There has been speculation that emerging Asian countries may face a ‘lose-lose’ situation in which they suffer damage from U.S. President Donald Trump’s tariffs and the intensification of the U.S.-China trade war. (Image courtesy of Yonhap)
SEOUL, Feb. 13 (Korea Bizwire) — Emerging Asian economies could face significant setbacks if U.S. President Donald Trump intensifies his trade war policies, potentially creating a lose-lose situation for nations that have benefited from global supply chain shifts in recent years, according to a Reuters analysis published on January 11.
While Trump initially targeted countries with the largest absolute trade deficits with the United States — China, Canada, and Mexico — nine of America’s top 15 trade deficit partners are now Asian nations, the analysis found.
These Asian economies, which maintain substantial trade surpluses with the United States relative to their GDP, could see impacts across multiple sectors, including growth, investment, and domestic consumption, if the Trump administration implements higher tariffs.
According to Citigroup data, Thailand’s trade surplus with the United States has surged 343% since 2017, when Trump’s first administration took office. Vietnam has seen a similar trajectory, with its surplus increasing 222% during the same period.
The analysis highlighted South Korea’s trade surplus with the United States, which is more than double China’s when measured as a percentage of GDP. Taiwan’s surplus approaches 10% of its GDP, underscoring the region’s vulnerability to potential trade actions.
The Heritage Foundation, a conservative think tank, identified several Asian nations — including India, Thailand, Taiwan, and Vietnam — as having relatively high tariffs on U.S. goods in its “Project 2025″ policy recommendations released during the last U.S. presidential election.
U.S. President Donald Trump attends the Super Bowl LIX in New Orleans, Louisiana, U.S. (Image courtesy of Yonhap)
Analysts at Nomura Holdings suggest that Asian emerging markets face heightened risks due to their comparatively high tariffs on U.S. goods, predicting increased negotiations between these nations and Trump. Morgan Stanley projects that the United States might raise tariffs on India and Thailand by 4 to 6 percentage points to reduce tariff disparities.
Reuters noted that Asian emerging markets have previously benefited from both American China Plus One and Chinese U.S. Plus One strategies. U.S. companies have increasingly invested in third countries with strong economic ties to China rather than investing directly in China — a trend that intensified during Trump’s first term and the COVID-19 pandemic.
Data from JP Morgan indicates that China’s export dependency on the United States decreased from 21% in 2000 to 16% in 2023, while its exports to emerging markets have grown from 16% to 44%.
Thailand and Vietnam, which have recently attracted increased investment amid U.S.-China tensions, are now taking preemptive measures to address their trade surpluses. Thailand has asked its petrochemical companies to increase U.S. ethane imports by at least 1 million tons and plans to boost imports of American agricultural products, including soybean meal. Vietnam intends to increase imports of U.S. aircraft and LNG.
M. H. Lee (mhlee@koreabizwire.com)
