Trump has assured American voters that 60% tariffs would be imposed on Chinese goods and 10-20% on good from other countries which is bound to cause serious economic crisis in Asia.
US President Donald Trump’s promise to the American public to ‘Make America Great Again’ is coming at the cost of Asian markets, which have the implications to cause serious adverse effects to the international economy. The Republican candidate’s election campaign on making promises of levying high tariffs on imports from Asia, which are now going to come into fruition.
He has assured American voters that 60% tariffs would be imposed on Chinese goods and 10-20% on good from other countries. During his previous Presidency, Trump had levied US $380bn worth tariffs on Chinese goods and the Biden administration had kept these in place. These fresh tariff proposals are bound to cause serious economic crisis in Asia.
According to Singapore-based Hinrich Foundation, 10 ASEAN countries have a 90% trade-to-GDP ratio. These countries were beneficiaries of the trade wars between Washington and Beijing during Trump’s first tenure, as it helped increase their export. However, this time around, the blanket tariff proposal across Asia is bound to have serious implications on these economies. Financial analysts are issuing warnings that unlike his previous term, Trump might not wait for two or three years to impose these taxes and may instead to resort to its implementation at the earliest.
China may divert some of its production to other Southeast Asian countries in order to by-pass these duties, such as Vietnam. The country which had earlier benefited from the US-China trade war, now worries that it may suffer collateral damage from Trump’s new tariffs. The automobile, electric vehicles, semiconductor industries etc are bound to be the hardest, once these tariffs are in place. It remains to be seen how China-US relations will take shape in the forthcoming months and by extension how the global supply chain is affected.
In order to circumvent these new protectionist policies, Asian companies are resorting to investments and other soft-power channels to improve their countries’ relations with US. Recently, a Vietnamese company partnered with the Trump Foundation to build a hotel and to develop a golf course worth US $1.5 billion. Taiwanese and South Korean companies have also invested approximately US $117 billion in the US with the hope of receiving grants and financial support, should the new tariffs be imposed.
While Asia is gearing up for sleepless nights, in light of recent events, Wall Street executives are celebrating Trump’s victory. For Wall Street, this election result would mean favourable business regulations, and newer deals and partnerships. While some are wary of Trump’s policies and have criticized his unpredictable nature, mostly, American business corporations welcome Trump into the White House.
Fewer regulations in the banking and cryptocurrency sector, tax breaks for corporations and widespread deregulations for businesses are all expected in the Trump 2.0 administration. In September, Trump had announced that corporate tax would be decreased from 21% to 15% for companies which would make their products in the US.
Wall Street executives have said that Trump is more open to prospect of more mergers and acquisitions as compared to his predecessor. They also expect less stringency with banks. Trump’s promise to reallow fracking and backing new pipelines in order to support the oil and gas industry helped him gain millions of dollars to support his campaign. He is likely to make good on these promises and ensure that drilling licenses cancelled by Biden will be restored. The promise of tax cuts was reiterated for the oil and gas industry too.
Trump has made no claims to show signs of environmental consciousness unlike his predecessor. The 78-year-old has been very frank about his business-first approach during his campaign for office, and now that he as the people’s mandate, Trump is sure to prioritise what he deems are ‘America’s needs’ over that of the rest of the world.
