President-elect Donald Trump has proposed significant tariff increases on goods from Mexico, Canada, and China, as well as imposing tariffs on all imported goods. These measures are set to reshape the trade relationships the US has with its major trading partners.
The implementation of these tariffs is expected to have a notable impact on Asian countries that heavily rely on exports to the US to drive their economies. However, Trump's planned tariffs on Chinese goods could potentially benefit certain countries in Southeast Asia, as manufacturing facilities may shift from China to other locations within the region.
In 2023, the US stood as the primary destination for exports from China, Vietnam, Thailand, India, and Japan. Notably, six out of the top 10 countries from which the US imports goods are situated in Asia. Despite this, the trade flow is unbalanced, with the US holding trade deficits with many Asian nations, indicating that the US imports more from these countries than it exports to them. During the initial nine months of 2024, the US recorded its largest trade deficit with China.
While the trade deficit with China has shown signs of narrowing in recent times, deficits with countries like Vietnam and Thailand are on the rise as the US seeks to reduce its reliance on Chinese imports.
Trump's objective of increasing tariffs on all imports to diminish or eliminate the trade deficit is met with caution from economists. They warn that these tariffs will essentially function as a tax burden on Americans, leading to increased prices domestically as companies transfer the elevated cost of imports to consumers.
