Trucks loaded with shipping containers pass over Donghai Bridge to exit Yangshan Port outside of Shanghai, China, Feb. 7. (Reuters)
Trucks loaded with shipping containers pass over Donghai Bridge to exit Yangshan Port outside of Shanghai, China, Feb. 7. (Reuters)

Emerging economies worldwide are bracing for sliding currencies and a possible deterioration of their sovereign credit after US President Donald Trump's tariffs brought levies on US imports to their highest levels in 100 years.

The worse-than-expected tariff blitz hits Asia -- and some of the world's poorest nations -- the hardest. It could mark a negative turning point for emerging market debt just as many nations had hoped to lure investments after years of risk aversion.

Emerging economies worldwide are bracing for sliding currencies and a possible deterioration of their sovereign credit after US President Donald Trump's tariffs brought levies on US imports to their highest levels in 100 years.

The worse-than-expected tariff blitz hits Asia -- and some of the world's poorest nations -- the hardest. It could mark a negative turning point for emerging market debt just as many nations had hoped to lure investments after years of risk aversion.

The tariffs, which add to existing levies, will hit everything from Madagascar's vanilla, at 47%, to Sri Lanka's textiles at 44 percent.

"The shock to sentiment and capital flows is likely to endure and requires higher risk premia," investment bank JPMorgan said in a note, downgrading its stance on emerging market currencies to "underweight" and calling a possible turning point for emerging market debt.

Emerging markets had only last year started to reverse a decade-long deterioration in credit ratings following a wave of defaults, which was accelerated by the fallout from COVID-19 and was a key driver of rising borrowing costs. (Reuters)