According to a note by Nomura, US President Donald Trump's imposition of reciprocal tariffs may end up harming emerging Asian nations like China, India, and Thailand more than developed Asian economies like Hong Kong and Singapore.
According to Nomura, Thailand (6.2 percent versus 0.9 percent), China (7.1 percent versus 2.9 percent), and India (9.5 percent weighted average effective tariff on US exports to India versus a 3 percent tariff rate on India's exports to the US) have significantly higher effective tariff rates on the US.
However, according to a recent note from Nomura analysts, nations like Singapore and South Korea that have free trade agreements with the US are less vulnerable to Trump's threat of reciprocal tariffs.
Analysts claim that India is particularly vulnerable to reciprocal tariffs because it has much higher relative tariff rates than other Asian economies.
With about 18% of India's total exports going to the US (or 2.2% of GDP as of fiscal 2023-34, or FY24), the US is the country's top export destination. The trade surplus between the US and India has grown recently, peaking at nearly $38 billion in 2024.
Sonal Varma, their chief economist, stated that "important exports include electrical/industrial machinery, gems & jewelry, pharmaceuticals, fuels, iron & steel, textiles, vehicles, apparels, and chemicals, among others, of which iron & steel and aluminum account for nearly 5.5% of the total."
Stock markets respond to the threat of Trump tariffs
Due to these developments, as well as the weak corporate earnings growth for the December 2024 quarter (Q3FY25), the domestic equity markets have been volatile and skewed negatively for the majority of calendar year 2025 (CY25).
The Nifty Midcap 100 and Nifty Smallcap 100 indices have lost more than 8% and 11%, respectively, during CY25, while the Nifty 50 index has lost more than 1% so far.
Christopher Wood, global head of equity strategy at Jefferies, claims that recent events have demonstrated that what could be called Donald Trump's tariff outbursts are essentially a negotiating ploy.
In contrast to the 60% increase in tariffs that was threatened during the election campaign, Tuesday's ten percentage point increase in US tariffs on Chinese imports appears to be modest. I still think that offering to establish production in America is the clearest way for China to respond to this tariff threat, giving the 47th American president another "win," Wood stated.
Analysts warn that the consequences are clear and that investors need to brace themselves for extreme volatility, which is now inevitable.
"Businesses are delaying investments because of uncertainty, and consumer sentiment is declining, raising the possibility of a wider global slowdown. We are entering a period where political unpredictability will have a direct impact on market movements. Trump's tariffs are only the beginning—this administration will continue to weaponize trade, making it a high-risk game for investors," Green warned.
