Perspectives Emerging Markets offers quarterly updates from our research team, providing in-depth analysis of economic developments, market trends, and investment opportunities in emerging economies.
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Trade tariffs will be Donald Trump’s core instrument for policy making. The most drastic announcements for emerging markets include a 60% tariff for China and 25% for Mexico. However, we do not anticipate tariffs of this scope to be implemented. Instead, we think they are intended as a bargaining tool and not for pursuing the goal of an actual economic separation. Although such high tariffs are unlikely, there will be trade barriers put in place, which will impact economic activity. The threat in itself is already causing uncertainty and hindering investment.
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Emerging markets are affected to varying degrees by possible trade tariffs. Should Donald Trump not introduce any widespread tariffs for all the USA’s trading partners as originally announced, but take the actual trade relations into consideration on a country-by-country basis, Latin America will have little cause for worry concerning direct trade tensions with the USA as the latter has a trade surplus with many countries in this region, the exception here being Mexico. Among the Asian countries, alongside China above all Vietnam could come under pressure.