COUNTRIES MOST AT RISK FROM TRUMP'S TARIFF

"Trade wars are like a ticking time bomb. Tariffs are going to hurt both sides, especially in the long run."
Warren Buffet
“When people talk about trade wars, they don't realize that we're really the piggy bank for the world. We’re the ones who are getting ripped off.”
Donald Trump (2018)

Buffet's is the traditional textbook view which holds true when tariffs are imposed by a country to make their own products more competitive. However, targeted tariffs need not necessarily have a lose-lose outcome. The result of Trump's tariffs against China for unfair trade practices in his first presidency is mixed. China had pegged the Renmenbi to USD which made their products cheap. The tariff was a success for Trump when the Chinese eventually allowed their currency to appreciate.

This time Trump has once again promised tariff but details are not out. It's one of his election promises to bring manufacturing jobs back and he intends to do it by tariffs, punishing American manufacturing companies that either relocated or outsourced overseas. His objective for this tariff is reshoring of manufacturing back to US. At the simplistic level, it makes sense. But no US manufacturer or US trading partners are going to take it lying down. There will be reciprocal tariffs and supply chain restructuring. The US is a higher cost country and a sudden return of manufacturers will push up wages making exports less competitive. But who knows what the longer term future holds. For example, if dedollarisation works out, the USD may weaken to make American exports competitive again. Or Trump's fracking policies may reduce energy cost for US manufacturers giving them a competitive edge. Or tariffs may be expanded to make US products competitive. That would be going down Warren Buffet's rabbit hole.

US MANUFACTURING INDUSTRIES THAT MOVED OFFSHORE
Manufacturers relocate due to globalization, cost considerations, and the development of global supply chains. These are the US manufacturing industries that have shifted offshore and where they went.

1. Electronics Manufacturing
Products: Consumer electronics, semiconductors, and components like printed circuit boards (PCBs).
Destinations: China, Taiwan, Vietnam, and Malaysia dominate as hubs due to low labor costs and established infrastructure.
2. Textile and Apparel Production
Products: Clothing, footwear, and home textiles.
Destinations: Bangladesh, Vietnam, India, and Mexico are common choices, leveraging cheaper labor
3. Automotive Components
Products: Parts such as transmissions, tires, and electronics for vehicles.
Destinations: Mexico, Canada, and Asian countries like China and South Korea are key locations, benefiting from proximity or cost efficiency.
4. Steel and Aluminum Production
Products: Raw steel, aluminum, and related products.
Destinations: China and other countries with lower energy and labor costs have taken over significant portions of production
5. Pharmaceutical and Chemical Manufacturing
Products: Generic drugs, APIs (Active Pharmaceutical Ingredients), and specialty chemicals.
Destinations: India and China are leading producers due to cost-effective production and regulatory considerations.
6. Furniture and Wood Products
Products: Assembled furniture, flooring, and cabinetry.
Destinations: Vietnam and China are dominant due to their manufacturing scale and access to raw materials.
7. Consumer Goods
Products: Toys, household goods, and appliances.
Destinations: China and Southeast Asia, where production costs and supply chains align well with consumer product demands.

TOP 10 COUNTRIES WHERE US GOODS COME FROM:
(Based on countries share of US annual imports of US$3.83T (and key products))

1.   Mexico (15.4%): Vehicles, machinery, and electronics.
2.   China (15%): Electronics, machinery, and textiles.
3.   Canada (12.1%): Energy products, vehicles, and machinery.
4.   Vietnam (3.9%): Electronics, textiles, and footwear.
5.   Germany (3.8%)  : Automobiles and parts, pharmaceuticals, machinery.
6.   Japan (3.8%): Automobiles & parts, machinery, electronics & semiconductors.
7.   South Korea (3.8%): Electronics, vehicles, and machinery.
8.   Taiwan (3%): semiconductors, electronics, and machinery.
9.   India (2.8% : pharmaceuticals, textiles, and jewelry.
10. Italy (2%): luxury goods, vehicles, and machinery.

US IMPORTS FROM ASEAN COUNTRIES:
(Based on countries' share of US annual imports of US$3.83T (and key products))

1.   Vietnam (3.9%): Electronics, textiles, and footwear.
2.   Malaysia (2.5%): Semiconductors, other electronics, machinery, and medical devices
3.   Thailand (1.7% : Automotive parts, machinery, and electronics
4.   Singapore (1.3%: Chemicals, machinery, and electronics
5.   Indonesia (0.9%): Rubber products, footwear, and textiles

TOP 15 COUNTRIES MOST AT RISK:
(Based on how much of their exports to US as a % of total exports))

1.    Mexico 80% or US$154b
2.    Canada 75% or US$121B
3.    Vietnam 29% or US$39B
4.    Japan 19% or US$38B
5.    Bangladesh 16% or US$8
6.    China 16.5% or US$150B
7.    South Korea 14% or US$38B
8.    Taiwan 12.5% or US$30B
9.    Indonesia 11% or US$9B
10.   Thailand 11% or US$17B
11.   Malaysia 11% or US$25B
12.   Italy 10% or US$20B
13.   France 8% or US$16B
14.   Germany 8.7% or US$38B
15.   Singapore 6% or US$13B

TRADE AGREEMENTS AND PROTECTION FROM TARIFF:
Here's an overview of whether these countries have bilateral trade agreements with the U.S. and the extent to which such agreements might shield them from tariffs:

1. Mexico
Agreement: The U.S.-Mexico-Canada Agreement (USMCA) replaced NAFTA in 2020.
Protection from Tariffs: Yes. USMCA establishes free trade conditions for most goods. However, certain sectors like steel and aluminum have seen tariffs imposed under national security claims​
2. Canada
Agreement: Part of the USMCA.
Protection from Tariffs: Yes. Similar to Mexico, most trade is tariff-free, but tariffs have been applied on certain goods under national security or other pretexts.
3. Vietnam
Agreements: No FTAs; trade is governed under WTO rules and broader frameworks like ASEAN-U.S. ties.
Protection from Tariffs: Limited; tariffs can be applied.
4. Japan
Agreement: The U.S.-Japan Trade Agreement (2020) focuses on agricultural and industrial goods.
Protection from Tariffs: Partial; the agreement reduces tariffs on covered goods but doesn't eliminate all trade barriersBr /> 5. Bangladesh
Agreement: No FTA; Bangladesh benefits from generalized tariff preferences (GSP), although the U.S. suspended its GSP benefits in 2013.
Protection from Tariffs: Limited protection due to the absence of an FTA
6. China
Agreement: No comprehensive bilateral free trade agreement (FTA). Trade is governed under WTO rules.
Protection from Tariffs: No, China has been a primary target of U.S. tariffs, especially under the Trump administration during the U.S.-China trade war.
7. South Korea
Agreement: The U.S.-Korea Free Trade Agreement (KORUS) provides strong bilateral trade rules.
Protection from Tariffs: Yes, KORUS offers substantial protection, but some tariffs on specific goods (like steel) have been implemented
8. Taiwan
Agreement: No FTA; Taiwan and the U.S. maintain strong trade ties but rely on broader frameworks and negotiations.
Protection from Tariffs: No direct protection.
9. Indonesia
Agreements: No FTAs; trade is governed under WTO rules and broader frameworks like ASEAN-U.S. ties.
Protection from Tariffs: Limited; tariffs can be applied
10. Thailand
Agreements: No FTAs; trade is governed under WTO rules and broader frameworks like ASEAN-U.S. ties.
Protection from Tariffs: Limited; tariffs can be applied.
11. Malaysia
Agreements: No FTAs; trade is governed under WTO rules and broader frameworks like ASEAN-U.S. ties.
Protection from Tariffs: Limited; tariffs can be applied.
12. Italy
Agreement: Trade is governed under the broader U.S.-EU framework; no bilateral FTA.
Protection from Tariffs: Limited. EU nations have faced U.S. tariffs, particularly during disputes (e.g., aircraft subsidies).
13. France
Agreement: Trade is governed under the broader U.S.-EU framework; no bilateral FTA.
Protection from Tariffs: Limited. EU nations have faced U.S. tariffs, particularly during disputes (e.g., aircraft subsidies).
14. Germany
Agreement: Trade is governed under the broader U.S.-EU framework; no bilateral FTA.
Protection from Tariffs: Limited. EU nations have faced U.S. tariffs, particularly during disputes (e.g., aircraft subsidies).
15. Singapore
Agreements: U.S.-Singapore Free Trade Agreement (FTA) offers significant trade benefits.
Protection from Tariffs: Protected under its FTA.

While bilateral agreements provide legal frameworks for tariff exemptions, they do not guarantee absolute protection if the U.S. government invokes extraordinary measures under domestic laws or shifts policy priorities.
.
Trump's tariffs, such as those during his first presidency, often bypassed existing trade agreements by invoking national security concerns or trade imbalances. Even countries with FTAs (e.g., Canada, South Korea) faced tariffs in some sectors.

Some thoughts from the above info:

1. We can see why India gave two hoots to Biden and Modhi is openly supportive of Trump.
2. Mexico will kow-tow to Biden or Trump, whoever is president. It's the reason why Trump was dead sure in 2016 that Mexico will pay for the construction of the border wall.
3. Canada needs to kow-tow to US who has always given them special treatment. But may be punished due to Trudeau's extremist position against Trump. However, Trudeau is facing a vote of confidence in parliament and Trump's tariff promises may just be the hand that flicks the irascible Trudeau off his throne and spare Canada from the wrath of US under a president who promises to bring common sense back to the government.
4. Vietnam and Bangladesh may not be at high risk because major exports to US are in labour-intensive low tech textiles industry.
5. China has reduced its dependency on trade with US. With exports to US comprising of 16.5% of its total exports, tariffs will still hurt but not to the sort of critical extent faced by Canada and Mexico. China therefore, has much strength going into a trade negotiation with the Trump admin.
6. Taiwan is a critical player for its export of semi-conductors to US manufacturing companies. TSMC (Taiwan Semiconductor Manufacturer Co) has already set up plants in US during Trump's first presidency.
7. Singapore has lesser worries than any of the other countries in terms of direct impact given exports to US is only 6% of total exports representing 3% of GDP. It has played it's trade cards a little better than fellow Asean members being the only country to secure an FTA with the US. If the FTA does not protect from Trump's tariff assaults, Singapore's agreement allowing US access to military facilities may be critical factor in the island's favour, particularly in the current state of heightened security tension.

There may be justification for tariffs if it is targeted and used as a tool to smoothen imbalances of trade due to unfair practices, for reshoring, to protect a sector considered a national security concern, or to shelter some domestic industries to buy time for them to develop fully, A general tariff to make a country's product price competitive is inefficient and a ticking time bomb, to quote Warren Buffet. A tariff to be used as a political weapon is reprehensible. The details of Trump's trade policies are still to be seen.. 




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