Trump’s Trade Tariff War: Winners and Losers

Who is most and least vulnerable? Least vulnerable: Russia, Brazil, Philippines, South Africa, Indonesia, India, and Malaysia. Most vulnerable: Vietnam, Taiwan, Mexico, Thailand, and the EU.

In this analysis, we examine 16 economies—including the EU, Canada, Mexico, Japan, eight additional Asian countries, and the BRICS. Each is ranked from 1 (least vulnerable) to 16 (most vulnerable) based on four key variables:

1. US reciprocal tariff rates 2. The US trade deficit with each country 3. Dependency on exports to the US 4. Overall economic dependency on exports

An aggregate vulnerability score is calculated by summing the rankings across these metrics. A higher total score indicates greater vulnerability to US trade actions. Investment recommendations are drawn from both a country's exposure to US tariffs and its business cycle fundamentals. While the framework may initially appear complex, its logic becomes clearer through the analysis.

Tariff Exposure

Figure 1 illustrates the total tariff increases—both proposed and enacted—by the US on a country-by-country basis. This includes the reciprocal tariffs announced on April 2 and previous measures such as the 25% duties on imports from Mexico and Canada. The effective US tariff rate on imports from China now stands at a staggering 145%.

China ranks as the most exposed (rank 16), followed by Vietnam (46% tariffs, rank 15), Thailand (37%), and Taiwan and Indonesia (32%). Russia evaded Trump's 10% global US import duty, primarily due to the existing sanctions framework. It is also likely that, in a bid to facilitate a Ukraine-Russia peace deal and negotiate a minerals agreement, Trump chose not to further antagonise Putin. Brazil and the Philippines have also seen relatively modest tariff hikes.

US Trade Deficit Analysis

As shown in Figure 2, China remains America’s largest trade deficit partner, with a gap of $295 billion, accounting for 25.6% of the total US trade deficit. The EU ranks second (rank 15), with a $236 billion surplus vis-à-vis the US. Vietnam and Mexico also maintain substantial trade surpluses, each exceeding $100 billion.

Over the past four years, the US trade deficit has grown with the EU, Mexico, Vietnam, Taiwan, Thailand, India, and Brazil. Only Canada and Malaysia have shown signs of narrowing their trade gaps with the US.

Export Dependence on the US

Effective tariff rates matter—but so does the size of a country’s surplus and its reliance on the US market. Countries running large trade surpluses are more vulnerable to US tariff hikes and often have limited retaliatory capacity.

Figure 3 shows that Mexico (rank 16) and Canada (rank 15) are the most dependent: 88% and 64% of their respective exports go to the US. In Asia, Vietnam stands out with 30% of its total exports bound for the US, while India, Thailand, and South Korea each send about 17.5–18.5%.

China’s export share to the US is just 14.7%, underscoring its reduced reliance. In fact, while Asian dependence on US exports had been rising before the pandemic, it has moderated. In 1990, 27% of Asian exports went to the US; today, that figure stands at around 14%.

Japan and the EU each rely on the US for roughly 20% of their exports. In contrast, the BRICS, with their large domestic markets, are far less dependent on US demand.

Overall Export Dependency

The final variable is each country's economic sensitivity to trade disruptions, measured by the ratio of gross goods exports to nominal GDP (Figure 4). A higher ratio indicates greater vulnerability and results in a higher ranking.

Gross exports as a share of GDP are not a perfect measure, as it fails to capture the full extent of the domestic manufacturing supply chain that supports the export sector. This includes intermediary goods and inputs, essential services such as logistics, warehousing, and shipping, as well as assembly-line labour. Still, while imperfect, the export-to-GDP ratio serves as a useful starting point—and not a bad one at that.

Vietnam’s economy is the most exposed—exports account for an extraordinary 88% of its GDP. Taiwan and Malaysia also exhibit high export dependence, as does the EU. On the other end of the spectrum, India (rank 1) and the Philippines (rank 2) appear well-positioned to absorb the impact of a trade war. The BRICS, broadly speaking, benefit from stronger domestic demand and are thus more resilient.

China's export-to-GDP ratio is relatively modest, which may partly explain Beijing's willingness to escalate tensions through retaliatory tariffs.

Vulnerability Rankings

Figure 5 presents the composite rankings across the four variables. Excluding Russia from the analysis:

• Least vulnerable: Brazil, Philippines, South Africa, Indonesia, India, and Malaysia • Most vulnerable: Vietnam, Taiwan, Mexico, Thailand, and the EU

China fares better than expected, as do Canada and Japan—despite their high-profile positions in recent tariff disputes.

Investment Implications

In light of the latest tariff escalations and broader market corrections, investors must ask: Where should capital be deployed—or withdrawn—from? Four key factors should guide decision-making:

1. Business Cycle Fundamentals Target countries where corporate profits, capital expenditure, and credit cycles are improving—and where the cost of capital reflects underlying economic strength. 2. Low Export Dependency Prefer economies with lower export-to-GDP ratios, making them less vulnerable to global trade volatility. 3. Negotiation Likelihood Countries with high US tariff exposure and strong trade surpluses may be more inclined to seek compromises—making them potential beneficiaries of future tariff rollbacks. 4. Strategic Alignment with US Objectives Economies increasing FDI into the US may align better with Trump's "Make America Great Again" and national security goals—possibly shielding them from the harshest trade measures.