New Delhi [India], April 3 : The imposition of reciprocal tariffs by the US President Donald Trump is set to slow down global trade significantly, according to a report by HSBC Research.
The report projects a decline in world export volume from 2.9 per cent in 2024 to 1.3 per cent in 2025-26, mainly due to weaker demand in US and uncertainty affecting global investment and confidence.
It said "As for world trade, our current projection of a marked slowdown in world export volume growth from 2.9 pc in 2024 to 1.3 pc in 2025-26 reflects slower US import demand and the negative impact of uncertainty on confidence and global investment spending".
It also noted that such a large-scale disruption to global trade has no historical precedent. The closest comparison is the trade tensions and tariffs imposed during Trump's first term, which reduced global GDP by around 1 per cent over two years. However, the newly announced tariffs are broader and more significant than those seen previously.
The report mentioned that the impact on global trade is still uncertain, as factors like temporary reprieves, selective exemptions, and negotiated deals could mitigate some of the effects. The new tariffs are set to take effect on April 9.
The report highlighted that financial markets are already feeling the pressure from increased uncertainty. While some risks could be balanced by supportive domestic policies in China and Europe, as well as efforts to diversify trade partnerships and strengthen services trade, investors remain cautious.
The tariffs, announced at the White House Rose Garden on Wednesday, target several key economies. Imports from mainland China now face an effective tariff rate of over 50%, while reciprocal tariffs have been set at 46 per cent for Vietnam, 32 per cent for Taiwan, and 27 per cent for India. Meanwhile, Latin American economies will face a universal tariff of 10 per cent.
If these tariffs remain in place, they could lead to significant disruptions, especially for Asian exporters who rely heavily on US trade. With uncertainty expected to persist, businesses and policymakers worldwide will be closely monitoring how the situation unfolds.
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