Brazil, India, Vietnam among trade partners at Risk of US reciprocal tariffs: Fitch Ratings

On a simple average basis, the highest differentials are in Brazil, India and Turkey

Fitch Ratings expects the US administration’s reciprocal tariff review to result in higher tariff rates, according to a new report. There is a high risk that tariffs ensnare many U.S. trading partners, particularly those emerging market economies where the tariff rates faced by U.S. exporters exceed those charged on US imports from these countries.

Brazil, India, Thailand, Malaysia, South Africa, Turkey and, on a simple average tariff basis, Vietnam and Indonesia, impose notably higher tariffs on exports from the U.S relative to tariffs imposed by the U.S. on imports from these countries.

Fitch compares tariff rates faced by U.S. exporters in trade partner markets in 2023 with the tariff rates paid by U.S. importers on goods sourced from those trade partners. The comparison includes two alternative tariff measures – simple average tariffs and trade weighted tariffs. The former is a simple unweighted average of tariffs on all traded products and is largely a reflection of ex ante tariff rate policy choices. Trade-weighted tariff rates are more heavily influenced by the sectoral mix of bilateral trade, as also detailed in the report.

The Most Favored Nation (MFN) tariff rate on all exports from the U.S. is 3.9pp higher than the tariff rate imposed on all U.S. imports, on a simple average basis, and 1.0pp on a trade-weighted basis. The trade weighted tariff differential ranges from a 5.4pp in Thailand to minus 1.7pp in Switzerland.

On a simple average basis, the highest differentials are in Brazil, India and Turkey. Indonesia and Vietnam also have a high differential on a simple average basis, but the differential is negative on a trade weighted basis. U.S. imports from these two countries are dominated by footwear and textiles, where the U.S. import tariff rates is quite high. U.S. exports to Vietnam are skewed towards machinery and equipment, where Vietnam’s tariff rate is relatively low.