Trump’s Eye-for-Eye Tariff Threat Puts India, Thailand at Risk

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Economists at global banks from Morgan Stanley to Nomura Holdings Inc. have identified India and Thailand as among the nations most exposed to risks from President Donald Trump’s vow to impose reciprocal tariffs on trading partners.

The two Asian countries stand out because the tariffs they impose on the US are, on average, far above the rate charged on them by the US, according to a range of estimates from analysts who considered scenarios of like-for-like levies. The caveat is that Trump has yet to clarify the potential policy, including which countries would be targeted and on what basis.

“Emerging Asian economies have higher relative tariff rates on US exports and are thus at risk of higher reciprocal tariffs,” Nomura analysts led by Sonal Varma said in a note to clients. “We expect Asian economies to step up their negotiations with Trump.”

Trump on Friday announced his plans for reciprocal tariffs to ensure the US is “treated evenly with other countries,” suggesting this approach may replace his previous threat of universal tariffs. He said additional details would be announced Tuesday or Wednesday, and that the tariffs would go into effect almost immediately or shortly after.

The threat will heap more pressure on officials across Asia to appease Trump to steer their export-dependent economies through a renewed trade war.

India’s top importers of liquefied natural gas are already negotiating purchases of more fuel from the US ahead of a summit between the two countries’ leaders this week. And Thailand is considering buying more American products, adding to its increased imports of ethane and agricultural goods planned for this year.

Bloomberg Economics’ Maeva Cousin and Deutsche Bank’s George Saravelos are among those who found that India’s wide tariff differential with the US left it at particular risk of retaliation.

The average rate that India charges US imports is more than 10 percentage points higher than US levies on Indian goods, according to Cousin’s analysis.

A broader interpretation of “reciprocity,” which could include considerations such as a country’s trade surplus with the US or its taxes on American firms, would have bigger consequences for all nations, Saravelos said in a report.

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