Donald Trump’s 10% tariffs on China (along with those threatened for Mexico and Canada) could prove to be the start of a protracted trade war. Other countries in Asia could benefit if penal tariffs against China enabled them to gain market share in the US. However, the rest of Asia would be vulnerable if Trump decided to broaden his attacks to countries with large trade surpluses with the US, or if he decided to target certain sectors (he has recently threatened tariffs on pharmaceuticals, semiconductors and industrial metals). Another risk is that Trump’s actions trigger large-scale retaliation and a broader global rise in trade barriers, that undercuts the appeal of widely-distributed global supply chains.
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