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.


Iran summons British envoy after arrest of nationals

Iran summons British envoy after arrest of nationals
Updated 19 May 2025
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Iran summons British envoy after arrest of nationals

Iran summons British envoy after arrest of nationals

TEHRAN: Iran has summoned a British envoy in Tehran to protest the arrest of several of its nationals on charges of spying, state media reported Monday.
“Following the unjustified arrest of a number of Iranian nationals in the UK... the British charge d’affaires in Tehran was summoned on Sunday,” the IRNA news agency said, describing the arrests as “politically motivated.”
Three Iranian men appeared in a London court on Saturday charged with spying for the Islamic republic.
They were arrested on May 3 and identified as Mostafa Sepahvand, 39, Farhad Javadi Manesh, 44, and Shapoor Qalehali Khani Noori, 55, all living in London.
The British Home Office said they were irregular migrants who arrived by small boat or other means, such as hidden in a vehicle, between 2016 and 2022.
The alleged spying took place from August 2024 to February 2025, according to UK police.
A fourth man was arrested on May 9 as part of the investigation, but has now been released without charge, the police said in a statement.
Five Iranians were also arrested on May 3 in a separate investigation.
Four of the men — who had been held on suspicion of preparation of a terrorist act — had been released, although the investigation “remains active and is ongoing,” police said.
The fifth was earlier bailed to an unspecified date in May.


Indonesia searches for 19 people after landslide at gold mine in Papua

Indonesia searches for 19 people after landslide at gold mine in Papua
Updated 19 May 2025
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Indonesia searches for 19 people after landslide at gold mine in Papua

Indonesia searches for 19 people after landslide at gold mine in Papua

JAKARTA: Indonesian rescue teams were searching for 19 people missing after heavy rain caused a landslide at a gold mine in its easternmost region of Papua, officials said on Monday.
Torrential rain triggered a landslide late on Friday in a small-scale mine run by local residents in the Arfak mountains in West Papua province, said Abdul Muhari, the spokesperson of Indonesia's disaster mitigation agency.
The landslide hit temporary shelters used by the miners and killed at least one person and injured four with 19 others still missing, he added.
At least 40 rescuers with police and military personnel had been deployed to search for the missing, officials said.
Small-scale and illegal mining has often led to accidents in Indonesia, where mineral resources are located in remote areas in conditions difficult for authorities to regulate.
The rescuers started the search operation only on Sunday because it took at least 12 hours for teams to travel to the site, Yefri Sabaruddin, the head of the local rescue team, told Reuters on Monday.
"The damaged roads and mountainous tracks as well as bad weather hampered the rescue efforts," Yefri said.
The number of casualties could rise, he added.
At least 15 people died in the collapse of an illegal gold mine in West Sumatra province September last year after a landslide caused by heavy rains.
Another landslide in a gold mine on Sulawesi island killed at least 23 people in July last year. 


Trump to hold call with Putin in push for Ukraine ceasefire

Trump to hold call with Putin in push for Ukraine ceasefire
Updated 19 May 2025
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Trump to hold call with Putin in push for Ukraine ceasefire

Trump to hold call with Putin in push for Ukraine ceasefire
  • Says he would also speak to Ukraine's President Zelensky and NATO officials
  • Trump has repeatedly stressed that he wants to see an end to the Ukraine-Russia conflict

WASHINGTON: US President Donald Trump will hold a phone call with Russia’s Vladimir Putin on Monday as part of his long-running effort to end the war set off by Moscow’s 2022 invasion of Ukraine.
Trump had vowed during the US election campaign to halt the conflict within a day of taking office, but his diplomatic efforts have so far yielded little progress.
Delegations from Russia and Ukraine held direct negotiations in Istanbul last week for the first time in almost three years, but the talks ended without a commitment to a ceasefire.
Both sides traded insults, with Ukraine accusing Moscow of sending a “dummy” delegation of low-ranking officials.
After the negotiations, Trump announced that he would speak by phone with the Russian president in a bid to end the “bloodbath” in Ukraine, which has destroyed large swathes of the country and displaced millions of people.
Trump also said he would speak to Ukrainian President Volodymyr Zelensky and NATO officials, expressing hope that a “ceasefire will take place, and this very violent war... will end.”
Since taking office in January, Trump has repeatedly stressed that he wants to see an end to the conflict, and has recently backed calls for an unconditional 30-day ceasefire.
So far, he has mainly focused on upping the pressure on Ukraine and abstained from criticizing Putin.
Both Moscow and Washington have previously stressed the need for a meeting on the conflict between Putin and Trump.
The US president has also argued that “nothing’s going to happen” on the conflict until he meets Putin face-to-face.

At the talks in Istanbul, which were also attended by US officials, Russia and Ukraine agreed to exchange 1,000 prisoners each and trade ideas on a possible truce, but with no concrete commitment.
Ukraine’s top negotiator, Defense Minister Rustem Umerov, said that the “next step” would be a meeting between Putin and Zelensky.
Russia said it had taken note of the request.
“We consider it possible, but only as a result of the work and upon achieving certain results in the form of an agreement between the two sides,” the Kremlin’s spokesperson said.
Ukraine’s western allies have since accused Putin of deliberately ignoring calls for a ceasefire and pushed for fresh sanctions against Russia.
The leaders of Britain, France, Germany and Italy held a phone call with Trump on Sunday.
“Looking ahead to President Trump’s call with President Putin tomorrow, the leaders discussed the need for an unconditional ceasefire and for President Putin to take peace talks seriously,” said a spokesman for British Prime Minister Keir Starmer.
“They also discussed the use of sanctions if Russia failed to engage seriously in a ceasefire and peace talks,” the spokesman said.
Zelensky also discussed possible sanctions with US Vice President JD Vance when they met after Pope Leo’s inaugural mass at the Vatican on Sunday.
“We discussed the talks in Istanbul, where the Russians sent a low-level delegation with no decision-making powers,” Zelensky wrote on Telegram following the meeting.
“We also touched on the need for sanctions against Russia, bilateral trade, defense cooperation, the situation on the battlefield and the future exchange of prisoners.”
A senior Ukrainian official from the president’s office, who spoke on condition of anonymity, told AFP that they had also discussed preparations for Monday’s telephone conversation between Trump and Putin.

It was the first meeting between Zelensky and Vance since their heated White House exchange in February.
In the Oval Office, Vance publicly accused Zelensky of being “disrespectful” toward Trump, who told the Ukrainian leader he should be more grateful and that he had no “cards” to play in negotiations with Russia.
Ukraine on Sunday said that Russia had launched a record number of drones at the country overnight, targeting various regions, including the capital Kyiv, where a woman was killed.
Another man was killed in the southeastern Kherson region, where a railway station and private houses and cars were hit.
In an interview with Russian state TV published on Sunday, Putin said that Moscow’s aim was to “eliminate the causes that triggered this crisis, create the conditions for a lasting peace and guarantee Russia’s security,” without elaborating further.
Russia’s references to the “root causes” of the conflict typically refer to grievances with Kyiv and the West that Moscow has put forward as justification for launching the invasion in February 2022.
They include pledges to “de-Nazify” and demilitarise Ukraine, protect Russian speakers in the country’s east, push back against NATO expansion and stop Ukraine’s westward geopolitical drift.
However, Kyiv and the West say that Russia’s invasion is an imperial-style land grab.


Trump to carry out tariff threats if nations don’t negotiate in ‘good faith,’ US treasury chief warns

Trump to carry out tariff threats if nations don’t negotiate in ‘good faith,’ US treasury chief warns
Updated 19 May 2025
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Trump to carry out tariff threats if nations don’t negotiate in ‘good faith,’ US treasury chief warns

Trump to carry out tariff threats if nations don’t negotiate in ‘good faith,’ US treasury chief warns
  • Bessent: Notified countries likely to see April 2 rates return
  • Says Trump administration was focused on its 18 most important trading relationships

WASHINGTON: President Donald Trump will impose tariffs at the rate he threatened last month on trading partners that do not negotiate in “good faith” on deals, Treasury Secretary Scott Bessent said in television interviews on Sunday.
He did not say what would constitute “good faith” negotiations or clarify the timing to announce any decisions to return a country to the various rates Trump initially imposed on April 2.
Trump has repeatedly reversed course since then, notably on April 9, when he lowered his tariff rates on most imported goods to 10 percent for 90 days to give negotiators time to hash out deals with other countries. He separately lowered the rate for Chinese goods to 30 percent. On Friday, he reiterated that his administration would send letters telling nations what their rates would be.
On Sunday, Bessent said the administration was focused on its 18 most important trading relationships and that the timing of any deals would also depend on whether countries were negotiating in good faith, with letters going out to those that did not.
“This means that they’re not negotiating in good faith. They are going to get a letter saying, ‘Here is the rate.’ So I would expect that everyone would come and negotiate in good faith,” he told NBC News’ “Meet the Press.”
He added that those countries that are notified would likely see their rates return to the levels set on April 2.
Asked when any trade deals could be announced, Bessent separately told CNN’s “State of the Union” program: “Again, it will depend on whether they’re negotiating in good faith.”
“My other sense is that we will do a lot of regional deals -this is the rate for Central America. This is the rate for this part of Africa,” he added.
Trump’s ongoing trade wars have severely disrupted global trade flows and roiled financial markets as investors grapple with what Bessent has called the Republican president’s “strategic uncertainty,” in his drive to reshape economic relationships in the US’ favor
Companies of all sizes have been whipsawed by Trump’s swift imposition of tariffs and sudden reversals as they seek to manage supply chains, production, staffing and prices. Congress is also grappling with the tariffs as it weighs revenues and tax cuts in its spending bill.
Walmart, the world’s largest retailer, last week said it would have to start raising prices later in May due to the high costs of tariffs, prompting Trump to slam the company for blaming the increases on his trade policies.
“Between Walmart and China they should, as is said, ‘EAT THE TARIFFS,’ and not charge valued customers ANYTHING,” Trump posted online on Saturday.
Bessent said he had spoken to Walmart CEO Doug McMillon on Saturday and that the company would absorb some tariffs. Representatives for the retailer declined to comment.
“Walmart is, in fact, going to ... eat some of the tariffs,” Bessent told NBC. “I didn’t apply any pressure.”


Britain poised to reset trade and defense ties with EU

Britain poised to reset trade and defense ties with EU
Updated 19 May 2025
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Britain poised to reset trade and defense ties with EU

Britain poised to reset trade and defense ties with EU
  • Starmer taking a political risk with closer EU ties
  • Deal likely to cover defense, trade, fish

LONDON Britain is poised to agree the most significant reset of ties with the European Union since Brexit on Monday, seeking closer collaboration on trade and defense to help grow the economy and boost security on the continent.
Prime Minister Keir Starmer, who backed remaining in the EU, has made a bet that securing tangible benefits for Britons will outweigh any talk of “Brexit betrayal” from critics like Reform UK leader Nigel Farage when he agrees closer EU alignment at a summit in London.
Starmer will argue that the world has changed since Britain left the bloc in 2020, and at the heart of the new reset will be a defense and security pact that could pave the way for British defense companies to take part in a 150 billion euros ($167 billion) program to rearm Europe.
The reset follows US President Donald Trump’s upending of the post-war global order and Russia’s full-scale invasion of Ukraine, which have forced governments around the world to rethink ties on trade, defense and security. Britain struck a full trade deal with India earlier this month and secured some tariff relief from the United States. The EU has also accelerated efforts to forge trade deals with the likes of India and deepen partnerships with countries including Canada, Australia, Japan and Singapore.
Negotiations between the two sides continued into Sunday evening, before European Commission President Ursula von der Leyen and European Council President Antonio Costa were due in London on Monday morning. One EU diplomat cautioned that “nothing is agreed until everything is agreed.” From the issues up for discussion, Britain is hoping to drastically reduce the border checks and paperwork slowing down UK and EU food and agricultural exports, while access to faster e-gates for UK travelers at EU airports would be hugely popular.
In return, Britain is expected to agree to a limited youth mobility scheme and could participate in the Erasmus+ student exchange program. France also wants a long-term deal on fishing rights, one of the most emotive issues during Brexit.

Limited room for maneuver
Britain’s vote to leave the EU in a historic referendum in 2016 revealed a country that was badly divided over everything from migration and sovereignty of power to culture and trade.
It helped trigger one of the most tumultuous periods in British political history, with five prime ministers holding office before Starmer arrived last July, and poisoned relations with Brussels.
Polls show a majority of Britons now regret the vote although they do not want to rejoin. Farage, who campaigned for Brexit for decades, leads opinion polls in Britain, giving Starmer limited room for maneuver.
But the prime minister and French President Emmanuel Macron have struck up a solid relationship over their support for Ukraine, and Starmer was not tainted with the Brexit rows that went before, helping to improve sentiment.

‘Break the taboo’
The economic benefit will be limited by Starmer’s promise to not rejoin the EU’s single market or customs union, but he has instead sought to negotiate better market access in some areas — a difficult task when the EU opposes so-called “cherry picking” of EU benefits without the obligations of membership.
Removing red tape on food trade will require Britain to accept EU oversight on standards, but Starmer is likely to argue that it is worth it to help lower the cost of food, and grow the sluggish economy.
Agreeing a longer-term fishing rights deal will also be opposed by Farage, while the opposition Conservative Party labelled Monday’s event as the “surrender summit.”
One trade expert who has advised politicians in both London and Brussels said the government needed to “break the taboo” on accepting EU rules, and doing so to help farmers and small businesses was smart.
Trade experts also said Britain benefited from the greater focus on defense, making the deal look more reciprocal, and said improved ties made sense in a more volatile world.
When “trade disruption is so visible and considerable” anything that reduced trade friction with a country’s biggest trading partner made sense, said Allie Renison, a former UK government trade official at consultancy SEC Newgate.