Who are the “Dirty 15”?

Several countries are in Trump’s crosshairs ahead of the 2nd April tariff deadlines:

On April 2nd 2025, the Trump administration is set to unveil a second wave of tariffs, following those already applied on Mexico, Canada, China, and various metals. There is significant speculation and uncertainty as to the exact details of these tariffs, although they are likely to be “reciprocal”: the US will match the level of tariffs that a country applies to US goods.

It is likely that not all US trading partners will be targeted: Treasury Secretary Scott Bessent has instead suggested targeting the so-called “Dirty 15” – those 15% of countries with whom the US has the largest trade deficit. Other measures, including tariff levels, non-tariff barriers, taxation, and regulation, will also be taken into account when deciding who to target.

Our analysis, based on a range of measures including trade deficits and different measures of tariff policy, shows that the “Dirty 15” group is likely to include China, the European Union, Mexico, Canada, Vietnam, India, Thailand, Japan, Brazil, Indonesia, South Korea, and Taiwan. Other countries, such as the UK and South Africa, could also potentially be targeted. Each country will likely receive its own individual tariff rate.

As has been the case in Trump’s second presidency, this remains a highly fluid situation, which is subject to change. America’s trading partners will have been hard at work trying to strike a deal with the Trump administration to stave off these tariffs, and Trump himself has said that he could potentially grant exemptions.

Business implications:

Given the extreme amount of uncertainty that surrounds the Trump administration’s tariff policy, there are several steps businesses need to take. Scenario planning and risk mitigation are a must: MNCs should consider developing different tariff scenarios, and prepare contingency plans for each (see our US-China scenarios and North America scenarios for additional inputs). From a mitigation perspective, firms should assess their exposure to tariffs on a country-by-country basis, and consider reducing any excessive dependency on a single supplier.

From a pricing perspective, companies should assess the extent to which they can pass on any additional costs to consumers: years of high inflation have made them price sensitive, and further increases could alienate them. Given the resilience of higher-income consumers (notably in the US), firms should consider prioritizing any price increases on their premium brands, while minimizing them for mass-market ones. Firms should also engage in negotiations with their suppliers to spread the burden of higher costs, although remain wary of potential financial strains in said suppliers.

From a longer-term perspective, the outlook remains extremely opaque and volatile. Firms should considering pausing or delaying any major capex plans, while simultaneously lobbying for more policy clarity (or tariff exemptions). Firms considering diversifying their supply chains from China should think twice about countries like Mexico or Vietnam – tariffs may alter the cost-benefit analysis of such markets.

What has been the response to Trump’s trade policy?

Tariffs, especially the uncertainty surrounding them, have proven unpopular among investors, businesses, and consumers. While the S&P 500 has regained some traction in recent days, it briefly entered correction territory in March amid a flurry of contradictory tariff-related headlines. Meanwhile, indicators of business sentiment have also soured since Trump’s inauguration: businesses’ expectations of future capital expenditures have fallen to their lowest level since the pandemic, according to the New York Federal Reserve. Consumers are also wary of tariffs, and their expectations of future inflation have increased since Trump’s return to the White House.

What about industry-wide tariffs?

Earlier this year, Trump proposed putting tariffs not just on individual countries, but also on entire industries: the three he suggested were autos, pharmaceuticals, and semiconductors, all set to come into play on April 2nd. The most recent information seems to suggest that Trump has walked back these plans, although this may be a delay rather than a full U-turn. Our view is that Trump will likely attempt to apply some of these tariffs (notably on autos) at some point this year, but be forced to dilute or strike them down given the economic dislocation they would cause.

Are we closer to the start or the end of the tariff saga?

In recent interviews, Trump has called reciprocal tariffs “the big one” – hinting that his administration may stop there afterwards. However, firms should consider two risks. First, Trump’s use of tariffs is not limited to trade: he is willing to apply them for a range of reasons, from extracting concessions on immigration and fentanyl, to applying geopolitical pressure. For this reason, the US president is likely to wield the tariff threat liberally and frequently for the remainder of his term. Second, the risk of blanket tariffs on all US imports is low, but has not gone away. A key signpost to monitor will be negotiations around the extension of the 2017 Tax Cuts, which expire at the end of 2025: the White House and Congressional Republicans may seek to extend the tax cuts, and fund this through tariff revenue. Firms should incorporate this scenario into their contingency plans.