Nomura has recently highlighted the potential vulnerability
of emerging Asian economies, particularly India
and Thailand, to reciprocal tariffs from the United States.
The financial research firm warns that these tariffs could
be imposed based on multiple factors, including tariff rates,
value-added tax (VAT), and non-tariff barriers.
According to Sonal Varma, Chief Economist for Asia
ex-Japan and India, Nomura, emerging Asian economies
face higher relative tariff rates on US exports.
The sectors most likely to be impacted include animals,
vegetables, food products, textiles, clothing, footwear, and
transportation equipment. Agricultural products and
transportation sectors are expected to be particularly
sensitive to potential trade restrictions.
US President Donald Trump has been vocal about his
intention to implement reciprocal tariffs, emphasising a
strategy of protecting domestic manufacturing.
During a recent address to Congress, he stated
unequivocally that products not manufactured in America
would face significant tariffs, positioning this as a response
to decades of what he perceives as unfair trade practices by
other countries.
The complexity of potential trade barriers extends beyond
traditional tariffs. Non-tariff barriers, which are more
challenging to quantify, encompass import policies, sanitary
measures, technical trade barriers, export subsidies, and
intellectual property protection concerns.
A 2024 United States Trade Representative (USTR) report
identified several Asian countries, including China, India,
Indonesia, the Philippines, Taiwan, and Thailand, as
having heightened non-tariff barriers.
Nomura’s analysis suggests that the risk is not limited to
direct trade. Countries like Vietnam, Malaysia, and
Thailand could be vulnerable if their exports containing
Chinese value-added are perceived as circumventing
existing tariffs.The research firm utilised the World Trade
Organisation’s Integrated Trade Intelligence Portal to
objectively assess these non-tariff barriers, finding China
and India to have the most significant impediments.
In terms of direct economic exposure, Vietnam appears
most at risk, with 25.1 per cent of its gross domestic
product tied to US exports in 2024.
Other significantly exposed countries include Taiwan (14
per cent), Thailand (10.4 per cent), Malaysia (10.3 per cent),
and Hong Kong (9.5 per cent).
India’s exports to the US, representing 2.2 per cent of its
GDP, could also be potentially impacted by universal tariff
implementation.
Interestingly, Nomura noted that Singapore, with its low
trade and non-trade barriers and a trade deficit with the
US, seems least exposed to potential reciprocal tax
measures.
Developed Asian economies like Japan, South Korea, and
Taiwan, which maintain trade surpluses with the US, may
face increased scrutiny through sanitary and phytosanitary
measures.
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