US ramps up tariff pressure as deal deadline looms
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Nikkei Asia
5 hours ago
- Nikkei Asia
Trump tariffs: Asian reaction to new US 'reciprocal' rates
TOKYO -- Hours ahead of his Aug. 1 deadline for new "reciprocal" tariffs, U.S. President Donald Trump has announced the rates he is going to impose on imports of goods from dozens of countries. The new rates include 25% on India, 20% on Taiwan and 19% on Thailand, Malaysia and Cambodia. Countries that run a trade deficit in goods with the U.S., such as Singapore, will face the baseline rate of 10%. Some of Asia's smallest economies have been hit hardest: Laos and Myanmar both face 40%. For more in-depth reaction and analysis, here are some of Nikkei Asia's recent articles on the U.S. tariffs: - Trump unveils new sweeping tariff rates up to 41% - Taiwan says US tariff deal not final, calls 20% hit 'temporary' - China pauses US-bound company investment amid trade war - India's Modi faces opposition slam after Trump slaps 25% tariff - South Korean stocks plunge nearly 4% following US trade deal Follow the latest developments in this live blog (Japan standard time): Saturday, August 2 12:15 a.m. Malaysia's tariff deal with the U.S. is a "win-win," the Southeast Asian country's trade minister said. The deal demonstrates the strong bilateral relationship between the two countries, Malaysian Trade Minister Zafrul Aziz told a news conference. The U.S. tariff rate of 19% is "fair," he said, given the circumstances faced by neighboring countries in the region. Read more. Friday, August 1 5:15 p.m. Thailand's acting Prime Minister Phumtham Wechayachai said at a cabinet meeting that the 19% tariffs on Thai products "are the same rate as many countries in the region, which is good news," according to a government spokesperson. "A key step for the Thai government is to issue a joint Thai-U.S. statement," Phumtham said, which the representatives from both sides have drafted. Earlier, Finance Minister Pichai Chunhavajira indicated that, unlike some other countries, Thailand did not agree to eliminate tariffs on all American products. "For the types of products we are prepared for, we will give them 0%. What we are not ready for yet, we won't allow it at all, or we will allow it partially, asking for three to five years to prepare," Pichai told local media. 3:45 p.m. Soh Thian Lai, president of the Federation of Malaysian Manufacturing, pointed out that the burden of tariffs is often shared across the supply chain. "A reduction in tariffs benefits not only Malaysian exporters but also U.S. importers. It improves the overall cost equation and can stimulate demand for Malaysian goods, especially in sectors where price plays a crucial role in purchasing decisions," Soh said. While it is still too early to assess the full impact, he anticipated that several export-oriented industries like electrical and electronics machinery and equipment, rubber-based products and processed industrial goods, may benefit from improved competitiveness and increased demand. And while some front-loading of orders may have occurred earlier, Soh predicted that the tariff cut is likely to encourage more exporters to consider "taking on new orders." 2:15 p.m. Alexandra Hermann, lead economist at U.K.-based consultancy Oxford Economics, said the 25% tariff rate on Indian exports -- higher than Asian peers such as Vietnam, Japan and South Korea -- will put the country at a disadvantage in the medium term, damaging "export prospects and investment appeal." Hermann warned that Trump's threat to penalize Russia's trading partners could also weigh on India, forcing it to replace discounted Russian oil. "Though probably temporary, an additional 100% duty over the remainder of Q3 would shock confidence and could push global oil prices to $80-$90, raising India's import bill," she said. "Public finances would likely take some of the hit to cushion the inflationary impact in the near term, with state-owned oil refiner margins potentially absorbing most of the cost." Hermann added that there is still room for negotiations, as indicated by Trump, with final tariffs of 15% "a plausible upside scenario." 2 p.m. Kriangkrai Thiennukul, president of the Federation of Thai Industries, stated that Thailand's success in negotiating the rate down from 36% to 19% reflects close cooperation between the public and private sectors. "This tariff rate is at an acceptable level. No one gains or loses too much. Overall, Thai products can still compete, but businesses with margins below 10% will need to cut costs, improve efficiency and negotiate with trading partners." 1:50 p.m. By midday, the Kuala Lumpur Stock Exchange was up nearly 20 points, or 1.3%, at 1,531.88, after slipping from its sharp rise to 1,533.10 at the opening. Hong Leong Investment Bank (HLIB) said in a statement that the EMS, or electronic manufacturing services, and glove industries are regarded as immediate beneficiaries of the tariff announcement. However, it noted that both sectors are "still grappling" with industry-specific headwinds, which could temper further rises. HLIB said its target for the benchmark KLCI for the rest of 2025 will be 1,640. 1:15 p.m. Top executives at Singaporean lender Oversea-Chinese Banking Corp. on Friday highlighted uncertainty and volatility from Trump's continuing trade war. While OCBC's home market Singapore, which has a trade deficit with the U.S., is set to have its tariff rate kept at the baseline of 10%, the bank counts China, a main target of Trump's protectionist campaign, as a key external market. "The impact we see in the environment is really customers re-evaluating their investment decisions," OCBC's Deputy CEO Tan Teck Long said during an earnings briefing on Friday. "When the tariff charge on China products was very high at triple digits, we found that the merchandise from a major manufacturing country such as China found its way to other markets ... [and] some of the local businesses suffer from this intense competition." 1 p.m. Tricia Yeoh, associate professor at the University of Nottingham Malaysia, raised concerns that the U.S. could place further pressure on Malaysia to concede on non-trade matters, including its relationship with China and countries in the Middle East. "If so, we are entering an interesting and unprecedented new global order, one in which non-traditional matters of security and foreign policy are grounds for negotiating traditional trade and economic deals," she said. All in all, she said she remains "cautiously optimistic," while countries in Southeast Asia and beyond need to be prepared to negotiate in unconventional ways. 12:45 p.m. For those of you focusing on Southeast Asia, here's a chart comparing how the U.S. tariff rates have changed from the initial announcement in April. 12:35 p.m. Deborah Kay Elms, head of trade policy at the Hinrich Foundation, a trade advocacy group, said the public would benefit from "greater clarity" from the White House, specifically on the transshipment provision, which indicates that "anyone found guilty" of doing this to evade duties will face a 40% levy. "It does not (at the moment) indicate Chinese content," she told Nikkei Asia. Elms argued the "bigger challenge" is that the tariffs in their current state are simply high. "There will be changes ahead. The document reserves the right for the president to modify rules. His agencies have a lot of latitude in implementation." 12:20 p.m. Malaysia's Trade Minister Zafrul Aziz welcomed the outcome, saying that it reflects "strong and enduring economic ties" between the two countries. "It is also a testament to Malaysia's credibility as a reliable trade and investment partner. We thank our counterparts in the U.S. especially the U.S. Trade Representative's Office and the Department of Commerce for their constructive cooperation and support throughout the negotiation process," Zafrul said in a statement. The statement also noted that Malaysia had "stood firm" on various "red line" items such as its affirmative action Bumiputera policy, procurement and opportunities for local companies. 12:10 p.m. Brian McFeeters, CEO and president of the US-ASEAN Business Council, said that since the "reciprocal" tariff rates for exports to the U.S. from several Southeast Asian countries are the "same or close," there should not be "massive shifts" in movable production. "The ASEAN countries have engaged in constructive negotiations with the U.S. administration and there may be scope for further tariff adjustments or other changes in the coming months," McFeeters told Nikkei Asia. 11:55 a.m. Piyasak Manason, head of economic research at InnovestX Securities in Bangkok, said the 19% U.S. tariff represents a "relatively positive outcome" for Thailand. "This tariff level allows Thai businesses to maintain competitiveness while managing the adjustment costs," he wrote, as Thailand's tariff rates were similar to those of regional competitors. At the same time, he warned that several key Thai export industries, such as electronics, machinery and processed foods, will face substantial pressure. "This tariff level allows Thai businesses to maintain competitiveness while managing the adjustment costs," he said. At the same time, the key is "how quickly Thai businesses can adapt through market diversification, productivity improvements and value-chain repositioning." 11:50 a.m. Cambodia's Deputy Prime Minister Sun Chanthol, who led negotiations with the White House, said that while the government welcomed the lowered tariff rate -- Cambodia was facing 49% in April -- it would continue to work with the U.S. to bring it down further. He said that all imports from the U.S. would face 0% duties. Chanthol added that the prospects of tariffs had spurred the government to increase its investment in the domestic market and infrastructure, saying the government would create 300,000 jobs a year. "For Cambodian workers in other countries, please come back home. We will have lot of jobs," he vowed. Chanthol also announced Cambodia was buying 10 Boeing planes for its national carriers, with the option of buying 10 more. Ken Loo, spokesperson for the Textile, Apparel, Footwear & Travel Goods Association in Cambodia, said the tariffs were likely to hit exports even though Cambodia is in the same range as some of its garment-exporting competitors like Vietnam, Indonesia and Bangladesh. "For sure this will affect exports in the short term, because I think this is going to result in lower profitability or higher consumer prices across the board," Loo said. 11:45 a.m. Stephen Olson, senior visiting fellow at the ISEAS -- Yuosf Ishak Institute and a former U.S. trade negotiator, told Nikkei Asia that Trump has "fundamentally rewritten the rules of global trade." "Instead of the U.S. at the head of a system created to reduce trade barriers and conduct trade relationships according to predictable, mutually agreed rules, countries wishing to trade with the U.S. will now face dramatically higher tariffs that could be further increased at the whim of a president who has shown a disdain for trade rules and trade agreements -- even those which he himself has signed," he said. Olson said that while many countries continue to adhere to the principles of free trade, the U.S. is effectively opting out and it "remains to be seen how or if that system can continue to function." He warned that the latest announcement is unlikely to be the end of the story. "Trump regards this as an ongoing reality show. More 'deals' or further tariff increases are almost certain to follow." Southeast Asian countries hoping to pursue export-led development "will be especially hard hit," he said. As for China, Olson said it "has an opportunity to pick up the pieces and seize the mantle -- perhaps rhetorically more than in practice -- as the leader of rules based trade." At the same time, Trump's imposition of a 40% transshipment duty will be perceived as directed against Chinese interests and "will inevitably spill over" in the superpowers' ongoing trade negotiations. 11:35 a.m. Nazir Razak, chair of the ASEAN-Business Advisory Council (ASEAN-BAC) said the reduction in tariffs on Malaysian goods from 25% to 19% is a "positive step forward" and hopefully there would be opportunity for further engagement and reductions. "ASEAN-BAC encourages continued efforts toward a more predictable, open and mutually beneficial trade environment for Malaysia and other ASEAN nations," he said. On the semiconductor front, Wong Siew Hai, president of Malaysia Semiconductor Industry Association commended that the government has put in a tremendous amount of effort to get it down as low as possible, in a "more level playing ground" relative to all the other countries in ASEAN. "From our perspective, the way I see it is that currently business will be as normal. Meanwhile, everybody has to find a way to compete as aggressively as possible, by working on productivity, getting on into technology and so on, until everything settles. Nothing is said about the sectoral tariff that is currently exempted," Wong said. 11:30 a.m. Australia's Minister for Trade Don Farrell said the country's engagement with the U.S. had paid off after the U.S. ally's tariff rate remained at 10%, and added that the government would move to take advantage of having a more competitive rate than some peers. "This is a vindication for the Albanese government, and particularly the prime minister, in the cool and calm way that we have conducted diplomacy with the United States," Farrell told reporters in Adelaide on Friday. He said Australian products like beef -- its top export to the U.S. -- as well as lamb, wine and wheat would be more competitive in the U.S. "As a government, we will assist all of our exporters in ensuring that we take advantage of this situation and increase the volume of exports, not just to the United States, but to all of those other countries that we have diversified with," he said, adding the government would continue pushing its U.S. counterparts to eliminate tariffs and had invited U.S. Secretary of Commerce Howard Lutnick to Australia for discussions. 11:05 a.m. Here are the U.S. "reciprocal" rates on key Asian countries: For further charts on the latest tariffs, check out our tracker. 11:05 a.m. The latest U.S. tariff adjustments reflect a more nuanced approach to "friendshoring," targeting countries closely tied to Chinese value chains while easing pressure on those like Malaysia that retain strategic flexibility, said Khoo Ying Hooi of the University of Malaya. "It signals that the U.S. is not shutting out ASEAN but curating trade ties based on geopolitical behavior," she told Nikkei Asia, adding it boosts investor confidence in Southeast Asia as a viable alternative for supply chain diversification. Former diplomat Ilango Karuppannan agreed, calling it a dual message of discipline and openness. While higher tariffs may raise cost concerns, he said the move also reaffirms Southeast Asia's strategic role in U.S. supply chain realignment. Countries like Malaysia, Thailand, and Indonesia may benefit as "second-best" but geopolitically favorable options. Mohd Faiz Abdullah of the Institute of Strategic and International Studies noted that Malaysia's role in the Thai-Cambodia truce and Prime Minister Anwar Ibrahim's diplomatic engagement influenced the outcome. "This deal was reached without compromising our sovereignty -- our Bumiputera policy, procurement rules, and domestic space remain intact," he said, referring to affirmative action policies to help native Malays. 11 a.m. Taiwan's President Lai Ching-te posted on Facebook that his negotiators in Washington were informed by the U.S. that the 20% rate is "provisional." "The main reason is that, due to procedural arrangements, the U.S. and Taiwan have not yet completed the final wrap-up meeting," Lai wrote. "If an agreement is reached later, the rate is expected to be reduced." He added that the two sides will continue negotiations on supply chain cooperation and other matters. 10:55 a.m. Thai Deputy Prime Minister and Finance Minister Pichai Chunhavajira, who led the government's negotiation team, said in a social media post: "It helps maintain Thailand's competitiveness on the global stage, boosts investor confidence, and opens the door to economic growth, increased income, and new opportunities for the country. "The outcome of this negotiation signals that Thailand must accelerate its adaptation and move forward in building a stable and resilient economy, ready to face global challenges ahead." 10:50 a.m. Wendy Cutler, senior vice president of the Asia Society Policy Institute and a former deputy U.S. Trade Representative, flagged some of the key things in, and missing from, Trump's executive order (EO): "What seems to be absent from the EO is whether existing or new rules of origin will be issued and/or negotiated. This is of key importance in light of the 40 percent transshipment tariff now applicable beyond Vietnam. "U.S. companies will also face challenges as they navigate this new tariff landscape. Of particular concern is the continued uncertainties they will face with new sectoral tariffs coming and possibilities of additional tariffs if the Administration believes countries are not operating in good faith in their implementation efforts. "No doubt about it -- the EO and related agreements concluded over the past few months tears up the trade rule book that has governed international trade since WW2. Whether our partners can preserve it without the United states is an open question." 10:45 a.m. U.S. President Donald Trump announced the new tariff rates in an executive order early evening Washington time, early morning in East Asia.
NHK
a day ago
- NHK
US Fed Governor Kugler to resign, allowing Trump to pick replacement
The US Federal Reserve has announced that its board member, Adriana Kugler, will step down on August 8. President Donald Trump will replace her with his pick. The Fed said on Friday that Kugler will resign and return to a university as a professor this fall. She will have resigned before the end of her term set in January next year. Kugler is one of the seven members of the board of governors. The Fed chair is elected from the board members. US media suggested Trump would take the opportunity to influence the leadership of the central bank. Trump has strongly criticized Fed Chair Jerome Powell over monetary policies, apparently believing he should resign. News outlet Axios reported that Kugler's resignation will give Trump "an early opportunity to appoint a favored candidate for potential leadership of the central bank." Trump spoke to reporters after Kugler's resignation was announced. He said, "I'm very happy" that "I have an open spot on the Federal Reserve Board."
Japan Times
a day ago
- Japan Times
India aghast at Donald Trump's ‘dead' economy dig and 25% tariffs
Shock, dismay and angst swept across India as businesses, policymakers and citizens digested U.S. President Donald Trump's sharp remarks and a surprise 25% tariff rate earlier this week. While Indian government officials weighed a response and business groups tallied the cost of the trade barrier, the domestic social media flared up with users protesting Trump's comments and criticizing Indian Prime Minister Narendra Modi for not speaking up. It started with Trump saying that India's trade barriers were the "most strenuous and obnoxious,' in a Truth Social post on Wednesday. He added the U.S. may also impose a penalty for New Delhi's purchase of Russian weapons and energy. Less than a day later, he ripped into India again for aligning with Russia, calling them "dead economies' in another post. With no imminent trade deal, the 25% tariffs kicked in as of Friday. India is hardly alone in facing Trump's trade wrath — and not the subject to the very highest rates — but the news left business and political leaders wondering how to cope with the fallout. 'Blunt-force' message "Overnight, the U.S.-India trade equation shifted from tense to turbulent,' said Akshat Garg, assistant vice president at Choice Wealth, a Mumbai based financial services firm. The levies "feel less like structured policy and more like a blunt-force political message.' Complicating the narrative around the India trade deal — or the lack of it — was the U.S. pact with its traditional rival Pakistan that came through on the same day. As the U.S. released rates across the world on Aug. 1, India's relative disadvantage to competitor exporting countries became more apparent, dampening moods and stoking tempers further. "The biggest blow is that Pakistan and Bangladesh got a better rate than us,' said V. Elangovan, managing director at SNQS Internationals, an apparel-maker in the south Indian manufacturing hub of Tirupur. "We were expecting something in the 15% to 20% range.' India's annoyance can be traced back in part to Trump declaring himself the peacemaker that helped broker a ceasefire in the armed conflict between India and Pakistan in May. The move was seen as an effort to upstage Modi and put the two South Asian neighbors on an equal footing, despite India's larger military and economy. The events of this week have cemented that impression further in the eyes of some Indian observers. When the tariff rate news first dropped late Wednesday evening in India, Ashish Kanodia recalls being "very disturbed.' A director at Kanodia Global, a closely held exporter that gets over 40% of its revenue from the U.S. selling home fabrics to toys, the entrepreneur already has two of its largest U.S. customers seeking discounts to make up for the levy. "The next six months are going to be difficult for everyone,' Kanodia said, adding that profit margins will be squeezed. If the pain continues for "months and months,' he said he'll have to start cutting his workforce. The U.S. is India's largest trading partner, with the two-way trade between them at an estimated $129.2 billion in 2024. Compared with India's 25%, Bangladesh was subjected to a 20% tariff, Vietnam got a 20% levy and Indonesia and Pakistan each received 19% duties. "We know that we have got a deal that is worse than other countries,' said Sabyasachi Ray, executive director at The Gem and Jewelry Export Promotion Council. "We will take it up with the government.' Trump's actions mark a 180-degree turn for New Delhi's hopes of preferential treatment over regional peers. It was among the first to engage Washington in trade talks in February, confident of hammering out a deal sooner than others. Trump had called Modi "my friend' in a Feb. 14 post on X and the bond between the two countries "special.' India is now weighing options to placate the White House, including boosting U.S. imports, according to people familiar with the matter, and many hope that the bilateral relationship and the tariff rate can still be improved. "It is a storm in the India-U.S. relationship at this moment but I think there's a good chance that it will go away,' said Vivek Mishra, deputy director of the Strategic Studies Program at Delhi-based Observer Researcher Foundation. Indian business and trade groups are supporting the government's stance on the deal as the negotiations for a U.S.-India trade deal continue. Negotiating tactic Jewelry businesses "are worried but they are not panicking' because they hope a more favorable deal can be worked out, said Ray of the gems export body. "The negotiation that should be happening should be a win-win, not a win-lose.' The abrupt announcement by Trump over social media when negotiations with India were ongoing "seems like a knee-jerk reaction,' according to Rohit Kumar, founding partner at public policy research firm The Quantum Hub. "This appears to be a negotiating tactic aimed at unresolved discussion points,' Kumar said.
