Asia, the world’s economic engine, prepares for Trump shock

Asia, the world’s economic engine, prepares for Trump shock
Pakistanis read morning newspapers which cover headline story about the results of US presidential elections, at a stall in Peshawar on November 7, 2024. (AP)
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Updated 10 November 2024
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Asia, the world’s economic engine, prepares for Trump shock

Asia, the world’s economic engine, prepares for Trump shock
  • Trump vowed during campaign to slap 60 percent tariffs on Chinese goods entering US 
  • Move could impact Southeast Asia where production chains are closely linked to China 

TOKYO: Some Asian countries stand to gain if US president-elect Donald Trump pushes ahead with his promised massive tariffs on China and triggers a new wave of factory relocations to the rest of the region.
But a trade war between the world’s biggest economies would also destabilize markets everywhere, with Asia — which contributes the largest share of global growth — the most affected.
Trump, who won a crushing presidential victory this week, vowed during his campaign to slap 60 percent tariffs on all Chinese goods entering the United States in an attempt to balance trade between the two nations.
Analysts however question whether the new president will stick to such a high figure, and dispute the blow such tariffs could inflect on the Chinese economy, estimating GDP could be lowered by between 0.7 percent and 1.6 percent.
The cooling effect would also make waves throughout Southeast Asia, where production chains are closely linked to China and enjoy significant investment from Beijing.
“Lower US demand for Chinese goods due to higher tariffs on China will translate into lower demand for ASEAN exports, even if there aren’t US tariffs levied directly onto those economies,” said Adam Ahmad Samdin, of Oxford Economics.
Indonesia is particularly exposed through its strong exports of nickel and minerals, but China is also the top trading partner of Japan, Taiwan and South Korea.
In addition to China, Donald Trump has also warned of an increase of 10 to 20 percent on duties for all imports, as part of his protectionist policies and fixation that other countries take advantage of the US.
“The extent of these effects likely depends on the direct exposure of each economy to the US,” said Samdin, who added that America accounts for a 39.1 percent share of Cambodian exports, 27.4 percent from Vietnam, 17 percent from Thailand and 15.4 percent from the Philippines.
Trump first slapped China with heavy tariffs in 2018 during his first administration, leading to the emergence of “connector countries,” through which Chinese companies passed their products to avoid American taxes.
Those countries could be in the line of fire now.
“Vietnam’s electronics exports to the US could also be targeted by Trump, in a bid to halt the diversion of Chinese electronic products to the US via Vietnam since 2018,” said Lloyd Chan, a senior analyst at MUFG, Japan’s largest bank.
“This is not inconceivable. Trade rewiring has notably gained traction in the region’s electronics value chain.”
“India could itself become a target of protectionist measures by the US due to the large share of Chinese components in Indian products,” added Alexandra Hermann, an economist with Oxford Economics.
Trump could also impose higher tariffs on Indian goods in sectors such as “automobiles, textiles, pharmaceuticals and wines, which could make Indian exports less competitive in the US,” said Ajay Srivastava of the New Delhi-based Global Trade Research Initiative.
A trade war would be dangerous for India, said Ajay Sahai, director of the Federation of Indian Export Organizations.
“Trump is a transactional person. He may target higher tariffs on certain items of Indian exports so he can negotiate for lower tariffs for US products in India,” he told AFP.
In the medium term, these negative effects could be counterbalanced by establishing factories outside China to escape the fallout.
The “China+1” strategy initiated during Donald Trump’s first term saw production shifts to India, Malaysia, Thailand and Vietnam.
With its geographical position and cheap skilled labor, Vietnam has already been one of the main beneficiaries.
The country has notably received investments from Taiwanese Apple subcontractors Foxconn and Pegatron and South Korea’s Samsung, becoming the second-largest exporter of smartphones in the world behind China.
“The likelihood increases that even more businesses will want to... have a second, or third, production base outside China,” said Bruno Jaspaert, chairman of the European Chamber of Commerce in Vietnam.
Chinese firms themselves are investing massively from Vietnam to Indonesia in sectors including solar, batteries, electric vehicles and minerals.
“American companies and investors are very interested in opportunities in Vietnam and this will continue under the incoming Trump Administration,” said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi.
But whether it is low-end or high-tech production, China’s competitive advantage in terms of price, scale and quality is difficult to reproduce, warns Nomura bank.
A reorganization of production chains could lead to a “loss of efficiency” and increased prices, “with a negative impact on global growth,” Thomas Helbling, deputy director of the IMF for Asia, recently explained to AFP.
Asian countries could therefore gain export market share but ultimately see their situation deteriorate amid weakening global demand.


Japan’s finance minister calls US Treasury holdings ‘a card’ in tariff talks with Trump

Japan’s finance minister calls US Treasury holdings ‘a card’ in tariff talks with Trump
Updated 59 min 29 sec ago
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Japan’s finance minister calls US Treasury holdings ‘a card’ in tariff talks with Trump

Japan’s finance minister calls US Treasury holdings ‘a card’ in tariff talks with Trump
  • Japan is the largest foreign holder of US government debt, at $1.13 trillion as of late February
  • The US is due to soon begin imposing a 25 percent tariff on imported vehicles and auto parts, as well as an overall 10 percent baseline tariff

TOKYO: Japan’s massive holdings of US Treasurys can be “a card on the table” in negotiations over tariffs with the Trump administration, Finance Minister Katsunobu Kato said Friday.
“It does exist as a card, but I think whether we choose to use it or not would be a separate decision,” Kato said during a news show on national broadcaster TV Tokyo.
Kato did not elaborate and he did not say Japan would step up sales of its holdings of US government bonds as part of its talks over President Donald Trump’s tariffs on exports from Japan.
Earlier, Japanese officials including Kato had ruled out such an option.
Japan is the largest foreign holder of US government debt, at $1.13 trillion as of late February. China, also at odds with the Trump administration over trade and tariffs, is the second largest foreign investor in Treasurys.
Kato stressed that various factors would be on the negotiating table with Trump, implying that a promise not to sell Treasurys could help coax Washington into an agreement favorable for Japan.
Trump has disrupted decades of American trade policies, including with key security allies like Japan, by i mposing big import taxes, or tariffs, on a wide range of products.
A team of Japanese officials was in Washington this week for talks on the tariffs.
The US is due to soon begin imposing a 25 percent tariff on imported vehicles and auto parts, as well as an overall 10 percent baseline tariff. The bigger tariffs will hurt at a time when Japanese economic growth is weakening.
Asian holdings of Treasurys have remained relatively steady in recent years, according to the most recent figures.
But some analysts worry China or other governments could liquidate their US Treasury holdings as trade tensions escalate.
US government bonds are traditionally viewed as a safe financial asset, and recent spikes in yields of those bonds have raised worries that they might be losing that status due to Trump’s tariff policies.


Greece arrests man on suspicion of spying for Russia

Greece arrests man on suspicion of spying for Russia
Updated 02 May 2025
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Greece arrests man on suspicion of spying for Russia

Greece arrests man on suspicion of spying for Russia
  • The source added that the suspect, who had served in the Russian army in his youth, had apparently been enlisted by Russia’s GRU military intelligence service via an intermediary
  • The Greek port of Alexandroupolis has been a key gateway for the American military

THESSALONIKI: Greek authorities have arrested a man in the strategic port city of Alexandroupolis on suspicion of photographing supply convoys on behalf of Russia, police said.
The suspect, a 59-year-old Greek citizen of Georgian descent, was arrested in the northeastern city on Tuesday and on Friday was taken before an investigating magistrate, according to police and media reports.
The man “confessed to taking photos and video of military material, acting on behalf of another person to whom he sent the footage via an encrypted application,” the police statement said in a statement released on Tuesday.
A police source told AFP this week that the man, who has identified himself as a house painter, was targeting military convoys to Ukraine, according to footage retrieved from his cellphone.
The source added that the suspect, who had served in the Russian army in his youth, had apparently been enlisted by Russia’s GRU military intelligence service via an intermediary.
Greek media have reported that this intermediary was a Georgian man with organized crime links living in Lithuania.
Despite historic ties to Russia, Greece has supported Ukraine since the start of the invasion.
The Greek port of Alexandroupolis has been a key gateway for the American military, used to transport supplies into Europe under a mutual defense pact.


Thailand reports first anthrax death, hundreds potentially exposed 

Thailand reports first anthrax death, hundreds potentially exposed 
Updated 02 May 2025
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Thailand reports first anthrax death, hundreds potentially exposed 

Thailand reports first anthrax death, hundreds potentially exposed 
  • A 53-year-old man in Mukdahan province, in northeastern Thailand near the border with Laos, died on Wednesday after contracting anthrax
  • There are plans to vaccinate 1,222 cattle, though no animals have shown signs of illness or unexplained death, it added

BANGKOK: Thailand has reported its first anthrax-related death with two infections nationwide, prompting a public health alert after authorities identified hundreds potentially exposed to the deadly bacteria, officials said on Thursday.
A 53-year-old man in Mukdahan province, in northeastern Thailand near the border with Laos, died on Wednesday after contracting anthrax, the government said, with a second case confirmed in the same province and three additional suspected cases under investigation.
Authorities have identified at least 638 people as being potentially exposed after eating raw meat. Among them, 36 had participated in butchering livestock while the rest had consumed raw or undercooked beef, health officials said. All are receiving antibiotics as part of containment measures.
“All individuals who may have been in contact with infected meat are being monitored,” the health ministry said.
The Livestock Department is overseeing containment efforts in the affected area, including a 5-km (3.2-mile) quarantine zone around the infection site, the agriculture ministry said.
There are plans to vaccinate 1,222 cattle, though no animals have shown signs of illness or unexplained death, it added.
Anthrax is a rare but serious disease caused by bacteria often transmitted through contact with infected animals or consumption of contaminated meat. It is not spread person-to-person.
Thailand last reported human anthrax cases in 2017, when two people were infected without fatalities. In 2000, 15 cases were recorded, also without deaths.
Wednesday’s death, the first fatality from anthrax in Thailand, follows a rise in regional infections. Laos reported 129 anthrax infections last year, including one death, while Vietnam confirmed 13 cases in May 2023.
Thai authorities are continuing investigations into the source of the infection and said they would maintain heightened surveillance in border areas.


Australian PM says battle ahead to win election

Australian PM says battle ahead to win election
Updated 02 May 2025
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Australian PM says battle ahead to win election

Australian PM says battle ahead to win election
  • Polls have suggested 10 or more unaligned crossbenchers could yet hold the balance of power
  • Albanese is promising modest tax cuts, cheaper health care and new homes for first-time buyers

SYDNEY: Australian Prime Minister Anthony Albanese says he has a “mountain to climb” in elections Saturday, despite leading the opinion polls, in a contest swayed by living costs and Trump tariffs.
Surveys give Albanese’s left-leaning Labour Party a narrow lead over the conservative opposition on a two-party preferred basis.
If they are right, Albanese, 62, could lead his party to a majority in the 150-seat parliament.
“On polls there’s a lot of undecided voters. We have a mountain to climb,” Albanese said Friday.
“My job is to maximize Labor’s vote in the next 48 hours. That’s what I’m intending to do.”
Albanese has promised to embrace renewable energy, tackle a worsening housing crisis and pour money into a creaking health care system.
He warned of “cuts and chaos” under a right-leaning coalition led by former police officer Peter Dutton, 54, who wants to slash immigration, crack down on crime and ditch a longstanding ban on nuclear power.
Dutton, leader of the Liberal Party, has predicted “a lot of surprises, seat by seat” on Saturday night.
“I haven’t met an Australian on this campaign who said that they’re better off today than they were three years ago,” he said.
A result could come as soon as Saturday night, unless the vote is very tight.
A total 18.1 million voters have enrolled for the election. More than a third of them have cast an early ballot, the election authority says.
Voting is compulsory, enforced with fines of Aus$20 ($13), leading to turnouts that top 90 percent.
Sizzling snags (sausages) cooked by local fundraisers also entice voters at more than 1,000 polling sites, searchable at democracysausage.org.
High prices are the top voter concern, polls show.
Albanese is promising modest tax cuts, cheaper health care and new homes for first-time buyers.
Dutton says he would slash fuel tax, curb gas prices and invest in infrastructure for half a million homes.
Both sides have had to grapple with US politics too.
The six-week election campaign had barely started when US President Donald Trump unveiled his trade tariffs, with a 10-percent levy on Australia.
Some polls showed Dutton leaking support because of Trump, who he praised earlier this year as a “big thinker” with “gravitas” on the global stage.
As Australians soured on the US president, both Dutton and Albanese took on a tougher tone, promising to stand up for Australia’s interests.
Coal mining superpower Australia will choose between two leaders with sharply contrasting ideas on climate change and emissions reduction.
Albanese’s government has embraced the global push toward decarbonization, warning of a future in which iron ore and polluting coal exports no longer prop up the economy.
Dutton’s signature policy is a $200 billion scheme to construct seven industrial-scale nuclear reactors, doing away with the need to ramp up renewables.
Growing disenchantment among voters has emboldened independents pushing for greater transparency and climate progress.
Polls have suggested 10 or more unaligned crossbenchers could yet hold the balance of power — making a rare minority government a possibility.


Hard right wins local UK election in blow to PM Starmer

Hard right wins local UK election in blow to PM Starmer
Updated 02 May 2025
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Hard right wins local UK election in blow to PM Starmer

Hard right wins local UK election in blow to PM Starmer
  • The group’s strong showing continues momentum it built up at last year’s general election and appears to confirm a trend that the UK is entering an era of multi-party politics
  • Labour won Runcorn with 53 percent of the vote last year, meaning it was one of its safest seats, while Reform got just 18 percent

RUNCORN: Hard-right upstarts Reform UK snatched a parliamentary seat from Prime Minister Keir Starmer’s Labour party on Friday in local elections that dealt a blow to Britain’s two establishment parties.
Reform, led by anti-immigrant firebrand Nigel Farage, won the by-election in Runcorn and Helsby in northwest England by just six votes, as it picked up gains in other localities including one mayoralty.
The group’s strong showing continues momentum it built up at last year’s general election and appears to confirm a trend that the UK is entering an era of multi-party politics.
“For the movement, for the party it’s a very, very big moment indeed,” Brexit champion Farage said of Reform’s first-ever by-election win and Starmer’s first electoral loss since he took office last July.
Reform also picked up dozens of council seats from both Labour and the Conservatives as Britain’s political landscape shows signs of splintering.
In the fight for six mayoralties, Reform won Greater Lincolnshire with Labour holding three. Labour, however, only narrowly held the North Tyneside mayoralty after a 26-percent swing to Reform.
New Greater Lincolnshire mayor Andrea Jenkyns said the “fightback to save the heart and soul of our great country has now begun.”
“Now that Reform is in a place of power, we can help start rebuilding Britain. Inch by inch,” she said.
The polls were the first since Starmer became prime minister and Kemi Badenoch took over the reins of the struggling opposition Conservatives last year.
Just 1,641 seats across 23 local authorities were up for grabs — only a fraction of England’s 17,000 councillors — but early results suggested Reform was transferring leads in national polls into tangible results at the ballot box.
“The big question we wanted to know after these results was are the polls right in suggesting that Reform now pose a significant challenge to both the Conservatives and the Labour party? The answer to that question so far is quite clearly yes,” political scientist John Curtice told the BBC.
The centrist Liberal Democrats and left-wing Greens also expected to make gains, as surveys show Britons are increasingly disillusioned with the two main parties amid anaemic economic growth, high levels of irregular immigration and flagging public services.
Reform, which has vowed to “stop the boats” of irregular migrants crossing the English Channel, is hoping that winning mayoralties and gaining hundreds of councillors will help it build its grassroots activism before the next general election — likely in 2029.
British politics have been dominated by the center-left Labour party and center-right Tories since the early 20th century.
But “British politics appears to be fragmenting,” Curtice wrote in the Telegraph this week.
He said Thursday’s polls were “likely be the first in which as many as five parties are serious players.”
Labour won a huge parliamentary majority in July with just 33.7 percent of the vote, the lowest share for any party winning a general election since World War II.
The Conservatives won just 24 percent of the vote, securing only 121 seats in the 650-seat parliament as the party endured its worst election defeat.
Reform picked up five seats, an unprecedented haul for a British hard-right party, although one of those now sits as an independent. After Friday’s win, their tally now stands at five again.
The Liberal Democrats in July won 61 more MPs than at the previous election and the Greens quadrupled their representation to four.
Labour won Runcorn with 53 percent of the vote last year, meaning it was one of its safest seats, while Reform got just 18 percent.
At a result declared shortly before 6:00 am (0500 GMT) Friday, election officials said Reform’s Sarah Pochin secured 12,645 votes to 12,639 for Labour candidate Karen Shore. Turnout was 46 percent.
The vote was sparked after sitting Labour MP Mike Amesbury was convicted of assault for punching a man in the street.
Labour spokesperson said by-elections are “always difficult for the party in government” and the events surrounding the Runcorn vote made it “even harder.”
On Tuesday, Reform UK topped a YouGov poll of voting intentions in Britain with 26 percent, three points ahead of Labour and six up on the Conservatives.
Labour has endured criticism over welfare cuts and tax rises that it claims is necessary to stabilize the economy.
As Labour edges rightwards it is facing a growing challenge from the Greens on the left.
Under threat from Reform on the right, the Tories are also being squeezed on the left by the Liberal Democrats, the traditional third party, which was eyeing gains in the wealthy south.