The US executive order on retaliatory tariffs is likely to impact major economies that trade with the country and have high trade deficits with it. A Moneycontrol analysis of UN COMTRADE data shows that some countries will be hit harder as the US tries to reduce its $1.3 trillion trade deficit in 2024.
Key Deficit Areas
Of the total US trade deficit, 65% (over $800 billion) came from 20 major commodity groups. The biggest contributors to the deficit were:
- Cars: $160 billion
- Computers: $100 billion
- Mobile phones: $76 billion
The combined deficit from these top categories alone stood at $454 billion. Other deficit-heavy commodities include medicines, motor parts, vaccines, crude oil, batteries, furniture, and ornaments, making up one-third of US imports.
Countries Facing the Biggest Impact
Countries that export large amounts of these deficit-heavy commodities may face higher US tariffs:
- Mexico: The United States previously threatened 25% tariffs against Mexican imports. Mexico has seen its trade imbalance with the United States double, reaching over $200 billion, since 2020.
- China: While it has lessened since 2016, China still has a $300 billion trade deficit against the US.
- Canada: Another trade deficit contributor, it has also suffered from targeted trade policy by the United States.
- Japan & Korea: Both these nations send enormous quantities of automobiles to the United States and both could face higher tariffs.
- United Kingdom: Tariffs charged on goods carrying vehicles could also have an effect on the UK.
- Vietnam: This country appears in the top five exporters for 10 out of the 20 high-deficit commodities.
- India: While India leads three out of the 20 categories, it has a trade deficit with the United States that is less than Vietnam’s.
Trade Dependency & Risk Exposure
Countries that depend heavily on US trade may feel the most pressure from tariffs:
- Canada: 78% of exports go to the US.
- Mexico: 56% of exports go to the US.
- Japan: 40% of exports are US-bound.
- UK: 20% of goods vehicles go to the US.
- Korea: 17% of exports are to the US.
- India: The US is the biggest buyer of Indian medicines (40%), furniture (50%), toys (50%), and mobile phones (31%).
The US is expected to take a tough stance on trade deficits, meaning many of these nations could see tariffs affecting their exports and economic relationships with the US.
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Source: Moneycontrol.
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