New Delhi, March 28
When it comes to the ratio of goods exports to GDP in the wake of US trade tariffs, India and Japan are the least exposed economies owing to domestic demand strength, a Morgan Stanley report said on Friday.
The ratio of goods exports to GDP is the most important metric; it determines the extent of trade orientation of the economies. This allows global research firms to assess which economy will face more downward pressures on growth.
“India and Japan — these economies have robust tailwinds from domestic demand strength as an offset and relatively lower ratios of goods exports to GDP,” the report mentioned.
The US has also implemented 25 per cent tariffs on auto imports. The report said that the imposition of 25 per cent tariffs on auto and auto parts will affect Japan and Korea the most, as auto exports to US account for 7 per cent of their exports.
On April 2, the US administration is likely to propose a plan for addressing reciprocity in trade relations. The US administration also continues to signal that it will impose sectoral tariffs on energy, pharmaceuticals, semiconductors, agriculture, copper, and lumber.
“The potential implementation will almost affect all economies in Asia directly either via economy-specific tariffs or sectoral tariffs. But our key concern remains that elevated levels of policy uncertainty weigh on capex and trade – damaging the business cycle,” the Morgan Stanley report noted.