Quick view: Unravelling the impact of Trump “liberation day” tariffs on Emerging Markets Debt

Targeting the “worst 60”

In a significant development on “liberation day”, new tariffs were introduced that surpassed initial expectations. Effective from 5^th April, a baseline universal tariff of 10% has been set, with additional targeted “reciprocal” tariffs on the “worst 60” trading partners coming into effect on 9^th April. These tariffs, ranging from 10-50%, primarily aim to drive down the US trade deficits with each country.   This layered tariff structure has brought the average tariff rate to around 22-23%, as seen in the 1890s.

Figure 1: Reciprocal tariff on top 30 trading partners