You are now reading:
US: Looming tariff threats put Asia at risk
- Ahead of the 2 Apr “Liberation Day” tariff announcement by US President Trump, it is highly uncertain how Asian exporters will be affected, as a number of them are likely to be on the “Dirty 15” list, including Vietnam, Japan, South Korea, India, Thailand, and Malaysia.
- The upcoming tariff announcements could be a combination of: 1) countryspecific tariff, e.g. the earlier announcement of 25% imposed on all imports from Canada and Mexico; 2) reciprocal tariff i.e. the US would implement tariff rate on imports from others that match tariffs that those countries impose on US products; and 3) product specific, e.g. the 25% duty on all automobile imports into the US that is slated to take effect from 2 Apr.
- For Asian countries, particularly ASEAN-5, reciprocal tariff would be relatively easier to manage, since the average rates in those countries hover around 7- 8%. However, product specific tariff rates, especially in the double-digit range, could cause significant impact to these exporters and their supply chain partners. It is too early to assess the potential implications at this point, and we will await 2 Apr for better clarity.
Market in turmoil ahead of 2 Apr “Liberation Day”
As the 2 Apr “Liberation Day” approaches, financial markets have turned more jittery with exporters and businesses bracing for potentially hard-hitting import tariffs imposed by US President Trump.
On Mon (31 Mar), both Japan’s Nikkei 225 and Taiwan’s TAIEX slumped more than 4%, South Korea’s KOSPI fell 3%, Hong Kong’s Hang Seng and mainland Chinese equity indices dropped 0.5% – 1%, as the 25% tariff imposed on all automobile imports into the US starting from 3 Apr rippled through. Major US equity indices have declined in 3 out of the 4 weeks in Mar, with the S&P 500 posting a 4.6% decline and the Nasdaq falling more than 10% in 1Q25, for the worst quarterly performances for both indexes since 2022.
With some of the import tariffs already effective since Trump came to power earlier this year, including the 25% tariff on steel and aluminum imports since 12 Mar and 20% additional tariff imposed on imports originating from China since 4 Mar, it remains to be seen how the new tariff announcements would look like on Liberation Day.
To help think about what Trump would do on 2 Apr, we break down three ways the US tariff announcement could emerge: 1) country-specific tariff; 2) reciprocal tariff, and/or 3) sector-specific tariff, or a combination of these categories for different countries.
1) Country-specific tariff: Dirty 15 – Who are they?
The Dirty 15 list was first mentioned by US Treasury Secretary Scott Bessent as part of a broader tariff policy aimed at addressing trade disparities with other countries and are seen to have trade practices perceived as unfair to US trade interests.
It was not articulated which countries are on that list, but a look through US trade balances suggests that most of the Asian countries are on that list, alongside Canada, Mexico and a number of EU members. However, it was reported on 31 Mar that Trump said his tariff would hit “all countries” and that "I haven't heard a rumor about 15 countries, 10 or 15," he said when asked which nations would be affected (link).
2) Reciprocal tariff: What is the likely quantum?
In contrast to limiting to the number of countries contributing the most to US trade deficits, Trump has in a number of occasions talked about raising US tariffs to match the tariffs that other countries charge on US imports. These countries charge duty on US products, and is therefore considered “unfair” from the US perspective.
3) Product-specific tariffs – More complicated and damaging
US President Trump on 26 Mar announced a 25% tariff rate on all auto and auto parts imports (including engines, transmissions, electrical components) into the US effective 2 Apr (link). In an interview on 30 Mar, Trump said he “couldn’t care less” if automakers raised prices because of new tariffs (link).
It is estimated the auto tariffs could increase prices of cars in the US by USD 5,000 to USD 10,000 for domestically produced and imported vehicles. The new tariff could also push up costs of maintenance, repairs and insurance even for those not looking to buying a new or used car, according to CNN (link).
Suan Teck Kin
Head of Research
Follow Teck Kin on LinkedIn
Alvin Liew
Senior Economist
Follow Alvin on LinkedIn
