The US executive order on retaliatory tariffs is expected to hurt most of the major economies that trade with the United States and run high deficits with the country, a Moneycontrol analysis shows that some countries will feel the pinch more as the US tries to correct its trade deficit.
Analysis of data from UN COMTRADE shows that of the $1.3 trillion deficit the US faced in 2024, 65 percent or over $800 billion came from 20 major commodity groups.
Cars were the primary category of deficit for the US, accounting for $160 billion in 2024, closely followed by computers, where the US has a deficit of $100 billion and mobile phones, which ran a deficit of $76 billion.
In fact, the combined deficit in the top items was $454 billion.
These 20 commodities, which also include medicines, parts of motor cars, vaccines, crude oil, batteries, furniture and ornaments, account for a third of the US imports.
Analysis of top trading partners in each of these commodities can give a fair idea of which countries may bear the brunt of reciprocal tariffs.
Take the case of cars, a major industry in the US. The top three countries, Mexico, Japan, and Korea, may face higher tariffs to correct the trade imbalance. These nations also run some of the highest deficits with the US.
The US has already threatened Mexico with higher 25 percent tariffs.
Mexico's trade deficit has nearly doubled to over $200 billion, since Trump was elected in 2020.
While China’s deficit has come down since 2016, it still runs a large deficit with the US running over $300 billion. Canada, with another large deficit, has also been facing the ire of the US president.
The United Kingdom may also be affected if Trump decides to impose tariffs on goods transport vehicles. The country ran a deficit with the US in 2020 but has since returned to a $3 billion trade surplus.
Vietnam, another name that pops up often in the trade deficit, may also be at the receiving end of reciprocal tariffs.
The country was a top five contributor in 10 of the 20 commodities where the US ran highest deficits.
India, which Trump noted was the leader in levying high tariffs on US imports, was the top exporter in three of the 20 categories.
However, India’s trade deficit with the US pales in comparison to Vietnam.
Germany, Ireland, and Thailand, which have witnessed high deficits and are among the top contributors to the top 20 categories that run highest deficits, may also face similar threats from the United States.
Trade dependency would also matter in such scenarios. Japan, one of the top suppliers of automobiles to the US, has 40 percent of its exports headed to the country. A fifth of UK’s exports of goods vehicles are headed to the US.
Canada’s 78 percent, while Mexico’s 56 percent of the trade is dependent on the US.
Korea’s 17 percent of exports are to the US mainland.
US is also the recipient of 40 percent of India’s medicines, 50 percent of furniture and 50 percent of toys market and 31 percent of mobile phone exports.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
