Traders work on the floor of the New York Stock Exchange on April 4, 2025.
Spencer Platt | Getty Images News | Getty Images
The iShares MSCI Emerging Markets ETF (EEM) was on pace Friday for its biggest drop since June 2020, as President Donald Trump’s retaliatory tariffs raised fears of a global trade war and recession.
The fund last traded around 5% lower, and it is on track to lose more than 6% on the week. Year to date, it is now down more than 2%.
EM ETF on Friday
Many emerging market economies are key members of global supply chains and rely heavily upon exports for economic output, and they face significant headwinds from tariffs. Exports of goods and services accounted for 44% of South Korea’s GDP in 2023, according to the World Bank, and 21.8% for India and 19.7% for China.
The top 10 holdings of the exchange-traded fund, which account for 26.4% of total holdings, are all based in Taiwan, China, India or South Korea — nations that are among the hardest hit by Trump’s tariffs. Taiwan faces a 32% levy, while South Korea and India face a 25% and 26% rate, respectively.
China, which is subject to a cumulative tariff rate of 54%, announced on Friday that it would impose a retaliatory 34% duty on all U.S. imports from April 10. It also announced earlier in the week trilateral discussions with Japan and South Korea to coordinate their tariff response.
“If a trade war now is beginning, and if terms stay in place for an extended period and for many years, this is going to have more negative implications on the rest of the world than it will on the U.S. … Simply because exports and imports as a share of GDP is much more substantial in the rest of the world than it is in the U.S.,” said Torsten Slok, Apollo Global Management’s chief economist, during a conference call with investors Friday.
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