Which countries will be hit hardest by tariffs from the incoming Trump administration?
President-elect Trump has vowed to put a blanket 10% tariff on all goods imported into the United States. Here are the countries Deutche Bank analysts think will be hardest hit:
A big surprise on the list is Vietnam. Do they really export that much to the United States?
The answer is Yes. When the first Trump administration put tariffs on China, a lot of Chinese trade was diverted through Vietnam. A Chinese manufacturer would open an assembly plant in Vietnam. Parts made in China would then be assembled in Vietnam and be badged as "Made in Vietnam" to get round the tariffs.
When the Biden administration kept the Trump tariffs and added to them, taking them to 50%, more and more Chinese manufacturers used the Vietnam route to get around them. Vietnam has no trade agreement with the USA, which means there is no minimum Vietnamese content mandated.
By contrast, both Canada and Mexico are in the USMCA trade deal (formerly NAFTA), where 60% of the content of goods needs to be made in either the US, Mexico or Canada to qualify for tariff-free status. This means it's harder for China to use either Canada or Mexico as a back-door into the US.
As an aside, this is the great value of trade deals; you get to put conditions in return for removing tariffs. Because of this, I think the Trump administration won't put tariffs on countries it has a trade deal with. All other countries are fair game, especially those which China is using to get around American tariffs.