Asia faces $621B Tariff Threat as US Tightens Trade Security
As the US Supreme Court deliberates on the future of President Donald Trump’s reciprocal tariffs, Washington is broadening another formidable trade instrument. A distinct array of responsibilities established for national security reasons could impact Asian exports valued at as much as $621 billion if implemented in full, as reported. Even if the highest court invalidates the reciprocal tariffs, the White House retains considerable authority to impose duties in accordance with current trade laws. These measures, currently implemented in various sectors, present significant risks for both competitors and trusted US allies in Asia. The Supreme Court is anticipated to deliver a ruling regarding the legality of Trump’s reciprocal tariffs, which are a key component of his trade strategy. A negative verdict would represent a significant setback for the administration. Trump has contended that refunding over $200 billion already paid by importers would result in a “complete mess”.
However, the administration possesses alternative options. At the forefront is Section 232 of the Trade Expansion Act of 1962, which permits tariffs on particular products if imports are considered a national security threat. Last year, the Trump administration initiated 14 Section 232 investigations, focusing on products including machinery, critical minerals, pharmaceuticals, and automobiles. Nikkei Asia discovered that Trump is responsible for 40 percent of all such investigations since the law was enacted over sixty years ago. In 2017, he became the first president to impose tariffs under Section 232 and has since relied heavily on this provision. During his current term, the tariffs encompass steel, aluminium, cars, furniture, kitchen cabinets, copper, and semiconductors — all of which are not included in the Supreme Court case. China stands as the most vulnerable Asian economy, facing $142 billion in goods at risk due to current or forthcoming Section 232 actions. Japan follows closely with $107 billion, whereas South Korea encounters risks amounting to approximately $102 billion in exports.
Even nations that have entered into free trade agreements with the United States are not entirely safeguarded. While certain nations, such as Japan and South Korea, have established fixed tariffs in specific sectors, these agreements may not be applicable to future investigations. Steel and aluminium imports now encounter tariffs of 50 per cent, an increase from the previous 25 per cent imposed earlier last year. The United States imports 50% of its aluminum and 25% of its steel, with Canada being the leading supplier. According to the report, China is at the forefront of Asian exporters, with Japan and South Korea following closely behind. Copper imports faced a 50 per cent tariff in August. China emerged as the largest supplier, primarily through copper-based electrical products, with Vietnam following closely behind. Wood products are subject to duties that range from 10 per cent to 25 per cent, impacting furniture, cabinets, and vanities. Vietnam and China collectively represent more than one-third of the impacted imports. Imported cars and auto parts currently encounter tariffs of 25 per cent, while Japan and South Korea have successfully negotiated a lower rate of 15 per cent through trade agreements. Japanese automakers experienced a significant $9.7 billion earnings hit last year due to rising costs, according to the report.
Medium- and heavy-duty trucks are also subject to a 25 per cent duty, while buses face a 10 per cent levy. While the majority of vehicles are assembled within the country, manufacturers depend on imported steel and aluminium. Semiconductors are currently subjected to 25 percent tariffs on advanced chips. Taiwan and Malaysia emerged as the largest suppliers in 2024, with Vietnam taking the lead in diodes and photosensitive devices. Chipmaking equipment primarily originated from Singapore and Japan. The administration is currently assessing wind turbines, robotics, drones, pharmaceuticals, medical supplies, and critical minerals. The United States is wholly reliant on imports for 12 essential minerals and depends on China for 70 percent of its rare-earth supplies.
