Goldman Sachs Trumps tariff policy will threaten many Asian countries especially Taiwan
Will Trump’s victory make America great again? Will China face severe trade sanctions and be subject to tariffs of at least 60%-100%, and will Americans really benefit from this? Is protectionism a positive or negative for the global economy? Financial economists provide their views.
The trade deficit between the United States and China has gradually decreased from $346.8 billion during Trump’s presidency in 2016 to $279.1 billion in 2023 under the Biden administration. Despite the apparent sanctions against China under protectionism, most of the United States’ trade orders have shifted to other countries such as Vietnam, Mexico, Indonesia, and Taiwan. Mari Pangestu, former Indonesian Minister of Trade, pointed out that although the tariff policy of the Trump administration has led to a shift in trade volume to these countries, the supply chain still relies heavily on China.
Trump is about to return as the President of the United States and immediately target China, increasing tariffs. The impact may not only be on China, but other countries with a trade deficit with the United States will also face more challenges.
According to CNBC, Goldman Sachs stated that Trump’s victory in the US election will not only cause fear in China but also increase the trade deficit for many Asian countries that rely on Chinese manufacturing. Asian suppliers will reduce their deficits by transferring their supply chains to other production sites.
Andrew Tilton, Chief Asia-Pacific Economist at Goldman Sachs, stated in a recent report that Trump and his possible appointees will prioritize reducing the bilateral trade deficit. Therefore, the risk of the United States imposing tariffs on other Asian economies, excluding China, will also increase. He described this risk as similar to a “whack-a-mole” game, where one mole is hit, and another one pops up. Suppliers will have countermeasures to deal with the new policies, possibly by transferring to avoid business losses, but they will also face tariffs in other locations.
Analysts at Barclays Bank also point out that protectionist trade policies may have the most significant impact on Asian emerging markets during Trump 2.0. The proposed tariffs by Trump may have a greater impact on open economies, with Taiwan being more vulnerable compared to South Korea or Singapore.
In addition to the significant impact of protectionism on emerging economies in Asia, many market analysts believe that the cost will be passed on to American consumers. Importers in the United States will significantly increase prices due to high tariffs and transfer this expenditure to consumers. Trump’s protectionist policies will lead to price hikes and worsen inflation. The National Retail Federation revealed in a survey that the new tariff policy will reduce Americans’ purchasing power in products such as clothing, toys, furniture, household appliances, footwear, and travel items, estimating losses of $46 billion to $78 billion annually.
By 2025, it may be necessary to eat instant noodles for a whole year, and even instant noodles will become more expensive. It’s time to start stocking up for this year.
