help eliminate U.S. trade deficits.
While the details remain unclear, “it is likely that U.S. import tariffs will rise for most emerging Asian economies,” a team of analysts at Barclays said Monday, with the exceptions of Singapore and Hong Kong, with which the U.S. enjoys trade surpluses.
Based on World Trade Organization estimates, most economies in Asia applied higher average tariffs on imports compared with the U.S. as of 2023. India led with a 17% simple average rate on countries with the most-favored-nation status, compared with the U.S. that levies 3.3%. The U.S. enjoys MFN status with most major economies, except Russia.
China topped trade surplus with the U.S. last year at $295.4 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 U.S. Census bureau.
“Just because these economies have dodged tariffs for now, [it] doesn’t mean they can breathe easy,” Stefan Angrick, senior economist at Moody’s Analytics told CNBC, stressing that “Washington’s mood could shift and tariffs could still be imposed later.”
These countries, except for Vietnam, were spared in Trump’s opening tariff salvo thanks to their deep security ties with Washington and large investments in the U.S., Angrick said, but “they shouldn’t get too comfortable.”
Vietnam braces for fallout
Vietnam is “undoubtedly one of the most exposed economies” to being a target of Trump’s trade restrictions, due to its large surplus with the U.S. and sizeable Chinese investment in the country, Angrick said.
Garment factory workers working in a factory in Hanoi, Vietnam on May 24, 2019.
Manan Vatsyayana | AFP | Getty Images
Vietnam’s trade surplus with the U.S. soared nearly 18% annually to a record high last year. The country’s simple average tariff rate on MFN partners stood at 9.4%, according to WTO data.
Beverages and tobacco imported into the country face up to 45.5% tariffs on average, while categories such as sugars and confectionery, fruits and vegetables, clothing and transport equipment are subjected to tariffs between 14% and 34%.
Trump, who in 2019 called Vietnam “almost the single worst abuser” of trade practices, has not made any public remarks about the nation after his re-election in November.
Hanoi has made efforts in recent months to find compromises with Washington on trade. In November, the country vowed to buy more aircraft, liquified natural gas and other products from the U.S.
Vietnamese Prime Minister Pham Minh Chinh last week asked Cabinet members to prepare for the impact of a possible global trade war this year.
Vietnam was a major beneficiary of the trade barriers Trump imposed on Beijing in his first term, which spurred manufacturers to shift production out of China. Consequently, the Southeast Asian nation became one of the largest recipient of foreign direct investment from China.
The U.S. may double its tariffs on Vietnam to 8% if it enforces “full tariff reciprocity,” Michael Wan, senior currency analyst at MUFG Bank said in a note on Monday. That said, he expects a less extreme U.S. stance on the country, with “some sector-specific tariffs” as a more likely possibility.
India readies concessions
India could be the most vulnerable to “reciprocal” tariffs as it imposes duties on U.S. imports that are significantly steeper than U.S. levies on shipments from India, according to estimates by several research firms.
U.S. tariffs on India could rise to above 15% from 3% currently, according to MUFG Bank’s Wen.
New Delhi in its union budget earlier this month reduced tariffs on a range of products including motorcycles, electronic goods, critical minerals and lithium ion batteries. Finance Secretary Tuhin Kanta Pandey said in an interview that “we are signaling that India is not a tariff king.”
Indian Prime Minister Narendra Modi is reportedly prepared to discuss further tariff cuts across a dozen sectors and buying more energy and defense equipment from the U.S. at his meeting with Trump later this week.
Narendra Modi, India’s prime minister, left, and U.S President Donald Trump, arrive for a news conference at Hyderabad House in New Delhi, India, on Tuesday, Feb. 25, 2020.
T. Narayan | Bloomberg | Getty Images
India’s surplus with the U.S., its third-largest trading partner, reached $45.7 billion last year. Notably, the country’s imported agricultural goods were subjected to hefty 39% duties.
During Trump’s first term, he had warm relations with Modi, but during his campaign for re-election, Trump had called India a “very big abuser” with tariffs.
In a phone call with Modi last month, Trump emphasized the importance of India buying more U.S.-made security equipment to reach a “fair bilateral trading relationship,” according to the White House statement.
Some market watchers floated the idea that the two sides may resume discussion on the long-awaited U.S.-India free trade accord. The Joe Biden administration had reportedly rebuffed India’s interest in exploring a free trade agreement, Indian local media reported, citing the country’s commerce and industry minister.
“Such a deal now would require substantial tariff reductions by New Delhi because it has much higher tariff rates than Washington; Trump believes in some degree of reciprocity,” according to Kenneth Juster, distinguished fellow at Council on Foreign Relations.
India could also offer to shift its oil imports from Russia toward the U.S. significantly to align with Trump’s plans of boosting oil and gas exports, said Arpit Chaturvedi, South Asia adviser at Teneo.
Japan as most favored nation
Japan appears to have secured a positive relationship with Trump and could be be shielded from higher tariffs “for now,” analysts said, as Prime Minister Shigeru Ishiba wrapped up a whirlwind visit to Washington over the weekend.
U.S. President Donald Trump gifts Japanese Prime Minister Shigeru Ishiba a book during a joint press conference in the East Room at the White House on February 07, 2025 in Washington, DC.
Andrew Harnik | Getty Images News | Getty Images
Tokyo maintains relatively low tariffs of around 3.7% on countries with MFN status, according to WTO data. That suggests “little scope for substantial increases in tariffs on Japanese goods,” Kyohei Morita, chief Japan economist at Nomura said in a note Monday.
During the summit last week, Japan agreed to import more natural gas from the U.S. and expressed interest in a project to deliver LNG through a pipeline from northern Alaska.
The two leaders also agreed on a compromise that instead of acquiring U.S. Steel, Japan’s Nippon Steel will “invest heavily” in the U.S. firm. Japan will provide technology for U.S. Steel to manufacturer better quality products in the U.S., Ishiba said.
Japan, which has been the largest foreign investor in the U.S. for five straight years, also pledged to expand that investment to $1 trillion, from $783.3 billion in 2023.
“While Japan may not avoid all the effects of future US tariff policies, Tokyo may avoid the targeted treatment seen with countries like Canada, Mexico, and China,” James Brady, vice president of Teneo said in a Saturday note.
“It may even hope for more lenient trade treatment than other major economies, as it appears to enjoy the status of one of Trump’s most favored nations,” Brady said.
China looks ready to talk
Chinese national flags flutter on boats near shipping containers at the Yangshan Port outside Shanghai, China, February 7, 2025.
Go Nakamura | Reuters
Beijing’s tit-for-tat measures — including 15% levy on U.S. coal, liquified natural gas, 10% duties on crude oil, farming equipment, cars and pickup trucks — are believed to be modest and restrained.
The tariff package is estimated to cover $13.9 billion worth of China’s imports from the U.S. in 2024, according to data compiled by Nomura, accounting for 8.5% of China’s total U.S. imports and just 0.5% of China’s total imports.
That is significantly lower than the $50 billion worth of U.S. goods targeted during Trump’s first term, said Tommy Xie, head of Asia macro research at OCBC Bank in a note on Monday.
The “calibrated approach” signaled that “China is opting for a more diversified response,” with non-tariff countermeasures such as export controls and regulatory probes into U.S. corporates, while also “leaving room for further negotiations,” Xie added. More
