Whether that Donald Trump puts heavy tax on Mexican goods could help the country mobilize enough money to construct the border wall between the two nations or not, it will bring out changes to the global commercial map.
In late January, 2017, the US Government informed that they had been considering levying a 20% tax on goods imported from Mexico for construction expenditure of the border wall. After that, two economists from Deutsche Bank - Robin Winkler and George Saravelos have calculated the commercial loss of many countries if they are taxed like Mexico.
Bloomberg reported that Mexico sustains the biggest loss with 6.5% net trade impact of GDP. Following are Vietnam (4.6%), Canada (4.5%) and other Asian countries like Malaysia (2.7%) and Thailand.
The US is considering putting tax on imported goods to narrow the trade deficit and increase the competitiveness of domestic goods exports. Impacts on the US trade partners depend on the Americans’ demands for their products.
If the demand is heavily fluctuating when the prices change, the trade partners will be greatly impacted. For instance, if the products are manufactured in Taiwan and imported to the US with a sudden increase of 10% of price, the buyers may choose domestic products instead.
This strategy will help the US narrow the trade deficit and be successful with its own targets as Trump’s priority is his country’s interests. However, it will lead the US dollars to increase due to high demand of domestic products. Nevertheless, the economists claim that this will not happen immediately and is hard to forecast.
They concluded that even if the US dollars increase reducing the advantages the US enterprises taking from tax reduction, the strategy will seriously undermine the bilateral trade relations of the US.
-Compiled by VietnamCredit-