Donald Trump's Tariffs Threats: How Will They Impact World? Nomura Decodes - Details

Japanese investment banking firm Nomura on Friday said that China will likely face the largest tariff increases among US trading partners.

In a report that discusses how the Trump administration will impact various strategies while raising tariffs, the investment banking firm said that it expects President-elect Trump to largely follow through on his campaign promise to raise tariffs.

According to the report, China will face the largest tariff increases among US trading partners, including many consumer goods that were not targeted in Trump's first term.

Trump's administration could raise tariff rates against China using the current framework of tariffs in place since 2018-19. "Conversely, tariff increases through legislative action could lead to a slower implementation," the report noted.

Additionally, broader tariffs on non-China countries will likely be implemented through the International Emergency Economic Powers Act (IEEPA), which would lead to quicker and broader action.

What Did Trump Announce?

During his election campaign, Donald Trump indicated that he would impose 60% tariffs on Chinese imported goods and 10-20% across-the-board tariffs. After the elections, he also announced that he has planned to implement 25% tariffs on Canada and Mexico.

The Japanese investment banking firm expects Trump to largely follow through on his campaign promise, but the proposals are likely to be softened, especially for tariffs on Canada and Mexico, as per the report.

The report also expects Chinese tariffs to be raised by 35pp cumulatively.

Trump is also likely to impose additional tariffs of about 10% on many other countries in Europe and Asia and 5% tariffs on Mexico. Consequently, Nomura expects the effective tariff rate on US imports to increase to around 10%.