巴黎银行-全球-宏观经济-美国的关税让新兴市场大发脾气？-20180312-12页_891kb

Summary of the Document: US Tariffs and Impact on Emerging Markets

Core Content

The document discusses the implications of the US administration's imposition of tariffs on steel and aluminium products, and examines how these measures might affect emerging markets (EMs). It also explores the broader context of trade dynamics, the motivations behind the tariffs, and the potential for further protectionist actions.

Main Views and Key Information

US Tariffs on Steel and Aluminium

• The US administration announced a 25% tariff on steel and a 10% tariff on aluminium, following previous tariffs on washing machines and solar panels.
• The timing and scope of these tariffs are still being clarified, and the full impact is yet to be determined.
• These measures are framed as being for "national security" but are widely seen as targeting China, given the large trade imbalance with China.

Impact on Emerging Markets

• Direct Impact: The direct effect on EM countries is expected to be limited due to the small share of steel and aluminium exports to the US relative to their GDP. For example, steel and aluminium exports to the US account for less than 0.3% of most EM countries' GDP.
• Exception: Bahrain is an exception, as its exports of these products account for 1.8% of its GDP.
• Indirect Impact: A potential decline in global steel prices due to the shift in supply routes could affect EM producers more broadly, although the impact is expected to be manageable for most.

Broader Trade Context

• Emerging markets have benefited significantly from the global rise in trade, which has outpaced GDP growth.
• Trade agreements and reduced tariffs have contributed to this growth, with EM countries seeing substantial export increases.
• The share of EM trade in global trade has risen from 35% in 1990 to over 60% today.

Risks of Escalation

• A significant escalation in trade protectionism could have a substantial negative impact on EMs through reduced exports, employment issues, and capital flow disruptions.
• The risk of such escalation is considered a "tail risk" for now, but remains a concern as other countries may retaliate.

Regional and Country-Specific Reactions

• NAFTA: The US is likely to continue negotiations on NAFTA, with auto rules of origin and the sunset clause being the most contentious issues.
• Europe: Some European officials have expressed willingness to retaliate, targeting US goods such as motorcycles and jeans.
• China: China's response has been relatively muted, with criticism but no announced retaliatory measures.
• Mexico and Canada: These countries may be exempted from tariffs, depending on the outcome of NAFTA renegotiations.

Future Outlook

• The US may pursue targeted protectionist measures in the lead-up to the mid-term elections, but a broad-based tariff on Chinese goods is unlikely due to its potential negative impact on inflation and consumer purchasing power.
• The document emphasizes that EMs have been major beneficiaries of global trade and remains overweight in EM assets, including rates, FX, and equities.

Conclusion

While the direct impact of the current US tariffs on EM countries is limited, the broader risk of trade conflict escalation and the potential for further protectionist actions remain a concern. Emerging markets continue to benefit from the expansion of global trade and the reduction of tariffs, but they could be significantly affected if trade tensions worsen. The document underscores the importance of monitoring the evolution of trade policies and their potential consequences for EM economies.