Latest news with #ISEAS
CNA
3 days ago
- General
- CNA
US should not see China defence chief's absence at Shangri-La Dialogue as a snub: ISEAS director
Mr Choi Shing Kwok, director and chief executive officer at the ISEAS-Yusof Ishak Institute, explains why he does not see the absence of Chinese defence officials at the Shangri-La Dialogue in Singapore as a missed opportunity for Beijing. He also shares why French President Emmanuel Macron's attendance at the annual defence gathering is a show of support for Asian allies.
South China Morning Post
3 days ago
- Business
- South China Morning Post
Vietnam's Mekong challenge: balancing ties with China amid build up of dams, canal projects
China-backed projects on the Mekong River may complicate ties with Vietnam, analysts warn, as Hanoi navigates the delicate balance of cooperation with Beijing while maintaining a strategic presence in neighbouring Cambodia and Laos. At a recent online forum on May 27, the discussion centred on Vietnam's complex security challenges and how Hanoi can maintain relations with its three neighbours while protecting its interests, especially amid China's growing economic influence in infrastructure projects, such as dams in Laos and Cambodia. China has embarked on extensive dam-building activities in the Mekong area, operating 12 mainstream dams and 95 tributary dams that pose an upstream threat to Vietnam, according to Phan Xuan Dung, research officer at ISEAS Yusof Ishak Institute and a PhD candidate at Australian National University. 'These dam projects have been developed unilaterally without consultation with the lower Mekong countries,' Phan said, adding that the dams have significantly reduced water flow and sediment reaching the Mekong Delta. The Mekong Delta serves as Vietnam's agricultural powerhouse, supporting some 80 million people and contributes to one-third of the country's gross domestic product, Phan said. Workers use excavators to dig the Funan Techo canal along the Prek Takeo channel that runs into the Mekong River in Cambodia. Photo: AFP Meanwhile, Laos operates 77 dams with 61 more planned, including seven on the mainstream Mekong, as it furthers its ambition to become the 'battery of Southeast Asia' by exporting hydropower energy.
CNA
3 days ago
- Business
- CNA
China is wooing Malaysia and Indonesia with mega investments. Is the plan working?
KUALA LUMPUR and JAKARTA: If the Association of Southeast Asian Nations (ASEAN) were forced to choose between the world's pre-eminent powers, 71 per cent of Malaysians would prefer China over the United States. That is according to the State of Southeast Asia 2025 survey, published last month by the ISEAS – Yusof Ishak Institute in Singapore. Leaving aside United States President Donald Trump's tariffs, one of the reasons for Malaysians' support for aligning with China is its 'growing economic importance' in the region, said former Malaysian deputy minister of international trade and industry Ong Kian Ming. The transformation of Proton, Malaysia's national car brand, and the forthcoming East Coast Rail Link — with Beijing having a key role in both — are just two examples that may explain why Malaysians feel upbeat about working with China. Over in Indonesia, a survey in March last year showed that some 73 per cent of Indonesians perceived Beijing's activities in the South China Sea as a threat to their country's sovereignty. Yet, in the State of Southeast Asia 2025 survey, support for aligning with China was strongest in Indonesia (72 per cent). Whether Indonesians view China as a military adversary or a reliable economic partner, their country is of strategic importance to Beijing. Firstly, it is the world's largest Muslim country, cited Centre for China and Globalisation vice president Victor Gao. The second reason is its geopolitical position, which straddles 'a very long distance from the east to the west — so many islands'. Indonesia has a 'huge economic upside', he added, noting the move of its capital from Jakarta to Nusantara, East Kalimantan. 'That'll involve a lot of hard work and engineering breakthroughs — a huge amount of capital investment.' The country also has the largest Chinese diaspora community, numbering more than 11 million. That makes Indonesia 'very special' from China's perspective, he said, even as many of them are Indonesian citizens. Malaysia and Indonesia are two countries where China is making significant inroads with projects including industrial parks, ports, nickel-processing plants, auto factories and more. As tensions between China and the US continue, Beijing is focusing its market efforts on the Global South, which represents 85 per cent of the world's population. And the largest Global South economy on China's doorstep is ASEAN. Its combined gross domestic product in 2023 was US$3.8 trillion — the world's fifth-largest economy. Just this week, both sides, along with the Gulf Cooperation Council, held an inaugural summit to strengthen cooperation. As Trump's tariffs bring uncertainty to the region, will ASEAN member states such as Malaysia and Indonesia pivot to China, asks CNA series China And The Global South. THE EAST COAST RAIL LINK In Malaysia, one Chinese project taking shape is the 665km East Coast Rail Link that runs from Port Klang, the country's busiest port, and crosses to the east coast, with its final stop in Kelantan, near the Thai border. Once the railway is up and running in January 2027 — with 20 stations altogether — it will whisk freight and people across the country at up to 160kmh. It is a feat of engineering, with teams from China using mammoth machines to bore tunnels through mountain rock. Such mega projects are pricey. The construction of the rail link was priced at RM65.5 billion (US$15.5 billion at current rates) under the Najib Razak administration. Under the Anwar Ibrahim government, the cost of construction is expected to be RM50 billion. This makes it Southeast Asia's most expensive Belt and Road railway project. In comparison, the Laos-China Railway cost US$6 billion. Chinese mega rail projects elsewhere in the world have also been subject to criticism for not having enough local multipliers and for using materials, labour and technology all from China. The Malaysian government has tried to assuage these concerns. Malaysian Transport Minister Anthony Loke pointed to the two countries' agreement to involve local companies in at least 40 per cent of the project's civil works. As to concerns about the project's impact on Malaysia's fiscal health, he said: 'We inherited this project. We don't have a choice, but we try to make the best of it.' He pointed to a 2019 renegotiation whereby the Chinese side accepted 50 per cent liability, in the form of a joint venture, for any operational losses during the loan period. But if there are profits, they will take 20 per cent and Malaysia will take 80 per cent to sustain repayments. These are the safeguards, said Loke, to ensure the project 'will be more sustainable and, hopefully, … operationally profitable'. Noting that the east coast of Peninsular Malaysia is relatively poorer in terms of economic development, he added that with the rail link, the government hopes to bring more manufacturing to the east coast, where land costs are also cheaper. 'There's still a lot of untapped and undeveloped land,' he said. There is already an industrial park waiting to connect to the rail link: the Malaysia-China Kuantan Industrial Park. It has attracted investments worth more than RM31 billion as of October 2023, which should create over 14,000 jobs. The industrial park is connected to the Kuantan Port, which has been expanded and upgraded by yet another Chinese company, the Guangxi Beibu Gulf International Port Group. Kuantan Port is Malaysia's closest port to China. Cargo ships sailing out take three days to reach the Guangxi region. A rail connection between Port Klang and Kuantan Port will then create 'a land bridge' between the Straits of Malacca and the South China Sea, said Loke. 'It's important in the sense that it creates infrastructure (that's) readily available. 'From a security point of view, from a supply chain point of view, if there are any tensions in the South China Sea, then this is a major option … that can be used.' WHAT CHINA'S REVAMP OF PROTON MEANS On the west coast of Peninsular Malaysia, another ambitious plan is afoot — to transform part of Perak into a national automotive hub and the country into a regional electric vehicle (EV) manufacturer. 'We know that our neighbouring countries are also attracting a lot of EV manufacturers,' said Loke. 'Malaysia has to, of course, step up.' It is doing so with high-tech robots from China assembling thousands of cars in Proton City, located in Tanjung Malim. This is the latest step in Proton's transformation since 2017, when China's Zhejiang Geely Holding Group acquired a 49.9 per cent stake in the car brand. The first was the introduction of the X70, Proton's first sport utility vehicle, in 2018. 'This was part of the technology transformation adopted by Proton,' said deputy chief executive officer Roslan Abdullah. 'We also learnt operational efficiency, thus reducing our operational costs.' In December, Proton launched its first homegrown EV, the 7, with retail prices starting at under RM110,000. Anwar hopes this will be the launch pad for a holistic ecosystem in Malaysia's EV sector. Geely's partnership with Proton would be a 'great business case study', said Ong, 'for Chinese companies and for others who are interested in seeing how a Chinese company can turn around a local entity in another country'. Sharing some of the key lessons, Roslan said the first was that the competition is unrelenting, as 'the market is big, and there are so many players'. To be 'ahead of everything', Proton migrated to new media marketing, besides introducing the latest technology. Secondly, because of the competition, 'everything is urgent', he said. 'We have to be very quick, and thus it improves our operation.' Motoring journalist Daniel Fernandez, the managing editor of is in no doubt that Geely's investment has been a 'huge success' for Proton. 'Because now there's no bailout from the government. That means the taxpayer isn't paying for Proton to stay alive,' he said. 'The older generation, who used to distrust Proton, … is slowly coming back to the brand. But the biggest change, I feel, is … the new generation of buyers are now happy to go into a Proton showroom.' WATCH: China's mega-investments in Malaysia as it woos ASEAN (25:40) Malaysia's investment figures over the past five years show that China is among the top five sources of FDI, with Netherlands, Singapore and the US also featuring on that list. Still, Chinese investments would not be more than 20 per cent of Malaysia's total FDI inflow — certainly not last year or in 2023 — Ong highlighted. That demonstrates, to him, 'a very balanced approach' to attracting FDI from different countries. Malaysia's leaders have always spoken of the need for non-alignment, and Loke affirmed that Malaysian foreign policy will remain neutral. 'We know that it's a very challenging situation right now,' he said. 'Hopefully, we can navigate this situation peacefully. 'We can continue to attract investment from both the US and China and … from Europe, from the Middle East, from Japan (and) Korea. These are all our major investors and major trading partners, so this will continuously be our focus.' A WHOOSH OF PRIDE AND NICKEL-PLATED DREAMS In Indonesia, a resort centre developed by the Dutch in the early 1900s has seen one Chinese-built structure have a major economic impact in the past two years. Bandung, the capital of West Java, is crested by hills and has lower year-round temperatures than most other Indonesian cities. It remains a popular holiday destination, but the drive from Jakarta takes at least two and a half hours. With a US$7.3 billion high-speed rail, Whoosh, now connecting the two cities — and its trains covering the 142km distance in around 40 minutes, zipping through the Indonesian landscape at up to 350kmh — business is booming for many. At the Mason Pine Hotel, the number of meetings, incentives, conferences and exhibitions has increased by more than 20 per cent, said Bayu Aji, its director of sales marketing until quite recently. 'And these customers keep coming back.' Many Jakarta-based corporations are hosting events in Bandung nowadays because a day trip to Bandung could even take less time than commuting within Jakarta. Also, the high-speed train is clean, punctual and comfortable. While there was 'a lot of discussion and polemic' on the high-speed rail — the first in Southeast Asia — before its completion, the uptake in its use has been 'very fast and very incredible', said former Indonesian trade minister Mari Pangestu. 'It's a very technologically advanced high-speed train, so in that sense, we're proud that this could be done in Indonesia,' added Mari, who is deputy chair of Indonesia's National Economic Council. 'And it wasn't just Chinese engineers. There were also Indonesian engineers, and there was a partnership there. There was a lot of capacity building and training.' China is also Indonesia's main partner in building its nickel sector. The Southeast Asian country has the world's largest reserves of this mineral, a key component for EV lithium batteries. Besides investors from China building smelters to refine nickel in places such as Sulawesi — adding value to Indonesia's metal exports and creating jobs — they are helping to build plants that produce battery materials and, soon enough, cars. China's BTR New Material Group and Singapore's Stellar Investment jointly invested US$478 million to build one such plant, which opened last August. Another US$299 million has been committed in a second phase of investment. Further downstream, Chinese electric car manufacturer GAC Aion is opening its Indonesian factory this year, targeting an annual production capacity of 50,000 units; and EV giant BYD is building a US$1 billion plant, with operations set to commence early next year. The biggest investment is coming from Chinese battery material maker CNGR Advanced Material Co, which plans to build an integrated production facility worth US$10 billion. These are all part of an economic development policy known as downstreaming, a critical pillar of Indonesian President Prabowo Subianto's plans for the country. And Chinese companies are playing a major role in Indonesia's efforts to add to the value chain because they have 'the most advanced and efficient technology', said National Economic Council executive secretary Septian Hario Seto. They make up the world's top 10 lithium battery companies, along with three from South Korea and 'one or two' from Japan. 'It is what it is today,' said the former deputy minister of investment and mining coordination. 'One thing that we can make sure is, we have a commitment (to) international cooperation. … The commitment from Indonesia is that we want our product to be freely sold to any country. So, it's not only to China.' TWO SIDES OF THE COIN Another recent priority for Indonesia was to join BRICS. The country became an official member on Jan 7 — the first in Southeast Asia to be part of the organisation. The group has been a growing political force in the past two decades, building on its desire to create a counterweight to Western influence. Some observers view Indonesia's membership as an indication that Jakarta is tilting towards Beijing. But Carlyle Thayer, an emeritus professor at the University of New South Wales, Canberra, sees more than that. Indonesia also wants to join the Organisation for Economic Co-operation and Development, he highlighted. 'The broader picture is to expand Indonesia's influence.' The country's foreign policy position is clear and based on national interests, said Septian. 'We don't want to lean towards (any one) axis.' But according to Ryan Hass, the director of the Brookings Institution's John L Thornton China Center, the Chinese strategy is to 'make other countries dependent upon them economically'. 'At the same time, China would like to establish military dominance over them,' he said. 'This combination of economic dependence and military dominance, (the Chinese) believe, should compel other countries to become more accommodating … (to) China and its long-term goals.' Indonesia is one of the countries China's territorial interests will 'run up against', he added. In this case, Beijing's nine-dash-line map of the South China Sea overlaps with Indonesia's exclusive economic zone near the oil- and gas-rich Natuna Islands. Gao, however, described claims of Chinese military ambitions against Indonesia as 'barking up the wrong tree'. 'We've been here for hundreds, if not thousands, of years. And between China and Indonesia, there have never been territorial adventures against each other,' he said. Indonesia is bulking up its defence regardless. In January, when Japanese Prime Minister Shigeru Ishiba visited Jakarta, it was announced that Japan would give Indonesia two high-speed patrol boats and boost regional maritime security cooperation. In 2023, the Indonesian military was the only one from ASEAN that participated in a two-week training exercise between Australia and the US. Experts have pointed out that these war games, called Talisman Sabre, are designed with China in mind. It is a balancing act, however, for Indonesia: Jakarta and Beijing have plans for joint military exercises this year. Indonesia sees the two sides of the coin, according to Mari. 'We do see China as an important market, also an important source of goods, components, investments and tourists, so there's the positive side,' she said. On the downside, there are, among other things, labour-related issues involving Chinese workers. 'In the 70s, we had kind of similar issues when there was a lot of Japanese investment,' she said. 'Both sides need to … accept each other's differences.' As for the perceived potential military threat and the Natunas issue, she hopes economic pragmatism will prevail. 'Can we look at whether we can develop this jointly?' she said. 'That's a more pragmatic view.'
Malaysian Reserve
19-05-2025
- Business
- Malaysian Reserve
China-US trade truce prompts nations to consider tougher tactics
CHINA'S defiant stance in negotiating a tariff truce with the US has convinced some countries they need to take a tougher position in their own trade talks with the Trump administration. The pause reached a week ago gave structure to what promise to be prolonged and difficult rounds of talks between Washington and Beijing, which still faces average US import taxes near 50% when past levies are factored into the 30% rate agreed to in Geneva, Switzerland. Yet US President Donald Trump's willingness to retreat so much from the earlier 145% duty on China surprised governments from Seoul to Brussels that have so far stuck with the US's request to negotiate rather than retaliate against its tariffs. After China's tough negotiating tactics earned it a favorable — albeit temporary — deal, nations taking a more diplomatic and expedited approach are questioning whether that's the right path. 'This shifts the negotiating dynamic,' said Stephen Olson, a former US trade negotiator who's now a visiting senior fellow with ISEAS — Yusof Ishak Institute in Singapore. 'Many countries will look at the outcome of the Geneva negotiations and conclude that Trump has begun to realize that he has overplayed his hand.' Left for now at 10%, the higher bespoke rates will kick in unless deals are signed or postponements are granted before a 90-day suspension ends in July. While officials are loathe to signal publicly any hardening of their approach, there are signs particularly from larger nations that they're realizing they hold more cards than previously thought and can afford to slow the pace of negotiations. South Korea's leading presidential candidate Lee Jae-myung said there's no need to rush for an early agreement in trade negotiations with the US, criticizing the interim government for what he called a hasty engagement with the Trump administration. Trump himself indicated last week — near the halfway point of the 90-day reprieve — that there isn't time to do deals with about 150 countries lining up for them. So the US may assign the higher tariff rates unilaterally in the next two to three weeks. While Trump also said that India was prepared to lower all tariffs on US goods, the nation's External Affairs Minister Subrahmanyam Jaishankar told reporters that trade talks are ongoing and 'any judgment on it would be premature.' India's Commerce Minister Piyush Goyal was scheduled to arrive in the US over the weekend for further negotiations. 'There are many countries that may learn from China that the correct way to negotiate with President Trump is to stand firm, remain calm and force him to capitulate,' said Marko Papic, chief strategist of GeoMacro at BCA Research. Japanese trade officials are scheduled to visit Washington this week. Japan's Trade Minister Yoji Muto skipped a regional meeting last week in nearby South Korea that US Trade Representative Jamieson Greer attended. Top negotiator Ryosei Akazawa, who leads Japan's tariff task force, said earlier this month that he is hoping to reach an accord with the US in June, but recent local media reports indicate an agreement is more likely be reached in July, ahead of an upper house election. Policymakers in Tokyo may be starting to think that it's preferable to take time rather than make major concessions to wrap up things up quickly. 'Everyone in the queue is wondering, 'Well, why have I been lining up?'' said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis. 'This deal let China jump the queue and also doesn't have clear benefits for the US so it's doubly painful for other countries watching.' Even US officials are signaling that negotiations will take longer. Commerce Secretary Howard Lutnick told Bloomberg TV that talks with Japan and South Korea will take time. Treasury Secretary Scott Bessent last week said the European Union suffered from a lack of unity that was impeding talks. 'I think the US and Europe may be a bit slower,' Bessent said Tuesday at a Saudi-US Investment Forum in Riyadh. On Sunday, the Treasury secretary sounded optimistic about talks more broadly, adding that 'we didn't get here overnight.' 'With a few exceptions, the countries are coming with very good proposals for us,' Bessent said in an interview on CNN's State of the Union. 'They want to lower their tariffs, they want to lower their non-tariff barriers, some of them have been manipulating their currency, they've been subsidizing industry and labor.' Officials in Brussels viewed the US-China tariff announcement as leaving high tariffs in place and limited on several fronts, according to people familiar with EU discussions. The meager negotiating gains for the US and the lack of a clear end game during the 90-day reprieve show how limited is Trump's appetite to keep ratcheting up the pressure on Beijing, the people said on condition of anonymity to discuss private deliberations. 'The trade landscape is becoming more fragmented' and 'the deals achieved so far are not completely addressing the situation,' the European Commission's top economic official Valdis Dombrovkis said in an interview in London on Thursday, referring to the China tariff truce and a UK-US outline of a deal announced days earlier. In Latin America, where developing economies want to preserve both Chinese investment and export access to the US market, leaders are trying to walk a careful line as the two heavyweights square off. Brazil President Luiz Inacio Lula da Silva, who previously said negotiation came before retaliation, on Wednesday brushed off concern that forging deeper ties with China would prompt a negative US response after a state visit to Beijing that saw him sign more than 30 agreements. Colombia's President Gustavo Petro, also in Beijing last week, signed on to China's Belt and Road initiative in a bid to boost trade and investment for his country, even as his top diplomat stressed the US remains the nation's main ally. The US-China arrangement may also show nations that the Trump administration isn't immune to the pressures of domestic economic headwinds caused by tariffs. 'The economic pain is more immediate and broad-based in the US and this deal can be seen as the Trump administration acknowledging that,' said Robert Subbaraman, head of global markets research at Nomura Holdings Inc. But only nations with economic heft and limited reliance on trade with the US may be able to act on that, according to Bert Hofman, professor at the National University of Singapore and a former World Bank country director for China. 'It's pretty risky for most countries to be tough on the US,' Hofman said by phone. A prime example of that is Canada, which Oxford Economics said last week had effectively suspended almost all of its tariffs on US products. Over the weekend, Canada's Finance Minister Francois-Philippe Champagne disputed that, saying the government kept 25% retaliatory tariffs on tens of billions of dollars in US goods. He said 70% of the counter-tariffs implemented by Canada in March are still in place, according to a social media post Saturday. The government 'temporarily and publicly paused tariffs' on some items for health and public safety reasons, he said. Still, because China's clout remains substantial as the world's factory floor, other countries may have 'to use more creative pieces of leverage,' according to Papic. For Vietnam, one-third of its economy depends on trade with the US, and that lack of leverage means there isn't scope to do much more than talk tough. Vietnam, which was among the first nations to offer purchasing additional US goods such as Boeing Co. aircraft to close the trade surplus, slammed Trump's tariffs earlier this month as 'unreasonable.' If larger nations do want to get confrontational, one area where they may have room is on services trade, said Katrina Ell, Moody's Analytics head of Asia Pacific economics. The EU, Singapore, South Korea and Japan are among nations that have the biggest services trade deficits with the US, Moody's Analytics data show. 'China has too much leverage over the US for the US to continue with its hardline stance whereas that's not the case for many other economies,' Ell said by phone. 'That's what we need to keep in mind is leverage and who has that leverage.' –BLOOMBERG
Japan Times
18-05-2025
- Business
- Japan Times
China-U.S. trade truce prompts nations to consider tougher tactics
China's defiant stance in negotiating a tariff truce with the U.S. has convinced some countries they need to take a tougher position in their own trade talks with the Trump administration. The pause reached a week ago gave structure to what promise to be prolonged and difficult rounds of talks between Washington and Beijing, which still faces average U.S. import taxes near 50% when past levies are factored into the 30% rate agreed to in Geneva, Switzerland. Yet U.S. President Donald Trump's willingness to retreat so much from the earlier 145% duty on China surprised governments from Seoul to Brussels that have so far stuck with the U.S.'s request to negotiate rather than retaliate against its tariffs. After China's tough negotiating tactics earned it a favorable — albeit temporary — deal, nations taking a more diplomatic and expedited approach are questioning whether that's the right path. Stay updated on the trade wars. Quality journalism is more crucial than ever. Help us get the story right. For a limited time, we're offering a discounted subscription plan. Unlimited access US$30 US$18 /mo FOREVER subscribe NOW "This shifts the negotiating dynamic,' said Stephen Olson, a former U.S. trade negotiator who's now a visiting senior fellow with ISEAS-Yusof Ishak Institute in Singapore. "Many countries will look at the outcome of the Geneva negotiations and conclude that Trump has begun to realize that he has overplayed his hand.' Left for now at 10%, the higher bespoke rates will kick in unless deals are signed or postponements are granted before a 90-day suspension ends in July. While officials are loathe to signal publicly any hardening of their approach, there are signs particularly from larger nations that they're realizing they hold more cards than previously thought and can afford to slow the pace of negotiations. Trump himself indicated last week — near the halfway point of the 90-day reprieve — that there isn't time to do deals with about 150 countries lining up for them. So the U.S. may assign the higher tariff rates unilaterally in the next two to three weeks. While Trump also said that India was prepared to lower all tariffs on U.S. goods, the nation's External Affairs Minister Subrahmanyam Jaishankar told reporters that trade talks are ongoing and "any judgment on it would be premature.' Indian Commerce Minister Piyush Goyal was scheduled to arrive in the U.S. this weekend for further negotiations. "There are many countries that may learn from China that the correct way to negotiate with President Trump is to stand firm, remain calm and force him to capitulate,' said Marko Papic, chief strategist of GeoMacro at BCA Research. Japan's rethink Japanese trade officials are scheduled to visit Washington this week. Japan's Trade Minister Yoji Muto skipped a regional meeting last week in nearby South Korea that U.S. Trade Representative Jamieson Greer attended. Top negotiator Ryosei Akazawa, who leads Japan's tariff task force, said earlier this month that he is hoping to reach an accord with the U.S. in June, but recent local media reports indicate an agreement is more likely be reached in July, ahead of an Upper House election. Policymakers in Tokyo may be starting to think that it's preferable to take time rather than make major concessions to wrap up things up quickly. "Everyone in the queue is wondering, 'Well, why have I been lining up?'' said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis. "This deal let China jump the queue and also doesn't have clear benefits for the U.S. so it's doubly painful for other countries watching.' Even U.S. officials are signaling that negotiations will take longer. Commerce Secretary Howard Lutnick told Bloomberg TV that talks with Japan and South Korea will take time. Treasury Secretary Scott Bessent last week said the European Union suffered from a lack of unity that was impeding talks. "I think the U.S. and Europe may be a bit slower,' Bessent said Tuesday at a Saudi-U.S. Investment Forum in Riyadh. On Sunday, the Treasury secretary sounded optimistic about talks more broadly, adding that "we didn't get here overnight.' "With a few exceptions, the countries are coming with very good proposals for us,' Bessent said in an interview on CNN's "State of the Union." "They want to lower their tariffs, they want to lower their nontariff barriers, some of them have been manipulating their currency, they've been subsidizing industry and labor.' EU skepticism Officials in Brussels viewed the U.S.-China tariff announcement as leaving high tariffs in place and limited on several fronts, according to people familiar with EU discussions. The meager negotiating gains for the U.S. and the lack of a clear end game during the 90-day reprieve show how limited is Trump's appetite to keep ratcheting up the pressure on Beijing, the people said on condition of anonymity to discuss private deliberations. "The trade landscape is becoming more fragmented' and "the deals achieved so far are not completely addressing the situation,' the European Commission's top economic official, Valdis Dombrovkis, said in an interview in London on Thursday, referring to the China tariff truce and a U.K.-U.S. outline of a deal announced days earlier. In Latin America, where developing economies want to preserve both Chinese investment and export access to the U.S. market, leaders are trying to walk a careful line as the two heavyweights square off. Visiting Beijing Brazilian President Luiz Inacio Lula da Silva, who previously said negotiation came before retaliation, on Wednesday brushed off concern that forging deeper ties with China would prompt a negative U.S. response after a state visit to Beijing that saw him sign more than 30 agreements. Colombian President Gustavo Petro, also in Beijing last week, signed on to China's Belt and Road initiative in a bid to boost trade and investment for his country, even as his top diplomat stressed the U.S. remains the nation's main ally. The U.S.-China arrangement may also show nations that the Trump administration isn't immune to the pressures of domestic economic headwinds caused by tariffs. "The economic pain is more immediate and broad-based in the U.S. and this deal can be seen as the Trump administration acknowledging that,' said Robert Subbaraman, head of global markets research at Nomura Holdings Inc. But only nations with economic heft and limited reliance on trade with the U.S. may be able to act on that, according to Bert Hofman, professor at the National University of Singapore and a former World Bank country director for China. "It's pretty risky for most countries to be tough on the U.S.,' Hofman said by phone. A prime example of that is Canada, which Oxford Economics said last week had effectively suspended almost all of its tariffs on U.S. products. Over the weekend, Canada's Finance Minister Francois-Philippe Champagne disputed that, saying the government kept 25% retaliatory tariffs on tens of billions of dollars in U.S. goods. He said 70% of the countertariffs implemented by Canada in March are still in place, according to a social media post Saturday. The government "temporarily and publicly paused tariffs' on some items for health and public safety reasons, he said. Still, because China's clout remains substantial as the world's factory floor, other countries may have "to use more creative pieces of leverage,' according to Papic. Lacking leverage For Vietnam, one-third of its economy depends on trade with the U.S., and that lack of leverage means there isn't scope to do much more than talk tough. Vietnam, which was among the first nations to offer purchasing additional U.S. goods such as Boeing aircraft to close the trade surplus, slammed Trump's tariffs earlier this month as "unreasonable.' If larger nations do want to get confrontational, one area where they may have room is on services trade, said Katrina Ell, Moody's Analytics head of Asia Pacific economics. The EU, Singapore, South Korea and Japan are among nations that have the biggest services trade deficits with the U.S., Moody's Analytics data show. "China has too much leverage over the U.S. for the U.S. to continue with its hard-line stance whereas that's not the case for many other economies,' Ell said by phone. "That's what we need to keep in mind is leverage and who has that leverage.'
