At this point, it is challenging to determine the precise impact of tariffs on EM economic activity as there are too many moving parts, including the possibility of negotiated reductions, retaliatory actions by US trading partners, and fluctuations in the currencies of affected economies. That said, we can look at the current level of tariffs and exports to the US to give us an idea about the portion of EM GDP that is at risk.
In the US, the Trump administration’s imposition of tariffs on imports from trading partners across the world has seen markets plunge. Here is what we are thinking as a credit desk and how we are approaching portfolios