Customs for better America could harm Asia

Customs for better America could harm Asia

The elected President Donald Trump announced on Monday via social media massive increase in tariffs to goods from Mexico, Canada and China, which should apply from the first day of his second term. During his election campaign, he had already promised to raise new tariffs on all imported goods. This could change the relationship between the United States to its most important trading partners, especially in Asia, and have a fundamentally effective effect on their economies.

consequences of the planned customs increases

Although the exact consequences are uncertain, the tariffs that represent a tax on imported goods are expected to burden countries in Asia that rely on sales in the United States to promote their economy.

export figures from Asia

Last year, Japan's exports to the United States were $ 145 billion, which was about 20% of the country's entire export. In 2023, the USA for South Korea was the second largest export market to China, with a trading volume of $ 116 billion.

China's factories and the relocation

The planned tariffs on Chinese products could benefit some countries in Southeast Asia, since many factories from China could be shifted to other regions of these countries. The shoe retailer Steve Madden announced at the beginning of the month to halve his production capacities in China to avoid Trump's tariffs. Instead, the company wants to produce in countries such as Cambodia, Vietnam, Mexico and Brazil.

The trade balance of the USA

In 2023, the USA was the largest recipient of exports from China, Vietnam, Thailand, India and Japan. In addition, the United States was the second largest importer of goods from South Korea and Indonesia, directly behind China, and took third place for Malaysia and Singapore. With regard to the entirety of imports, Mexico came first, followed by China and Canada. Six of the ten largest countries of origin for American imports are in Asia.

trade deficit with Asian countries

However, the flows of goods are not mutual because the United States has a trade deficit with many Asian countries. This means that the USA imports more from these countries than they export. In the first nine months of 2024, the USA recorded the largest trade deficit with China. Mexico followed in second place, while Vietnam ranked third with a deficit of $ 90.6 billion. Japan and South Korea were also one of the top 10.

changes in the trade strategy

Although the trade deficit with China was reduced last year, deficits with countries such as Vietnam and Thailand are increasing, while the United States is trying to detach itself from Chinese imports. Trump explains that he wants to increase the tariffs to all imports in order to reduce or even eliminate the trade deficit. However, economists warn that its tariffs effectively warn a represent the companies, since the companies pass on the increased import costs to the consumers become.