The return of Donald Trump in his second term as the President of the United States has sparked concerns about the possibility of escalated tariffs on China and potentially on other Asian nations, as highlighted by Goldman Sachs.
Andrew Tilton, the Chief Asia-Pacific Economist at Goldman Sachs, highlighted that although the U.S. bilateral trade deficit with China has slightly decreased during the Trump administration, deficits with other Asian exporters have seen a significant increase and could potentially face heightened scrutiny.
The tariffs imposed by the U.S. are paid by companies importing goods into the country, leading to increased costs for them.
Tilton pointed out that South Korea, Taiwan, and Vietnam have witnessed significant trade gains with the U.S., with each country having unique contributing factors.
South Korea attained a record trade surplus of $44.4 billion with the U.S. in 2023, mainly driven by car exports.
Taiwan’s exports surged to a record $24.6 billion in the first quarter of 2024, with a substantial increase in IT and audio-visual products.
Vietnam also notably stood out with a trade surplus of $90 billion with the U.S. between January and September.
Goldman Sachs highlighted that India and Japan, along with other Asian nations, also maintain trade surpluses with the U.S., albeit with different trends.
Looking ahead, Tilton predicted that these Asian trading partners might seek ways to reduce their surpluses and divert attention, possibly by adjusting imports to the U.S. market.
Analysts at Barclays Bank noted that trade policy could significantly impact Emerging Asia during Trump’s second presidential term, with proposed tariffs potentially affecting more open economies like Taiwan.
The analysts underscored a potential hit on countries like Thailand and Malaysia, with Thailand expected to face a slightly larger impact.
While the U.S. trade deficit with China decreased to $279.11 billion in 2023 from $346.83 billion in 2016, trade volumes redirected to other countries like Vietnam, Mexico, Indonesia, and Taiwan following the tariffs implemented during the first Trump administration.
Despite these shifts, there remains a reliance on Chinese components within supply chains, signaling a challenge for subsequent trade policies. Goldman Sachs anticipates ongoing pressure to relocate supply chains from China to other regions like Southeast Asia, India, or Mexico.
Meanwhile, President-elect Trump’s tariff plans include a blanket tariff of 10% to 20% on all imports and additional tariffs of 60% to 100% on Chinese products. Goldman projects that the U.S. will levy additional tariffs averaging 20% on Chinese goods during the first half of 2025.
