Asian stocks edge higher as Trump open to tariff talks
The MSCI regional stock benchmark advanced 0.1% led by gains in South Korean and Japanese stocks. Contracts for the S&P 500 were little changed after falling on Monday on tariff angst. The won and the yen gained slightly while the dollar dipped 0.2% after jumping the most in three weeks on Monday. Treasuries inched lower with yields on the 10-year rising about 1 basis point to 4.39%.
After announcing higher levies on several countries, Trump said he was still open to additional negotiations and pushed off increased duties until at least Aug 1. The president also teased the possibility of additional negotiations and delays later Monday at the White House, saying the notifications were 'not 100% firm.'
Despite Monday's fall, stocks are hovering around record high levels. Markets recovered from their April plunge - when sweeping levies were announced - fueled by expectations that the tariff deadline will be extended, based on Trump's pattern of threatening first and backing down later, a strategy analysts and strategists call 'TACO' for 'Trump Always Chickens Out.'
'Investors are looking past the latest tariff announcements, seeing them as a tactic to accelerate negotiations, rather than the final word of where duties will ultimately land,' said Frederic Neumann, HSBC's chief Asia economist.
On Monday, Trump released the first in a series of tariff warning letters, just two days before agreements are due on countries facing his April 2 so-called reciprocal levies. The new rates include 25% duties on goods from Japan, South Korea, and Malaysia; 32% on Indonesia; 35% on Bangladesh; 36% on Thailand and Cambodia; and 40% on Laos and Myanmar.
'Maybe adjust a little bit, depending,' Trump said, indicating he would look favorably on countries continuing to offer additional concessions. 'We're not going to be unfair.'
Despite the market turmoil from Trump's tariffs, stocks globally have rebounded from their April lows, reflecting optimism that Japan and other countries will strike deals with the US to avoid derailing growth.
So far, the US economy has held up under the threat of a spiraling global trade war. Hiring is healthy and inflation has remained tame. The Federal Reserve is wary about tariffs and wants to see how they feed through to output in the next few months.
The narrative that the US president is again engaged in a negotiating tactic rather than serious threats means dip buyers will likely pile in. The more uncertain the trade path is, the more certain investors are that the impact will be minimal.
One positive to be taken away from the latest trade developments was that the higher tariffs won't be in place during July. That means 'an indirect extension' of the original 90-day pause that would expire on Wednesday, said Ian Lyngen and Vail Hartman at BMO Capital Markets.
'The outcome could certainly have been more dire for the economic outlook had the additional window of relief not been included in the latest trade-war salvo,' they noted.
Indian officials familiar with the matter said the nation had made its best offer on trade and the fate of an interim deal now lies in the hands of Trump. Negotiators conveyed to Washington the red lines they were unwilling to breach in finalizing an agreement, including allowing the US to export genetically modified crops to India, and opening up India's dairy and automobile sectors to America.
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Bangkok Post
5 hours ago
- Bangkok Post
China pressures rebels in Myanmar rare-earth belt
The global supply of heavy rare earths hinges in part on the outcome of a months-long battle between a rebel army and the Chinese-backed military junta in the hills of northern Myanmar. The Kachin Independence Army since December has been battling the junta over the town of Bhamo, less than 100 kilometres from the Chinese border, as part of the civil war that erupted after the military's 2021 coup. Nearly half the world's supply of heavy rare earths is extracted from mines in Kachin state, including those north of Bhamo, a strategically vital garrison town. They are then shipped to China for processing into magnets that power electronic vehicles and wind turbines. China, which has a near-monopoly over the processing of heavy rare earths, has threatened to halt buying the minerals mined in KIA-controlled territory unless the militia stops trying to seize full control of Bhamo, according to three people familiar with the matter. The ultimatum, issued by Chinese officials to the KIA in a meeting earlier this year, underscores how Beijing is wielding its control of the minerals to further its geopolitical aims. One of the people, a KIA official, said the Chinese demand was made in May, without detailing where the discussions took place. Another person, a KIA commander, said Beijing was represented by foreign ministry officials at the talks. Reuters could not determine whether China had carried out its threat. Fighting in the region has restricted mining operations and rare-earth exports from Myanmar have plunged this year. China spooked global supply chains this spring when it restricted exports of the minerals in retaliation against US President Donald Trump's tariffs. It is now using its dominance to shore up Myanmar's beleaguered junta, which China sees as a guarantor of its economic interests in its backyard. China's foreign ministry said in response to Reuters' questions that it was not aware of the specifics of deliberations with the KIA. 'An early ceasefire and peace talks between the Myanmar military and the Kachin Independence Army are in the common interests of China and Myanmar as well as their people,' a ministry spokesperson said. A senior KIA general did not respond to a request for comment. The KIA official, who spoke on condition of anonymity to discuss sensitive matters, said Beijing also offered a carrot: greater cross-border trade with KIA-controlled territories if the militia abandoned efforts to seize Bhamo, a logistics hub for the junta and home to some 166,000 people. 'And if we did not accept, they would block exports from Kachin State, including rare-earth minerals,' said the official, who did not elaborate on the consequences of an economic blockade. Beijing is not seeking to resolve the wider civil war but it wants fighting to subside in order to advance its economic interests, said David Mathieson, an independent Myanmar-focused analyst. 'China's pressure is a more general approach to calming down the conflict.' (Story continues below) Defying Beijing The battle for Bhamo began soon after the KIA wrested control of the main rare-earths belt in Kachin last October. After its takeover, the KIA raised taxes on miners and throttled production of dysprosium and terbium, sending prices of the latter skyrocketing. Supply has been squeezed, with Beijing importing 12,944 tonnes of rare-earth oxides and metals from Myanmar in the first five months of 2025, according to Chinese customs data. That is down by half from the same period last year, though exports rose more than 20% between April and May. The KIA, which analysts estimate has over 15,000 personnel, was founded in 1961 to fight for the autonomy of Myanmar's Kachin minority. Battle-hardened through decades of combat and funded by a combination of local taxation and natural resources, it is among the strongest of Myanmar's rebel groups. The militia is confident of its ability to seize Bhamo and believes Beijing won't ultimately carry out its threat to stop exports due to its thirst for the minerals, two of the people said. Myanmar has been in crisis since the military overthrew a democratically elected government in 2021, violently quashing protests and sparking a nationwide armed rebellion. Swathes of territory were subsequently seized by anti-junta forces, but the rebels have come under Chinese pressure to make concessions to the military. Beijing has also sent jets and drones to the junta, which is increasingly reliant on airpower, according to the US-based Stimson Centre think-tank. China, which has major investments in Myanmar, last year brokered a ceasefire for the junta to return to Lashio, a northeastern town housing a regional military command. More than 200km to the north, about 5,000 KIA and allied personnel have been involved in the offensive for Bhamo, according to a KIA commander with direct knowledge of the fighting. Losing Bhamo would cut off the military's land and river access to parts of Kachin and neighbouring region, isolating its troops housed at military bases there and weakening its control over northern trade routes, according to Maj Naung Yoe, who defected from the junta after the coup. The junta spokesperson's office told Reuters that China may have held talks with the KIA, but it did not respond to a question about whether it had asked Beijing to threaten a blockade. 'China may have been exerted pressure and offered incentives to the KIA,' it said in a statement. Beijing first advised the rebels to pull back from Bhamo during negotiations in early December, according to the KIA official. Instead of withdrawing from Bhamo after those talks, the KIA doubled down, according to the commander and the official. The International Institute for Strategic Studies said in a May briefing that the battle for Bhamo had cost the KIA significant resources and hundreds of casualties. Beijing became more confrontational during further discussions that took place in spring, when its representatives threatened to stop rare-earth purchases, the official said. A disruption in the movement of heavy rare earths from Kachin could lead to a deficit in the global market by the end of the year, said Neha Mukherjee of the UK-based consultancy Benchmark Mineral Intelligence. Supplies of the critical minerals outside China were already constrained, she said: 'In the short term, during the brief disruption period, prices outside of China could shoot up higher.' Battle for Bhamo The KIA has pushed junta troops into a handful of isolated pockets, according to the commander. But the junta retains air superiority and has devastated large parts of Bhamo with relentless airstrikes, according to the KIA official, the commander and a former resident of the town. The junta spokesperson's office said it was permitted to strike such sites because the KIA had been using them for military purposes, though it did not provide evidence. Nathan Ruser, an analyst at the Australian Strategic Policy Institute, who has reviewed satellite imagery of Bhamo, said much of the damage across the town appeared to be from airstrikes. Airstrikes have killed civilians including children and destroyed schools and places of worship, according to Khon Ja, a Kachin activist from Bhamo who said her home had been bombed. 'I don't know for how long that the revolutionary groups will be able to resist Chinese pressure,' she said, adding that existing border restrictions had led to shortages of petrol and medicine in Kachin. Despite the obstacles, KIA leaders believe capturing Bhamo would shift momentum in their favour and strengthen public support. If the ethnic army were to take control of the entire state, then Beijing would have no option but to negotiate and sideline the junta, the commander and the official said.
Bangkok Post
8 hours ago
- Bangkok Post
Thai exports face ‘severe harm' if high tariff sticks
Thai exports could contract in the second half of this year if the United States imposes a 36% tariff rate starting next month, business leaders said on Tuesday. Starting on Aug 1, Washington plans to impose a 36% tariff on all Thai products, separate from sectoral tariffs, according to a letter signed by President Donald Trump and issued on Monday. Finance Minister Pichai Chunvajira said the letter was sent before US officials had seen a revised proposal from Thailand, and he expressed optimism that Thai negotiators could get the tariff rate reduced. Dhanakorn Kasetrsuwan, chairman of the Thai National Shippers' Council, said a 36% tariff could severely harm Thailand's export market, particularly as nations such as Vietnam (20%) and Malaysia (25%) currently have significantly lower rates. This could diminish Thailand's competitiveness, leading to a shift in orders to those countries, he said. Moreover, high tariffs could deter foreign investment, with potential investors opting for locations such as Vietnam or Malaysia due to unfavourable tariff conditions in Thailand, said Mr Dhanakorn. He urged the government to study Vietnam's approach, which quickly led to an agreement with Washington, in part by agreeing to eliminate tariffs for all US products as Hanoi did. Mr Dhanakorn said the government must develop a model that equally engages both China and the US, while exploring the possibility of offering zero tariffs on US products. 'A 36% tariff will definitely affect Thai exports, potentially causing them to contract in the latter half of the year. The severity of the downturn will depend on how much higher Thailand's tariffs are compared with those of competitors,' he said. Mr Dhanakorn said the speed at which competitors can replace Thai export orders to the US will be another important factor. The United States accounts for more than 18% of all Thai exports by value. The government must weigh the long-term impact on Thai exports, looking beyond the immediate effect on orders, he said. Poj Aramwattananont, chairman of the Thai Chamber of Commerce and the Thai Board of Trade, said Thailand's negotiating team should promptly revise its proposals for US review, as the tariff enforcement has now been postponed to Aug 1. The government is planning a meeting on Wednesday on tariffs with the Joint Standing Committee on Commerce, Industry and Banking, according to Mr Poj. Commerce Minister Jatuporn Buruspat said the ministry would have discussions with related industries to evaluate the impacts and plan appropriate countermeasures. 'The export structure will inevitably change regardless of the tariff rates,' he said. 'We will explore various strategic models, including the possibility of reducing tariffs on US products to zero.' Team Thailand and relevant ministers have a meeting planned at Phitsanulok Mansion on Friday for further discussions.
Bangkok Post
10 hours ago
- Bangkok Post
Analysts warn of 'tariff shock' if talks fail
The Stock Exchange of Thailand (SET) index could fall below 1,000 points and the country's GDP growth to less than 1% if the Thai negotiating team led by Finance Minister Pichai Chunhavajira cannot convince the US to lower its reciprocal tariff from 36%, analysts said on Tuesday. Bualuang Securities (BLS) said the worst-case scenario would be a 36% tariff on US imports of Thai shipments, which would cause Thai GDP growth to plunge to 0.9%, while the SET index could fall to 980 points. It was 1,115.65 at the close on Tuesday. In such a scenario, every major Southeast Asian nation would gain a competitive advantage over Thailand, the BLS note said. Based on current information, the Thai tariff rate would exceed that of Indonesia at 32%, Malaysia at 25% and Vietnam at 20%. 'This scenario would cause a severe economic impact,' said Piriyapon Kongvanich, strategist at BLS. Veeravat Virochpoka, head of research at FSS International Investment Advisory Securities, said the proposed US tariff on Thai goods also exceeds that on major Asian economies such as Japan, South Korea and Taiwan. Export-oriented industries, particularly electronics, food and agricultural products, could be damaged by a high US tariff on Thai goods, FSS noted. Electronics companies ship an average 20-30% of their exports to the US. 'We remain hopeful that the Thai government can convince Washington over the next three weeks to lower the reciprocal tariff on Thai exports. The highest rate the market expects is 18%,' said Mr Veeravat. Therdsak Thaveeteeratham, executive vice-president of the research division at Asia Plus Securities, also said the high US tariff carries downside risks for Thai GDP growth, pressuring the 2025 estimate to 1.3% and 1.5-1.6% for next year. 'Thailand may face tariff shock, especially with additional tariffs on exports of automobiles and parts, steel and aluminium,' said Mr Therdsak. However, he said, in the worst-case scenario the SET index should not fall below its previous low of 1,056-1,060 points, the level recorded when US President Donald Trump first announced the reciprocal tariffs. 'If the government submits a really good proposal that prompts Trump to change his mind, we can expect some upside,' said Mr Therdsak. He said the Thai negotiating team should take into account the possible adverse impacts of the proposed low tariffs on agricultural products imported from the US. "A high proportion of the Thai economy and population is involved in the farming sector. If the tariffs on US imports are too low, both the social and economic impacts would be too high,' said Mr Therdsak. "The Bank of Thailand should lower interest rates to revitalise the economy."
