US Misses Mark on China Tariffs... 'Han, Il, Vietnam' Seen as Next Targets

SCMP cites Barclays and Moody's reports
Barclays: "South Korea likely to be a major Trump target"
Vietnam, with large trade surplus with the U.S., sees dong value fall

The possibility of U.S. President Donald Trump's implementation of 'reciprocal tariffs' has increased. Following the U.S.'s initial imposition of a 10% general tariff on China, there is a growing expectation that major Asian countries with large trade surpluses with the U.S., such as South Korea, Japan, and Vietnam, are likely to be the next targets.

According to the South China Morning Post (SCMP) on the 12th (local time), British investment bank Barclays pointed out in a report on the 10th that "South Korea imposes much higher tariffs on U.S. products than the tariffs the U.S. imposes on Korean products," suggesting that South Korea is likely to be a major target of President Trump.

Moody's Analytics also warned in a recent report that "the trade war is just beginning, and advanced economies in Northeast Asia could soon become battlegrounds."

Barclays issued this warning citing estimates from the World Trade Organization (WTO). According to the WTO, as of 2023, most Asian economic zones have applied higher average tariff rates than the U.S. For example, India applied an average tariff rate of 17%, while the U.S. applied a rate of 3.3%.

The Barclays analysis team noted that Singapore and Hong Kong are likely to be exempt from the U.S.'s scope, as both countries run trade deficits with the U.S.

According to the U.S. Department of Commerce's International Trade Administration (ITA), as of 2024, the country with the largest U.S. goods trade deficit was China, recording $295.4 billion. Vietnam ranked third ($123.5 billion), Japan seventh ($68.5 billion), and South Korea eighth ($66 billion), all among the top ranks. In contrast, Hong Kong ($21.9 billion) and Singapore ($2.8 billion) are among the few places where the U.S. runs a trade surplus.

Vietnam's large trade surplus with the U.S. is partly due to a workaround to U.S. sanctions on China. SCMP noted, "Chinese investors complete products in Vietnam and then export them to the U.S.," explaining that "this has been used as a method to circumvent the tariffs on China implemented since 2018."

In fact, the market is concerned about the economic impact on Vietnam. According to Bloomberg News, the Vietnamese dong hit a record high of 25,535 dong per U.S. dollar the previous day. As a result, the dong's value fell by 0.6% against the dollar. This is interpreted as emerging market currencies, including Vietnam, a highly trade-dependent country, facing downward pressure.

Following President Trump's explosive remarks on steel and aluminum tariffs on the 10th (local time), there are also expectations that the U.S. may announce reciprocal tariffs this week. Barclays added that the U.S. "could announce reciprocal tariffs as early as this week."