As the Trump administration prepares to take office, analysts are identifying potential opportunities for tariff rate arbitrage. This comes amid expectations of increased tariffs on Chinese imports, which could have significant implications for global trade dynamics.
What Happened: Evan Feigenbaum, Vice President for Studies, Asia Pacific at the Carnegie Endowment for International Peace, identified potential for tariff rate arbitrage under the new Trump administration. Feigenbaum noted during CNBC’s “Squawk Box Asia” that tariffs on China are expected to be higher compared to other nations, as reported on Monday.
Feigenbaum explained the dual nature of former President Trump’s approach, describing it as either transactional or hawkish. He emphasized that Trump’s enthusiasm for tariffs remains evident, with many tariffs from his previous term still in place, now supported by the Biden administration.
“If you’re in the supply chain business there may be some ways to play that game but broadly speaking I think a lot of Asian countries and Asian economies are going to come under pressure and it’s not just a negotiating ploy, although it will be the entry of a negotiation,” he said.
Furthermore, Feigenbaum pointed out that Chinese companies have been investing in countries like Vietnam to circumvent tariffs. He noted that the Trump administration is more vigilant about such activities now, making it challenging for Asian countries to avoid this pressure.
Why It Matters: The potential increase in tariffs under the Trump administration is not without precedent. Earlier reports indicated that Goldman Sachs analyst Elsie Peng projected significant tariff hikes on Chinese imports, with average rates potentially rising by 20 percentage points. This could lead to ripple effects across the U.S. economy, impacting consumer prices and industrial production.
Additionally, economists have warned that Trump’s proposed tariffs on Canada, Mexico, and China could lead to higher costs for American households. The tariffs are expected to affect essential items like groceries, housing, and cars, potentially straining household budgets.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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