Moody’s Says 15% US Tariff Would Aid China, Southeast Asia But Not Japan, Korea

The US Supreme Court last week ruled against the Trump administration's country-specific tariffs after which Trump imposed 10 per cent tariffs on all countries for 150 days.

He has also announced to increase it to 15 per cent. However, no order or proclamation has been issued so far in this regard.

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A uniform 15 per cent tariff, announced by US President Donald Trump, would benefit some Asia-Pacific economies that have faced much steeper country-specific levies, including China and much of Southeast Asia, Moody's Analytics said on Tuesday.

But it will have a small impact on countries such as Japan, South Korea, and Taiwan (China), where the base rate is already 15 per cent, it said in a statement.

"There is a lot of uncertainty, but we do know a few things. A uniform 15 per cent tariff would benefit some Asia-Pacific economies that have faced much steeper country-specific levies," it said.

The US Supreme Court last week ruled against the Trump administration's country-specific tariffs after which Trump imposed 10 per cent tariffs on all countries for 150 days. He has also announced to increase it to 15 per cent. However, no order or proclamation has been issued so far in this regard.

"The court ruling also raises questions about the recent trade deals made with India and Indonesia. Key details such as the timeline for India to wind down purchases of Russian oil and the volume of tariff-free textile exports from Indonesia have yet to be finalised. India has delayed plans to send a delegation to Washington," it said.

It added that the court ruling limits Washington's ability to impose country-specific tariffs, which in turn limits its leverage in trade negotiations, including in high-stakes exchanges such as the meeting between Trump and Chinese President Xi Jinping in a little over a month.

"We expect Trump to find other legal routes to raise tariffs, and we wouldn't be surprised if US tariffs end up close to where they sat before Friday. Some governments may slow-walk ratification of trade deals with the US, but we think they are unlikely to quit altogether for fear of inviting more punitive tariffs," it said.

Even in a best-case scenario, where tariffs eventually settle below the rates in place before February 20, there will be plenty of trade uncertainty and logistical mess, it said, adding that firms may seek compensation for tariffs already paid -- a process that could prove highly contentious and time-consuming.

"We may also see a fresh round of front-loading; if US importers treat the ruling as a temporary reprieve, they could rush shipments before tariff walls rise again. In short, the decision may offer momentary relief, but business and policymakers would be wise to keep the champagne on ice," it said. 

(Disclaimer: This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)

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