Flurry of trade deals offers relief for some Asian countries, while others wait
Donald Trump
has announced trade deals with Japan and a handful of other Asian countries that will relieve some pressure on companies and consumers from sharply higher tariffs on their exports to the United States.
A deal with China is under negotiation, with US Treasury Secretary Scott Bessent saying an August 12 deadline might be postponed again to allow more time for talks.
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Steep tariffs on US imports of steel and aluminium remain, however, and many other countries, including South Korea and Thailand, have yet to clinch agreements. Overall, economists say the tariffs inevitably will dent growth in Asia and the world.
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The deals reached so far, ahead of Trump's August 1 deadline
Trump and Japanese Prime Minister Shigeru Ishiba announced a deal Wednesday that will impose 15 per cent tariffs on US imports from Japan, down from Trump's proposed 25 per cent 'reciprocal' tariffs.
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It was a huge relief for automakers like Toyota Motor Corp and Honda, whose shares jumped by double digits in Tokyo. Trump also announced trade deals with the Philippines and Indonesia.
After meeting with Philippine President Ferdinand Marcos, Jr, Trump said the import tax on products from his country would be subject to a 19 per cent tariff, down just 1 per cent from the earlier threat of a 20 per cent tariff.
Indonesia also will face a 19 per cent tariff, down from the 32 per cent rate Trump had recently said would apply, and it committed to eliminating nearly all of its trade barriers for imports of American goods.
Earlier, Trump announced that Vietnam's exports would face a 20 per cent tariff, with double that rate for goods transshipped from China, though there has been no formal announcement.
Talks with China may be extended
Negotiations with China are subject to an August 12 deadline, but it's likely to be extended, Bessent told Fox Business on Tuesday. He said the two sides were due to hold another round of talks, this time in Sweden, early next week.
Meanwhile, Trump said a trip to China may happen soon, hinting at efforts to stabilise US-China trade relations.
A preliminary agreement announced in June paved the way for China to lift some restrictions on its exports of rare earths, minerals critical for high technology and other manufacturing.
In May, the US agreed to drop Trump's 145 per cent tariff rate on Chinese goods to 30 per cent for 90 days, while China agreed to lower its 125 per cent rate on US goods to 10 per cent.
The reprieve allowed companies more time to rush to try to beat the potentially higher tariffs, giving a boost to Chinese exports and alleviating some of the pressure on its manufacturing sector. But prolonged uncertainty over what Trump might do has left companies wary about committing to further investment in China.
No deals yet for South Korea and other Asian countries
Pressure is mounting on some countries in Asia and elsewhere as the August 1 deadline for striking deals approaches.
Trump sent letters, posted on Truth Social, outlining higher tariffs some countries will face if they fail to reach agreements. He said they'd face even higher tariffs if they retaliate by raising their own import duties.
South Korea's is set at 25 per cent. Imports from Myanmar and Laos would be taxed at 40 per cent, Cambodia and Thailand at 36 per cent, Serbia and Bangladesh at 35 per cent, South Africa and Bosnia and Herzegovina at 30 per cent and Kazakhstan, Malaysia and Tunisia at 25 per cent.
The status of talks with India remains unclear but progress appears to hinge on the country's heavily protected farm sector. It faces a 26 per cent tariff.
Nearly every country has faced a minimum 10 per cent levy on goods entering the US since April, on top of other sectoral levies.
Economists expect tariffs to sap growth even with trade deals
Even after Trump has pulled back from the harshest of his threatened tariffs, the onslaught of uncertainty and higher costs for both manufacturers and consumers has raised risks for the regional and global economy. Economists have been downgrading their estimates for growth in 2025 and beyond.
The Asian Development Bank said Wednesday it had cut its growth estimate for economies in developing Asia and the Pacific to 4.7 per cent in 2025 and 4.6 per cent in 2026, down 0.2 percentage points and 0.1 percentage points.
The outlook for the region could be further dimmed by an escalation of tariffs and trade friction, it said. 'Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices,' as well as a deterioration in China's ailing property market.
Economists at AMRO were less optimistic, expecting growth for Southeast Asia and other major economies in Asia at 3.8 per cent in 2025 and 3.6 per cent next year.
While countries in the region have moved to protect their economies from Trump's trade shock, they face significant uncertainties, said AMRO's chief economist, Dong He.
'Uneven progress in tariff negotiations and the potential expansion of tariffs to additional products could further disrupt trade activities and weigh on growth for the region,' he said.
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The Hindu
17 minutes ago
- The Hindu
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Officials had discussed terms for a quota system for steel and aluminum imports, which would face a lower import tax below a certain threshold and would be charged the regular 50% rate above it. The EU had also been seeking quotas and a cap on future industry-specific tariffs. For months, Trump has threatened most of the world with high tariffs with the goal of shrinking US trade deficits. But the prospect of those duties — and Trump's unpredictable nature — put world capitals on edge. In May, he threatened to impose a 50% duty on nearly all EU goods, adding pressure that accelerated negotiations, before lowering that to 30%. The transatlantic pact removes a major risk for markets and the global economy — a trade war involving $1.7 trillion worth of cross-border commerce — even though it means European shipments to the US are getting hit with a higher tax at the border. The goals, Trump said, were more production in the US and wider access for American exporters to the European market. Von der Leyen acknowledged part of the drive behind the talks was a reordering of trade, but cast it as beneficial for both sides. 'The starting point was an imbalance,' von der Leyen said. 'We wanted to rebalance the trade we made, and we wanted to do it in a way that trade goes on between the two of us across the Atlantic, because the two biggest economies should have a good trade flow.' The announcement capped off months of often tense shuttle diplomacy between Brussels and Washington. The two sides appeared close to a deal earlier this month when Trump made his 30% threat. The EU had prepared to put levies on about €100 billion ($117 billion) — about a third of American exports to the bloc — if a deal wasn't reached and Trump followed through on his warning. US and European negotiators had been zeroing in on an agreement this past week, and the decision for von der Leyen to meet Trump at his signature golf property brought the standoff to a dramatic conclusion. The EU for weeks indicated a willingness to accept an unbalanced pact involving a reduced rate of around 15%, while seeking relief from levies on industries critical to the European economy. The US president has also imposed 25% duties on cars and double that rate on steel and aluminum, as well as copper. Several exporters in Asia, including Indonesia, the Philippines and Japan, have negotiated reciprocal rates between 15% to 20%, and the EU saw Japan's deal for 15% on autos as a breakthrough worth seeking as well. Washington's talks also continue with Switzerland, South Korea and Taiwan. Trump said he is 'looking at deals with three or four other countries' but 'for the most part' others with smaller economies or less significant trading relationships with the US would receive letters simply setting tariff rates. Earlier: Trump Says Countries Will Face Tariffs Ranging From 15% to 50% Trump announced a range of tariffs on almost all US trading partners in April, declaring his intent to revive domestic manufacturing, help pay for a massive tax cut and address economic imbalances he has said are detrimental to US workers. He put them on pause a week later when investors panicked. Trump's decades-old complaints about the global trading system heap particularly sharp scorn on the EU, which he has accused of being formed to 'screw' the US. The bloc was established in the years following World War II in order to establish economic stability on the continent. The president has lashed out at non-tariff barriers for American companies to do business across the 27-nation bloc. Those include the EU's value-added tax, levies on digital services, and safety and environmental regulations. Weeks of negotiations tested the EU's willingness to digest what is seen as an asymmetrical outcome, a senior EU diplomat said, but one that offers an opportunity to continue the talks without escalating further. --With assistance from Michael G. Wilson, Skylar Woodhouse, Katharina Rosskopf, Kasia Klimasinska, Sam Kim, Jorge Valero, Jenny Leonard, Tommaso Ebhardt, Arne Delfs, Se Young Lee and Richard Bravo.
