Most emerging nations can realign trade to weather US tariffs, report finds
The paper did not examine Brics member Russia
[LONDON] Most big emerging economies, including China, Brazil and India, can weather US tariffs without excessive pain, a study by risk consultancy Verisk Maplecroft showed.
This raises doubt about the clout of US President Donald Trump’s trade tools.
The firm analysed the resilience of 20 of the biggest emerging markets, using measures from debt levels to export-revenue reliance, to gauge their ability to handle trade volatility and rapidly shifting geopolitical alliances.
“Most manufacturing hubs globally are in a better position in their current baseline than you would think or give them credit for, to weather this tariff storm specifically coming out of the US, even if it comes to full capacity,” said Reema Bhattacharya, head of Asia research who co-authored the report.
Mexico and Vietnam are among the most exposed to US trade dependence, the paper showed. But progressive economic policies, improving infrastructure and political stability meant they were among the more resilient economies.
Brazil and South Africa, it said, are effectively building links with other trade partners, that could shield them in coming years.
“Almost every emerging market or global market understands that we need to do business with the US and China, but we can’t over-rely on either. So we need a third market,” Bhattacharya said, adding that trade between members of the Brics group of developing nations was rising.
The Maplecroft paper did not examine Brics member Russia, a founding member of the group of major emerging economies that promotes cooperation and seeks to counterbalance Western economic influence.
It was originally an acronym for Brazil, Russia, India, China and South Africa, but the group has since added five new members: Egypt, Ethiopia, Iran, the United Arab Emirates, and Indonesia.
China, though particularly exposed to geopolitical tensions with the US, “is so entrenched it’s actually almost impossible to replicate it elsewhere”, she added.
She cited Beijing’s diversified export base and its human capital.
A manufacturing juggernaut, China is in the crosshairs of Trump’s efforts to reshape global trade policy.
Data out earlier this week showed that in October, China exports suffered their worst downturn since February, shortly after Trump returned to the White House.
Bhattacharya also pointed to China’s years-long effort to expand the use of the renminbi in trade settlements as “a pragmatic push for economic resilience and geopolitical risk diversification”.
Brazil, Argentina and Chile have signed local-currency settlement arrangements with China’s central bank, while Chinese state-owned enterprises and investors are financing lithium and copper projects in Chile, Bolivia and Peru. REUTERS
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