RBI ESINABARD ESISEBI
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Context:
S&P Global Ratings claims that several Asia Pacific economies may be the very targets of an advancing higher tariff regime under a presumed Trump administration. India, South Korea, and Thailand have been identified to be at most risk regarding US trade retaliation. With their high exposure to the US, Vietnam, Taiwan, Thailand, and South Korea are more susceptible to tariff influence.
Risks of Trade Policy & Tariffs
- The Trump administration has already imposed:
- 10% additional tariffs on Chinese imports.
- 25% on steel and aluminum imports.
- Trump has announced plans to ratchet up reciprocal tariffs against some key US trade partners, including India.
Economic Uncertainty & Tariffs Ahead
- S&P warns more trade disruptions:
- High uncertainty due to the US’s extensive powers to impose tariffs.
- Bilateral trade negotiations greatly, indeed, govern tariff policy.
Tariff Discrepancies in Asia Pacific
- Some Asia Pacific nations impose higher tariffs on US goods than the reverse.
- Such discrepancies may make them easy prey for retaliatory measures.
- The scope and methodology of such tariff comparisons will determine much of our future trade policy.
India’s Vulnerability to US Tariffs
- India, South Korea, and Thailand are ranked highest in retaliatory risk against US tariffs.
- S&P’s evaluation proceeded with the use of the weighted average tariff rate in estimating potential risks.
- Although vulnerable, India’s huge domestic market provides it with some insulation against external trade shocks.
Further negotiations and trade policy choices will form the foundation for deciding upon tariff actions.
Key sectors such as manufacturing, steel, and technology are likely to bear greatly increased trade barriers.
