Trump's tariff threat casts a shadow over several Asian countries, not just China

The prospect of further tariffs on China has been heightened by Donald Trump’s election victory in the United States. But Goldman Sachs suggests that China may not be the only Asian nation in this situation.

In a recent note, Andrew Tilton stated that although the U.S. bilateral trade deficit with China has considerably diminished during the Trump administration. However, the deficits with other Asian exporters have climbed dramatically and may be subject to greater attention.

He stated, “There is a risk that — in a sort of ‘whack-a-mole’ fashion — burgeoning bilateral deficits could eventually prompt U.S. tariffs on other Asian economies, given Trump and some likely appointees’ focus on reducing bilateral deficits.”

A tariff is a charge on imported goods that the exporting nation does not pay. Therefore, businesses wishing to import goods into the United States will have to pay U.S. tariffs. It would eventually increase their expenses.

Tilton noted that “Korea, Taiwan, and especially Vietnam have seen large trade gains versus the U.S.” He said that Vietnam has profited from the rerouting of trade from China, while Korea and Taiwan’s positions are indicative of their “privileged positions” in the semiconductor supply chain.

Automobile exports account for about 30% of all shipments to the United States. South Korea’s trade surplus with the US reportedly hit a record $44.4 billion in 2023, the biggest surplus of any nation.

Goldman Sachs Opinion

According to Goldman Sachs, both India and Japan have trade surpluses with the United States. India’s surplus has grown significantly in recent years and Japan’s surplus staying mostly unchanged.

According to Tilton, these Asian trading partners may attempt in the future to reduce these surpluses and “deflect attention” in a number of ways, including by moving imports as close to the United States as feasible.

“In his second term as U.S. president, Mr. Trump is likely to have the biggest impact on Emerging Asia through trade policy,” analysts from Barclays Bank wrote in a report dated Friday.

According to the bank’s economists, led by Brian Tan. Trump’s proposed tariffs are expected to cause “greater pain” to the region’s more open economies. With Taiwan being more vulnerable to that threat than Korea or Singapore.

Goldman anticipates ongoing pressure to move some supply chains from China to Southeast Asia. Especifically India or Mexico, regardless of tariffs.

In addition to extra tariffs of 60% to 100% on goods imported from China, U.S. President-elect Trump has declared his plan to impose a blanket tariff of 10% to 20% on all imports. In the first half of 2025. Goldman anticipates that the United States will impose new tariffs on an average of 20% of Chinese goods.