Trump tariffs majorly target emerging economies particularly in South-East Asia: Report

ANI April 5, 2025 188 views

A new Systematix Research report highlights the severe economic impact of Trump's tariff strategies on emerging markets. Southeast Asian economies are expected to be the most heavily impacted, facing potential declines in per capita income and productivity. The report warns of significant challenges including reduced foreign investments, slower capital expenditure, and declining household incomes. These tariffs could fundamentally reshape global trade dynamics and economic growth patterns in emerging economies.

"Every 100bps decline in global trade openness results in a 200-600bps decline in per capita income" - Systematix Research Report
New Delhi, April 5: The maximum increase in tariffs announced by US President Donald Trump is targeted at emerging economies, particularly those in Asia, according to a report by Systematix Research.

Key Points

1

Trump tariffs target 52 major countries contributing 66% of US imports

2

Southeast Asia faces steepest rise in economic challenges

3

Global trade openness decline threatens emerging market productivity

The report stated that the analysis of regional averages showed that Southeast Asia faces the steepest rise in tariffs, followed by countries in Eastern and Continental Europe, and the Middle East.

It said, "The maximum increase in tariffs is on emerging economies, particularly in Asia and Eastern Europe, with Southeast Asia, followed by Eastern and Continental Europe, and the Middle East."

The so-called "Liberation Day" tariff shock is expected to have a deep impact on emerging markets (EMs), making the post-2008 experience of rising protectionism relevant once again.

The report outlined a number of economic challenges that these economies could face as a result of increased tariffs. These include a narrowing of the growth differential between EMs and the rest of the world, a slowdown in real household incomes, and a widespread fall in savings and investment rates.

Additionally, rising public debt, weak performance by the private sector, and a fall in both Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) are highlighted as likely consequences.

The report also warned that every 100 basis point (bps) decline in global trade openness--measured as the sum of imports and exports relative to GDP--can lead to a 200-600 bps fall in per capita income and a 123 bps drop in productivity for emerging markets.

It said, "For the EMs, every 100bps decline in global trade openness (imports+exports/GDP) results in a 200-600bps decline in per capita income and a 123bps loss in productivity".

The weighted average tariff for the 52 major countries targeted--who together contribute 66 per cent of US imports--has been pegged at 34.6 per cent. In comparison, the remaining 170 countries, which contribute just 0.2 per cent to US imports on average, face a minimum tariff of 10 per cent.

For India, the report stated that the rise in global protectionism is expected to lead to slower private capital expenditure, reduced job creation, a decline in household disposable income and real consumption, and a further increase in both public and household debts.

Reader Comments

M
Michael T.
This is concerning for global trade. While I understand protecting domestic industries, these tariffs seem disproportionately targeting developing nations. The economic ripple effects could be massive. 😟
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Sarah L.
The article makes good points but I wish it included more perspectives from business owners in these affected regions. How are local entrepreneurs preparing for these changes?
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James K.
I work in manufacturing in Vietnam and we're already seeing orders slow down. These tariffs couldn't come at a worse time as we're still recovering from pandemic losses.
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Anita R.
The data about per capita income decline is staggering. 200-600bps is huge! This will set back development in these regions by years. There must be better ways to handle trade imbalances.
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David P.
While I generally support fair trade policies, these tariffs seem excessive. A 34.6% average is punishing. There should be more gradual implementation to allow economies to adjust.
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Lisa M.
Interesting analysis but I wonder how this compares to previous tariff implementations. Is this unprecedented or following historical patterns? Would help put it in context.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Tags:
Trump Tariffs Southeast Asia Economics Emerging Markets Trade Protectionism US Imports
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