Trump’s Tariff Tsunami: Nomura’s Predictions on Trump’s 2025 Tariff Strategy

President-elect Donald Trump is gearing up for a fresh wave of tariffs, fulfilling his campaign promise to revamp US trade policy.

Nomura’s recent report predicts significant hikes, particularly for Chinese imports, and broader tariffs on other global trading partners. China faces the most substantial impact, with tariffs expected to rise by 35 percentage points, bringing effective rates to 60%. This move marks a strategic escalation from the trade policies of Trump’s first term.

“China will likely face the largest tariff increases among US trading partners, including many consumer goods not targeted in Trump’s first term,” the report states.

Gradual Implementation of Chinese Tariffs
The administration is likely to introduce these tariff hikes in stages, with three separate increases planned over the year. This piecemeal approach mirrors Trump’s 2018–2019 strategy during his first term, designed to maintain leverage in trade negotiations.

Stephen Miran, Trump’s choice for Chair of the Council of Economic Advisors, proposed a “2% monthly increase in tariffs on China in perpetuity until demands are met,” emphasizing a more gradual and successive approach.

Nomura’s analysts argue that logistical hurdles for implementing these tariffs under Section 301 are minimal. The framework, established during the initial trade war, enables swift action. However, congressional involvement in revising tariff schedules could slow down the process.

Expanding Tariff Scope Beyond China
Trump’s policies won’t stop with China. European and Asian imports are expected to face a 10% tariff increase, while Canada and Mexico could see new tariffs of 25% and 5%, respectively. These measures could bring the effective tariff rate on all US imports to approximately 10%, a substantial rise compared to the current rate.

“Trump’s broader tariffs on non-China countries will likely be implemented through Section 232 or the International Emergency Economic Powers Act (IEEPA),” the report explains. The IEEPA, in particular, allows for quicker and more extensive actions than Section 232.

The De Minimis Loophole Under Threat
Another potential shift is the closure of the de minimis loophole, which exempts low-value imports from tariffs. This exemption currently accounts for $40–50 billion in annual imports. Nomura highlights bipartisan support for ending this policy, as it could bring additional revenue and tighten restrictions on Chinese goods.

Broader Implications for Global Trade
These aggressive trade policies reflect Trump’s broader objectives, including addressing trade imbalances and using tariffs as a revenue source. According to Nomura, Trump aims to align US tariffs with those faced by its exports. This approach could lead to uneven increases in import tariffs among trading partners, with some countries facing significantly higher rates.

In addition to geopolitical implications, these policies are expected to impact consumer goods, as Trump broadens the tariff scope to include previously exempt categories.

Risks of Economic Disruption
While the proposed tariffs aim to strengthen US trade positions, they also pose risks of economic disruption. Higher import costs could lead to inflationary pressures, affecting American consumers and businesses.

The report warns of the potential fallout:
“Imports of Chinese goods that were not targeted by Trump tariffs in 2018–2019 increased over time, suggesting targeted tariffs were ineffective in reducing imports from China. “

As the world braces for a new era of US trade policies, the economic and political ramifications of these measures will likely reverberate globally. Whether these strategies will achieve their intended goals or exacerbate tensions remains to be seen.

For now, global markets and trading partners are closely watching the unfolding drama as Trump prepares to implement his ambitious tariff agenda.