Consumer goods most affected by reciprocal tariffs announced by US administration

Tariffs for all: 10 percentage points now, 16.8 percentage points to follow

The US government has declared an International Emergency Economic Powers Act (IEEPA) action, citing “a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption.”

As a consequence, tariffs of 10 percentage points will be applied to all countries and products (with several exceptions) from April 5 with additional country-specific rates to be applied from April 9.

Functionally speaking, exceptions will include all imports from Canada and Mexico as well as products already subject to, or under investigation for, duties under other IEEPA measures or Section 232 (national security) tariff provisions.

The calculation of the country-specific duty rates includes differential tariff rates, non-tariff barriers, currency practices and the use of value-added taxes.

• No details are provided on how precisely these have been incorporated for each country, although our prior analysis suggests around 4.8 percentage points of increase could be the result of differential tariff rates alon
• The additional country duty rates vary from 0 percentage point (including the UK, Brazil and Singapore) to as much as 40 percentage points (including Lesotho at 40 percentage points, Cambodia at 39 percentage points, Vietnam at 36 percentage points, Thailand at 26 percentage points and mainland China at 24 percentage points). The impact on individual countries will depend on the share of their exports to the US, typically in the 20%-30% range.
• Taking a weighted average, that implies the average tariff rate for the countries and products covered under the new duties is 26.8%, implying a 16.8-percentage-point rise on April 9.
• The implied increase on all US imports — i.e., when adding back Canada and Mexico — is equivalent to 20.5 percentage points, adding US$458 billion of import duties to be paid by US  buyers of overseas goods and services.

Unhappy holidays: Consumer goods face brunt of tariffs

The impact of the new duties on individual supply chains can be calculated from the share of imports by country and the new duty rates applied — i.e., those products with a high proportion of imports from higher-tariff-rate countries will experience a higher rate.

Finished consumer goods are among the most notable examples as a result. Imports of toys and video games, which are predominantly imported from mainland China, face an average duty rate increase of 30.4 percentage points. That comes on top of the 20 percentage points’ higher duty rates applied against imports from mainland China.

Other examples include computer parts (29.6 percentage points), clothing (28.3 percentage points with some as high as 36.9 percentage points) and smartphones (27.0 percentage points).

Sectors where supply chains already relocated to Canada or Mexico face lower additional rates, including aerospace parts (10.6 percentage points), televisions (9.6 percentage points) and medical diagnostic equipment (9.5 percentage points). The food and spirits sectors are also relatively unaffected.

It should be noted that imports from Canada and Mexico that are not United States-Mexico-Canada Agreement (USMCA) free trade-eligible will still pay an additional 25% rate under previously announced rules.

Many of the products that are excluded from these new duties will face their own tariff reviews and may end up with duties of around 25%, including copper, lumber, pharmaceuticals and semiconductors, after the reviews are completed in a few months.

Autos as well as steel and aluminum already have 25% duties applied.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.