Emerging markets gain from tariff shake-up
Published: 04:04 PM,Apr 28,2025 | EDITED : 08:04 PM,Apr 28,2025
The Trump administration has now deferred the reciprocal tariff for three months with the exception of China. However, enormous tariffs will remain on China, the world’s second-largest economy, which also Trump may reconsider in due course.
The decision to pause the tariff may be an acknowledgement of the fact that the policy would be economically unsustainable and would harm the US economy. Economists noted that there could be a downturn in the US economy, which they would find it difficult to reverse easily.
The world economy to learn from the broad tariff agenda and the tactics of the US. It may be noted that President Donald Trump announced his tariff plan against all countries of the world, citing that the US is being treated unfairly in global trade, creating an imbalance in tariffs. His stance was that if they charge us, we charge them.
OPPORTUNITIES IN THE MEDIUM TO LONG TERM HORIZON
The Emerging Market (EM) economies of the world may find opportunities in the medium to long term horizon in several areas due to the tariff threats. The short term impact will be very high as this can have far reaching consequences on economies, business entities and consumers. It is a fact that it has already created uncertainties in the global trade.
Undoubtedly, the move applicable to most goods imported to the US would have adversely impacted all countries of the world and in particular the emerging market economies like India, Brazil, Indonesia, Thailand, Turkey, Vietnam, South Africa etc. The impact would have been minimal in GCC, particularly Oman.
US would be imposing a tariff of 10 per cent on goods imported from Oman, while other nations at substantially higher rates. The GCC have an advantage of their currency being pegged to the US Dollar and therefore the strengthening or weakening of the USD has little impact on the exchange front.
Countries like China started imposing retaliatory tariffs on imports from the US, adding fuel to the fire, which irked the Trump administration, in not revoking the tariff on China.
Truly speaking, the uncertain situation evolved due to the US administration’s announcement may be treated as an opportunity for all world economies to be self-sufficient in goods and services, wherever possible, and also to diversify trade relationships. The world economies, particularly the emerging market economies, to focus on self-sufficiency plans to reduce their dependence on major economies of the world taking cues from the current scenario.
These economies to encourage diverse industries, stimulate investments in domestic infrastructure, and make the goods and services available at internationally competitive rates.
Support the Small and Medium-sized Enterprises (SMEs), startups, and other export-oriented activities by making available all infrastructure facilities, including cheaper and affordable finance, besides tax sops. Innovations in manufacturing processes and the development of new industries, as is happening in China, may be followed.
Invest in research and development, and skill upgradation areas to meet global demands. The economies that are heavily dependent on crude oil imports to focus on non-conventional energy to reduce the import bill.
In short, while tariffs can pose significant threats to emerging market economies, they also can offer opportunities for growth and innovation. No doubt, the tariff move will negatively impact the GDP growth of all economies of the world in the short term. A solution in the medium to long term horizon will be strengthening regional trade agreements, enhancing economic cooperation among the emerging market economies.
The global trade landscape is evolving and therefore it is essential for them to remain agile and proactive in addressing the challenges and opportunities created by the reciprocal and retaliatory tariffs.
R Madhusoodanan
The writer is the Executive Advisor to the Board, Global Money Exchange, and Muscat
The decision to pause the tariff may be an acknowledgement of the fact that the policy would be economically unsustainable and would harm the US economy. Economists noted that there could be a downturn in the US economy, which they would find it difficult to reverse easily.
The world economy to learn from the broad tariff agenda and the tactics of the US. It may be noted that President Donald Trump announced his tariff plan against all countries of the world, citing that the US is being treated unfairly in global trade, creating an imbalance in tariffs. His stance was that if they charge us, we charge them.
OPPORTUNITIES IN THE MEDIUM TO LONG TERM HORIZON
The Emerging Market (EM) economies of the world may find opportunities in the medium to long term horizon in several areas due to the tariff threats. The short term impact will be very high as this can have far reaching consequences on economies, business entities and consumers. It is a fact that it has already created uncertainties in the global trade.
Undoubtedly, the move applicable to most goods imported to the US would have adversely impacted all countries of the world and in particular the emerging market economies like India, Brazil, Indonesia, Thailand, Turkey, Vietnam, South Africa etc. The impact would have been minimal in GCC, particularly Oman.
US would be imposing a tariff of 10 per cent on goods imported from Oman, while other nations at substantially higher rates. The GCC have an advantage of their currency being pegged to the US Dollar and therefore the strengthening or weakening of the USD has little impact on the exchange front.
Countries like China started imposing retaliatory tariffs on imports from the US, adding fuel to the fire, which irked the Trump administration, in not revoking the tariff on China.
Truly speaking, the uncertain situation evolved due to the US administration’s announcement may be treated as an opportunity for all world economies to be self-sufficient in goods and services, wherever possible, and also to diversify trade relationships. The world economies, particularly the emerging market economies, to focus on self-sufficiency plans to reduce their dependence on major economies of the world taking cues from the current scenario.
These economies to encourage diverse industries, stimulate investments in domestic infrastructure, and make the goods and services available at internationally competitive rates.
Support the Small and Medium-sized Enterprises (SMEs), startups, and other export-oriented activities by making available all infrastructure facilities, including cheaper and affordable finance, besides tax sops. Innovations in manufacturing processes and the development of new industries, as is happening in China, may be followed.
Invest in research and development, and skill upgradation areas to meet global demands. The economies that are heavily dependent on crude oil imports to focus on non-conventional energy to reduce the import bill.
In short, while tariffs can pose significant threats to emerging market economies, they also can offer opportunities for growth and innovation. No doubt, the tariff move will negatively impact the GDP growth of all economies of the world in the short term. A solution in the medium to long term horizon will be strengthening regional trade agreements, enhancing economic cooperation among the emerging market economies.
The global trade landscape is evolving and therefore it is essential for them to remain agile and proactive in addressing the challenges and opportunities created by the reciprocal and retaliatory tariffs.
R Madhusoodanan
The writer is the Executive Advisor to the Board, Global Money Exchange, and Muscat