Trump tariff deals bring some clarity for Asia, the world's manufacturing base
SYDNEY – After months of uncertainty, US President Donald Trump's latest tariff deals are providing clarity on the broad contours of a new trade landscape for the world's biggest manufacturing region, Asia.
Mr Trump
on July 22 announced a deal with Japan that sets tariffs on the nation's imports at 15 per cent, including for autos – by far the biggest component of the trade deficit between the countries.
A separate agreement with the Philippines set a 19 per cent rate, the same level as Indonesia agreed and a percentage point below Vietnam's 20 per cent baseline level, signaling that the bulk of South-east Asia is likely to get a similar rate.
At the same time, US Treasury Secretary Scott Bessent said he'll meet his Chinese counterparts in Stockholm next week for their third round of talks aimed at extending a tariff truce and widening the discussions. That suggests a continuing stabilisation in ties between the world's two largest economies after the US recently eased chip curbs and China resumed rare earths exports.
'We're getting along with China very well,' Mr Trump told reporters on July 22. 'We have a very good relationship.'
Throw it all together and a level of predictability is finally emerging after six months of tariff threats that had at one point jacked up tariff levels to 145 per cent on China and near 50 per cent on some smaller Asian exporters.
Investors cheered the moves, with Asian shares rising the most in a month. Japan's Nikkei index jumped 3.2 per cent, with Toyota Motor and other carmakers leading the gains.
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Although the latest deals bring some relief, key questions remain. The Trump administration is still considering a range of sectoral tariffs on goods like semiconductors and pharmaceuticals that will be critical for Asian economies including Singapore, Taiwan and India – countries for which the US have yet to announce tariff rates or deals. South Korea is also more exposed to sectoral tariffs, even though the Japan deal provides a potential template for new President Lee Jae Myung.
As Mr Trump moves quickly on talks with countries accounting for the bulk of the US trade deficit, he has said he may hit around 150 smaller countries with a blanket rate of between 10 per cent and 15 per cent.
With some certainty on tariff levels now emerging, businesses with complex supply chains across Asia and still reliant of the US consumer can start to game out how they'll shift operations to minimise the hit to sales. For US consumers who have so far been spared the tariff ticket shock, economists warn there's likely to be some pass through in the months ahead.
The front-loading of shipments from Asia to the US to get ahead of the incoming levies will likely slow once the new rates kick in. While there's relief that tariff rates for South-east Asian economies and 15 per cent for Japan are lower than some of Trump's earlier threats, the reality is that they're far higher than they were before he took office.
The latest deals 'continue the trend of tariff rates gravitating towards the 15-20 per cent range that President Trump recently indicated to be his preferred level for the blanket rate instead of 10 per cent currently,' Barclays analysts including Brian Tan wrote in a note. That skews risks to GDP growth forecasts for Asia 'to the downside,' they wrote.
Federal Reserve chair Jerome Powell has argued he wants to see where tariffs land and how they filter through the economy before cutting interest rates – much to the annoyance of Mr Trump.
For now, Mr Trump is hailing a win on trade, and investors seem overall relieved. BLOOMBERG
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Explainer-How do the US trade deals reached by the EU and UK compare?
U.S. President Donald Trump shakes hands with European Commission President Ursula von der Leyen, as U.S. Commerce Secretary Howard Lutnick, Trade Representative Jamieson Greer and White House Deputy Chief of Staff Stephen Miller clap, after an announcement of a trade deal between the U.S. and EU, in Turnberry, Scotland, Britain, July 27, 2025. REUTERS/Evelyn Hockstein REFILE - QUALITY REPEAT LONDON - The European Union and the United States announced a tariff deal on Sunday that will see most EU exports face a 15% tariff, nearly three months after Britain locked in a 10% baseline tariff rate. EU leaders have said their deal offers more certainty given the threat of higher U.S. tariffs from August but some politicians have criticised it as "unbalanced" and worse than Britain's deal. The details of the two deals paint a more complicated picture than the headline figures suggest, and not all the small print of the EU deal has been confirmed. Here is a comparison of what we know about the two deals. BASELINE TARIFFS The EU has agreed a 15% baseline tariff for most of its exports to the United States. While this is lower than a rate of up to 30% previously threatened by U.S. President Donald Trump, it is higher than the baseline tariff rate of 10% which applies to British exports. However, under the EU deal, 15% is the maximum tariff, and isn't added to any existing rate. For Britain, the 10% base rate is in addition to the "most-favoured nation" (MFN) rates that the U.S. applies as a minimum to specific goods imports from all its trade partners, so the effective tariff rate is often higher. Top stories Swipe. Select. Stay informed. Asia Cambodia, Thailand agree to 'immediate and unconditional ceasefire' to de-escalate border row Singapore Tanjong Katong sinkhole: Road recovery works progressing steadily, tests under way Singapore ST Explains: What we know about the Tanjong Katong sinkhole so far Singapore Foreign workers who rescued woman from sinkhole given tokens of appreciation Asia Gunman kills 5 near Bangkok's Chatuchak market before taking own life Business SIA Q1 profit falls 59%; airline group sees volatile times ahead Singapore Man exposed daughter's identity despite court order after she was removed from his care Singapore Over 6 years' jail for conman who cheated 13 victims of more than $1.2m For instance, the UK Fashion and Textile Association has highlighted that certain luxury products face an MFN tariff of around 35% in the U.S., despite a "baseline" rate of only 10%. PHARMACEUTICALS The U.S. is to announce the result of its so-called Section 232 trade investigations into certain sectors in a few weeks and decide on tariff rates. The EU-U.S. deal already determines a 15% tariff for European pharmaceuticals, and the results of the investigations will not change that, U.S. officials said. In its deal with Britain, the United States said it would negotiate "significantly preferential treatment outcomes on pharmaceuticals", contingent on the outcome of the 232 investigations. Asked if Britain would be impacted by tariffs on the pharma sector in August, Trump said that he could deal with Britain on pharma and he didn't think the sector would be a "block" in talks. In the meantime Britain faces no tariffs for its pharmaceuticals. Britain also pledged to try to improve the overall environment for pharma firms operating in the country, but it is tussling with multinationals over drug pricing. STEEL Tariffs on EU steel and aluminium exports will stay at 50%, but von der Leyen said these would later be cut and replaced by a quota system. British steel and aluminium exports face a 25% tariff in the United States, which both sides have agreed will go down to zero once talks over quotas and supply chains are concluded. Those talks have stalled over "melted and poured" rules about where the steel originates and how it is processed. Britain's Tata Steel has imported steel from India and the Netherlands after shutting blast furnaces last year, so Britain is seeking an exemption from a U.S. demand that steel needs to be "melted and poured" in Britain to qualify for lower tariffs. AUTOS Car exports from the EU to the U.S. face the baseline tariff of 15% in the deal struck on Sunday. While full details have not been published, neither side mentioned a quota for the number of cars covered by the rate. Britain has negotiated a lower tariff of 10% for its car sector but it also has a 100,000-vehicle quota which leaves little room for export growth. Above that quota, British car exports face a tariff of 25%. AEROSPACE The EU will face no U.S. tariffs on aerospace exports, pending the outcome of a Section 232 probe into the sector. Britain also has no tariffs on its aerospace sector after its deal with Washington reduced them from 10%. REUTERS
