Donald Trump's reciprocal tariffs come into effect on April 2: Will India, Thailand feel the most heat?

President Donald Trump said the reciprocal tariffs he plans to impose on April 2 would include "all countries", not just those with the largest trade imbalances with the United States. Donald Trump's ‘Liberation Day’ tariffs are likely to impact several countries, including India, China, the European Union, Mexico, Vietnam, Taiwan, Japan, South Korea, and Canada.

However, an S&P analysis suggests that India, South Korea, and Thailand could be the most vulnerable to these tariffs.

Speaking aboard Air Force One, just 48 hours before what he termed “Liberation Day” on April 2, Trump confirmed that these tariffs would be applied universally, breaking away from earlier plans to target only select nations. “We would start with all countries, so let’s see what happens,” Trump told reporters mid-flight.

While Donald Trump refused to put a number to the countries that are likely to be affected by his upcoming tariff salvo, it is expected to affect 15 per cent of US trade partners that have persistent trade imbalances with the United States, a group Treasury Secretary Scott Bessent called a "Dirty 15."

Further, Japan and South Korea's carmakers were disproportionately affected by measures announced by Trump last week.

Tariffs already imposed by Trump

President Donald Trump has already slapped tariffs on steel and aluminium imports and additional levies on imports from China. Tariffs on imported autos are also due to take effect on April 3.

Trump's top trade aide, Peter Navarro, said the tax on auto imports could raise $100 billion a year.

"And in addition, the other tariffs are going to raise about $600 billion a year, about $6 trillion over a 10-year period," Navarro told Fox News.

What is reciprocal tariff?

A reciprocal tariff is a trade measure in which one country imposes import duties that match or counteract the tariffs applied by another country on its exports, aiming to promote balanced trade and protect domestic industries.

Taking a look at how other countries will be affected:

India

India is poised to bear consequences as US President Donald Trump announces reciprocal tariffs that take effect on April 2.

With an average weighted tariff of 9.5 per cent on US exports—among the highest globally—India has become a focal point of Trump’s trade strategy. Key sectors such as pharmaceuticals, gems and jewellery, automobiles, and food products are expected to face higher duties, potentially costing India up to $7 billion annually.

S&P Global Ratings also said that the low exposure will help India reduce the impact of the tariffs. India’s exports to the US account for just 2.3 per cent of its GDP, the agency added.

India is actively seeking to appease the Trump administration and is open to cutting tariffs on over half of US imports worth $23 billion, Reuters reported last week.

However, the trade imbalance remains a contentious issue, with India exporting $120 billion worth of goods to the US in 2023 against $70 billion in imports.

China

China, long embroiled in trade disputes with the US, is no stranger to tariffs under Donald Trump’s administration. The US president has long railed against the gaping trade deficit between the world’s two largest economies – and on the campaign trail threatened upwards of 60 per cent duties on all Chinese goods coming into the US.

With a weighted average tariff rate of 7.1 per cent on US exports, China is among the nations most affected by this new measure.

China has already hit back swiftly – though modestly – on the two tranches of additional 10 per cent tariffs Trump has imposed on Chinese imports to the US so far, while sharpening a toolbox of other countermeasures.

Chinese Premier Li Qiang signed an order strengthening China’s “anti-sanctions law,” which allows Beijing to take action against foreign countries that “contain or suppress” China or discriminate against its entities and individuals.

European Union

The European Union (EU) faces similar challenges under Donald Trump’s reciprocal tariff regime. As one of the largest trading partners of the US, the EU imposes relatively high tariffs on American goods compared to what it receives. Sectors like automobiles, agriculture, and machinery are expected to be hit hardest by these measures.

The EU is identifying concessions it is willing to make to Donald Trump’s administration to secure the partial removal of the US tariffs that have already started hitting the bloc’s exports, reported Bloomberg.

Mexico and Canada

Trump’s reciprocal tariffs have ignited significant backlash from Canada and Mexico, two of America’s closest trading partners. Effective April 2, these tariffs impose a 25 per cent duty on imports from both nations, targeting a wide range of goods.

While Donald Trump claims the measures are necessary to address trade imbalances and combat the flow of illicit drugs such as fentanyl, leaders in Canada and Mexico have sharply criticised the move as unjust and economically disruptive.

In Mexico, President Claudia Sheinbaum has denounced the tariffs as baseless, citing data showing a decline in fentanyl seizures at the border. Sheinbaum has promised retaliatory tariffs and rejected Trump’s allegations of inadequate cooperation on border security.

Both nations have warned that these tariffs could undermine existing trade agreements like the USMCA and strain diplomatic relations further.