Disclaimer: Views in this blog do not promote, and are not directly connected to any L&G product or service. Views are from a range of L&G investment professionals, may be specific to an author’s particular investment region or desk, and do not necessarily reflect the views of L&G. For investment professionals only.
Chart of the month: Which countries could be most vulnerable to tariffs?
President Trump’s return to office has seen renewed threats of tariffs on numerous trading partners. Yet how much different countries are affected could vary depending on their trade balance and US import share.
If President Trump’s first few weeks are anything to go by, countries which run large bilateral trade surpluses against the US could potentially be at risk of continued trade action, with Canada, Mexico and China all in focus.
Since the first wave of US tariffs in 2018, trade action appears to have had some effect. A move in trade away from China is clearly reflected in the US import statistics, with China losing US market share at the expense of rivals in Asia, Europe, and America.
However, if the arrival of what the White House might potentially view as “balanced trade” (no trade imbalances at all) remains a distant prospect, that could leave the global trading system vulnerable to swings in trade news.
The UK is something of a trade outlier by this measure, being one of the few major economies that currently runs a US trade deficit. Furthermore, with UK trade policy now separate from the wider EU, it’s possible the UK might escape being on the receiving end of any change in tariffs resulting from the White House’s recent policy agenda.
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