As the 2024 U.S. presidential election approaches, speculation about potential changes in trade policy under a second term for Donald Trump looms large. Trump’s proposed trade agenda suggests a shift toward protectionism, with an emphasis on safeguarding domestic jobs and industries. This could entail a broad 10% tariff on all imports and a reduced emphasis on existing trade agreements, as detailed in the Republican Party platform. Such policies could significantly impact many of America’s key trading partners.
Methodology
The Economist has developed the Trump Risk Index to evaluate the vulnerability of America’s 70 largest trading partners to potential shifts in U.S. trade policy. The index is categorized into three sub-indexes: trade, immigration, and security. For the trade sub-index, each country’s risk level is assessed based on six indicators: bilateral trade balance, trend in bilateral trade, current-account balance, sensitive exports to the U.S., reliance on the U.S. for goods and trade, and existing free-trade agreements with America.
1. Mexico
As the largest exporter to the U.S., Mexico is the most exposed to potential changes in U.S. trade policy. With a significant trade surplus of $152 billion, Mexico’s exports—particularly in automotive sectors and sensitive commodities like aluminum and steel—are vulnerable. The recent surge in Mexico’s trade surplus, up nearly 40% since 2020, highlights its critical role in U.S. trade. Under a Trump presidency, the future of the USMCA trade agreement, which currently eliminates tariffs on goods meeting the treaty’s criteria, could be uncertain when it comes up for renegotiation in 2026.
2. China
China, with the largest trade surplus among U.S. trading partners, faces substantial risk if Trump is re-elected. Trump’s plan to impose tariffs of 60% or more on Chinese imports would mark a stark departure from current policies. While President Biden has implemented targeted tariffs—such as a 100% levy on electric vehicles and a 50% tariff on semiconductor chips by 2025—Trump’s proposed policies would affect approximately $427 billion in Chinese goods, compared to Biden’s $18 billion impact.
3. Vietnam and India
Both Vietnam and India are also highly exposed to potential changes in U.S. trade policy due to their growing roles in American trade. The U.S. is Vietnam’s largest export market, and India is a significant trading partner. Both countries enjoy major trade surpluses with the U.S., making them susceptible to shifts in trade relations. The potential risk to these countries reflects their increasing economic interactions with the U.S.
In conclusion, Trump’s proposed trade policies could have far-reaching consequences for many of America’s largest trading partners. Countries with substantial trade surpluses and significant export volumes to the U.S. are particularly vulnerable to the potential economic disruptions.
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