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Ahead of the 1 Aug implementation date, the White House announced tariff rates on the rest of the trading partners, with whom deals are yet to be finalised. Officials were cited saying that countries had been classified into three groups – 10% for countries which run a deficit with the US, 15% for the ones that have either reached deals or run a modest surplus with the US and rest - with whom either deals have been struck, announcements already made or run significant surplus with the US, according to Bloomberg. This implies 10% on Singapore, while Thailand and Malaysia’s stands at 19%, with the rest already announced in the past few weeks (see our note here on the region and India).
Undercurrents are concerning. While there is clarity on the specific rates, the new rates are 2-6x of the average implied MFN rates in 2024, implying economic impact on the region and the US (inflationary for the latter besides potential demand compression). Details of the already signed deals suggest significant market access, trade and investment concessions have been offered to the US, with partner countries expected to work on the fine print in the coming months.
Considerations for the regional countries also differ. From the US’ point of view, a shift in Vietnam’s trade imbalances will matter the most, as the US ran the third biggest deficit with Vietnam last year. Rest in the region are smaller trading partners, by contrast. For Malaysia, the tariff stands at 19%, down from 24% in April, but uncertainty surrounding potential US semiconductor levies present a challenging outlook for the externally driven economy in 2H25. Thailand will see the second biggest drop in US reciprocal tariffs to 19% starting August 1 from the initially threatened 36%. However, the still-high import levy will still pose significant external headwinds, as the US is Thailand’s largest goods export partner with ~18% share. While the downside direct impact on Singapore would be contained, the city-state’s exports and economy will still face indirect negative impact through its trade-linkages with key trading partners, with further threats from sectoral tariffs like semiconductors and pharmaceuticals that are still under review. India opted to stay out of a hurried trade deal, preferring a phased tariff reduction and market access framework rather than an immediate across the board move. Absence of a trade deal coupled with dollar strengthening, however, hurt the rupee amid net FPI outflows. We expect tariff-related developments to remain fluid in the coming weeks.
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