On face value, Lesotho is the worst affected country by Trump’s tariffs announced yesterday. The country will now face an adjusted reciprocal tariff of 50% from the US, which is the highest tariffs for a country Trump’s Executive Order has announced in its list of 57 countries. US’s goods trade deficit with Lesotho in 2024 was $234.5 million which is nothing compared to US’s total goods trade deficit of $1.2 trillion.
Extreme examples aside, the Trump administration has imposed significant tariffs on major trading partners of the US. For example, Vietnam now faces an adjusted reciprocal tariff of 46%. For China this number is now 34% (on top of a previously announced 20%). How will these reciprocal tariffs impact individual countries?
It is tempting to do a simplistic analysis by comparing something like a country’s exports to the US as a share of its total GDP. For example, US imported goods worth $136.6 billion from Vietnam in 2024. This is as much as 28.6% of Vietnam’s nominal GDP in 2024. China exported goods worth $439 billion to the US in 2024 but has a nominal GDP of $18.5 trillion,which means the impact could be as little as 2.4% of GDP. However, such comparisons could be completely misleading because of various complications in how these tariffs will play out in the real world.
For example, a lot of Chinese exports to other countries become a part of global value chains which eventually culminate being exported to the US. “In 2024, Vietnam with a trade surplus of $123.5 billion with the US came in fourth place behind China: $295.4 billion, European Union: $235.6 billion and Mexico: $171.8 billion. Vietnam is a major player in manufacturing trade. A lot is made of the fact that Vietnam’s exports are not “really” Vietnamese. Vietnam, it is alleged, is acting as a conduit for manufacturing and trade from China. And it is true that there is a striking correlation between Vietnamese imports from China and exports to the US”, Adam Tooze, a professor at Columbia University wrote in his newsletter.
{{/usCountry}}For example, a lot of Chinese exports to other countries become a part of global value chains which eventually culminate being exported to the US. “In 2024, Vietnam with a trade surplus of $123.5 billion with the US came in fourth place behind China: $295.4 billion, European Union: $235.6 billion and Mexico: $171.8 billion. Vietnam is a major player in manufacturing trade. A lot is made of the fact that Vietnam’s exports are not “really” Vietnamese. Vietnam, it is alleged, is acting as a conduit for manufacturing and trade from China. And it is true that there is a striking correlation between Vietnamese imports from China and exports to the US”, Adam Tooze, a professor at Columbia University wrote in his newsletter.
{{/usCountry}}Similarly specific countries could end up with lower effective tariff rates because of commodity-group wise exemptions from reciprocal tariffs in Trump’s executive order. When read with the fact that the Trump administration will hold widespread negotiations with countries about these tariffs, the country-wise impact could become even more complicated.