US tariff letters ignite fresh issues: Amundi | Australian Markets
The Trump administration’s levying of adjusted tariff charges on sure trade companions, to come back into impact from 1 August, has sparked fresh issues over stalling financial growth.
The latest commentary from the Amundi Investment Institute indicated that the estimated GDP loss from tariffs imposed by the US at more than 10 per cent varies from 0.2 to three.0 throughout Asia, with Thailand on the high (3.1) intently adopted by Vietnam (3.0).
South Korea nonetheless takes fairly a hit at 1.1, with the Philippines (0.3), Japan (0.2) and Indonesia (0.2) additionally following.
This comes because the letters additionally embody a clause that inflicts a greater tariff on transshipment, with Vietnamese-origin cargo thought-about to be transshipped items subject to a 40 per cent tariff.
“While final tariff levels remain highly uncertain, it is worthwhile to begin assessing their impact on growth through trade channels across countries,” Alessia Berardi, Head of Emerging Macro Strategy on the Amundi Investment Institute, mentioned.
“Asia is especially affected. Despite the challenges in imposing transshipping tariffs, medium and small open economies within the area face important growth impacts, as they bear among the many highest tariff charges within the new letters of intent.
“However, the situation remains fluid. Indonesia is a case in point, seeing a tariff reduction from 32% to 19% on the back of a deal to lower its own tariffs on the US and reduce its trade surplus. Japan also managed to reach a deal a few days after its upper house election, lowering the tariff from 25% to 15%.”
Europe additionally noticed greater tariffs imposed within the current letters despatched out (30 per cent) than on ‘Liberation Day’ (20 per cent), with an anticipated GDP loss of 0.4. Brazil was additionally one of the hardest-hit international locations, with a 50 per cent tariff contained within the letter – considerably greater than the ten per cent imposed on Liberation Day.
“Regarding Europe, the implementation of higher tariffs from 1 August is likely to cause a contraction in economic activity, potentially reducing growth by an additional 0.3% to 0.4% through the trade channel between the second half of 2025 and the first half of 2026,” Berardi mentioned.
“With the latest tariff letters, the efficient average tariff fee within the US is anticipated to rise from the present 15% to a vary of 17% to twenty%. This increase might negatively impression US GDP by roughly 0.4% and raise the core Personal Consumption Expenditures inflation fee by about 0.2%.
“Concerning inflation in the rest of the world, in the absence of significant retaliatory measures, persistent supply chain disruptions, and
weak currency trends, price dynamics are expected to remain subdued due to weaker demand.”
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