Navigating the Trade Maze: China's Slippery Surplus and the Effects of US Tariffs on Global Markets

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Key highlights:
Closing the Year of the Dragon on a fiery note, China’s trade surplus reached a record high of nearly USD1tn in 2024. The Year of the Snake could however be slippery, with President Trump setting an increase in 10% tariffs against China.
Weaker export prices and currency may partly mitigate the impact of the trade war, although a mild depreciation of the Chinese Yuan is expected to arise from confidence effects and the risk of capital flight.
Similiar tariffs in Canada and Mexico could soon be fully implemented, putting at risk between USD60bn and USD100bn of Canadian exports, as well as between USD110bn and USD140bn of Mexican exports.
If a 10% universal US import tariff is implemented, it could threaten USD80bn of emerging market exports, and partners with large trade deficits (Vietnam, Taiwan, India, Thailand, Malaysia) could have a target on their backs.