New Delhi, Mar 5 (KNN) Nomura has recently highlighted the potential vulnerability of emerging Asian economies, particularly India and Thailand, to reciprocal tariffs from the United States.
The financial research firm warns that these tariffs could be imposed based on multiple factors, including tariff rates, value-added tax (VAT), and non-tariff barriers.
According to Sonal Varma, Chief Economist for Asia ex-Japan and India, Nomura, emerging Asian economies face higher relative tariff rates on US exports.
The sectors most likely to be impacted include animals, vegetables, food products, textiles, clothing, footwear, and transportation equipment. Agricultural products and transportation sectors are expected to be particularly sensitive to potential trade restrictions.
US President Donald Trump has been vocal about his intention to implement reciprocal tariffs, emphasising a strategy of protecting domestic manufacturing.
During a recent address to Congress, he stated unequivocally that products not manufactured in America would face significant tariffs, positioning this as a response to decades of what he perceives as unfair trade practices by other countries.
The complexity of potential trade barriers extends beyond traditional tariffs. Non-tariff barriers, which are more challenging to quantify, encompass import policies, sanitary measures, technical trade barriers, export subsidies, and intellectual property protection concerns.
A 2024 United States Trade Representative (USTR) report identified several Asian countries, including China, India, Indonesia, the Philippines, Taiwan, and Thailand, as having heightened non-tariff barriers.
Nomura’s analysis suggests that the risk is not limited to direct trade. Countries like Vietnam, Malaysia, and Thailand could be vulnerable if their exports containing Chinese value-added are perceived as circumventing existing tariffs.
The research firm utilised the World Trade Organisation’s Integrated Trade Intelligence Portal to objectively assess these non-tariff barriers, finding China and India to have the most significant impediments.
In terms of direct economic exposure, Vietnam appears most at risk, with 25.1 per cent of its gross domestic product tied to US exports in 2024.
Other significantly exposed countries include Taiwan (14 per cent), Thailand (10.4 per cent), Malaysia (10.3 per cent), and Hong Kong (9.5 per cent).
India’s exports to the US, representing 2.2 per cent of its GDP, could also be potentially impacted by universal tariff implementation.
Interestingly, Nomura noted that Singapore, with its low trade and non-trade barriers and a trade deficit with the US, seems least exposed to potential reciprocal tax measures.
Developed Asian economies like Japan, South Korea, and Taiwan, which maintain trade surpluses with the US, may face increased scrutiny through sanitary and phytosanitary measures.
(KNN Bureau)
