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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.'
Independent Singapore
10-05-2025
- Business
- Independent Singapore
Clock's ticking: U.S. and China rush back to talks as global crisis looms
Photo: Freepik/kjpargeter WASHINGTON/BEIJING: After approximately two years of economic scuffles, the United States and China—the world's two prime economies—are poised to revive direct trade consultations in Switzerland this weekend. According to the latest BBC report, the high-level discussions will signify the first head-on conference between top trade bureaucrats since President Donald Trump slapped extensive tariffs on Chinese imports in January. China retorted, prompting a series of punitive actions that saw tariffs rise to 145% on Chinese products and up to 125% on some American exports. Within a setting of sweltering political pomposity and patriotic bravado, this conference proposes a rare moment of vigilant confidence. Who blinked first? Both sides claim initiative Despite months of threatening rhetoric and aggressive diplomacy, both Washington and Beijing now seem ready and willing to interrupt the standoff, without losing face. Political analysts propose that the timing mirrors a shared acknowledgement of the fact that negotiation is essential, not a concession. 'Neither side wants to appear to be backing down,' noted Stephen Olson, a former U.S. trade delegate. Still, the optics are deeply questioned. China claims it is responding to pleas from American industries and customers, while Trump asserts that Chinese bureaucrats are frantic due to a vacillating economy. 'We can all play games,' the President said, toning down the discussion on from whom the idea of the meeting originated. 'It only matters what happens in that room.' Domestic pressures mount in Washington and Beijing Behind the pomposity, both countries are confronted with substantial internal tensions. In China, manufacturing and services have collapsed, with factory production hitting a five-month low. Warehouses are swarming with unsold products, prompting exporters to look elsewhere aside from the U.S. market. In the meantime, the American economy constricted for the first time in three years, crashing businesses that depend on Chinese manufacturing. Toymakers and tech firms are cautious about collapsing supply chains, and the general public is frustrated by the growing inflation and escalating prices. Even President Trump recognised the tariffs' effect, flippantly saying that children might have 'two dolls instead of 30' due to an increase in prices. His sliding approval rankings imply that voters are not happy. A diplomatic opening, but the road ahead is long This weekend's consultations, expectedly focusing on switching positions and creating a forthcoming agenda, are not anticipated to produce an instantaneous solution. Specialists expect a lengthy process, similar to the protracted consultations that created the inadequate 'phase one' transaction in early 2020. This time, onlookers are hopeful that a 'phase one deal on steroids' that might deal with more profound issues, extending from China's industrial appropriations to geopolitical apprehensions like the fentanyl business and bonds with Moscow. Nevertheless, no one expects speedy outcomes. 'The systemic frictions will not be solved any time soon,' Olson warns. At best, Geneva may offer gracious and civil speeches and a delicate pledge to keep the discussions on a continuing basis.
Free Malaysia Today
09-05-2025
- Business
- Free Malaysia Today
Malaysia unlikely to escape Trump tariffs, says former US trade negotiator
Last month, Donald Trump announced a 24% tariff on most Malaysian goods entering the US, which was later put on hold for 90 days to allow for trade negotiations. PETALING JAYA : A former US trade negotiator says Malaysia is unlikely to succeed in completely eliminating the 24% tariff rate imposed by US president Donald Trump. Stephen Olson, who represented the US in negotiations for two free trade agreements, said Malaysia would have limited leverage in tariff talks. He said Trump is 'unlikely to bat an eye' even if Malaysia threatened the US with 500% tariffs. Olson suggested that Malaysia raise other potential 'pressure points' during negotiations, such as corporate and geopolitical issues. He said Malaysian negotiators should also emphasise the ways in which the US benefits from its trade and economic relations with Malaysia. 'To be brutally honest, I don't see any scenario in which 0% tariffs are within the realm of possibility (for Malaysia) here,' he said. The US has been Malaysia's third largest trading partner since 2015, with the total trade between the two countries surging 29.9% to RM324.91 billion last year. Olson, a visiting senior fellow of the Yusof Ishak Institute in Singapore, said commitments to purchase more US products may find favour with Trump, who uses trade balances to gauge whether a country 'wins or loses' in trade. Trump takes the view that a trade deficit with another country indicates that the country is 'beating' the US. In view of that, Olson said Malaysian trade officials would have to assess whether the cost of making additional purchases from the US would outweigh the benefits of securing reduction or elimination of tariffs. Last month, the US announced tariffs on goods imported from some 60 countries, set at varying rates. Malaysia was slapped with a 24% tariff on most of its exports to the US. The tariffs were subsequently paused for 90 days to allow for trade negotiations. However, a 10% blanket duty remains in place on almost all imports into the US. On Monday, investment, trade and industry minister Tengku Zafrul Aziz said the country's main objective was to secure the removal, or at the very least, a significant reduction of the tariff imposed on Malaysian goods. He said Putrajaya's team for the talks, which started on Tuesday, is led by Mastura Ahmad Mustafa, the ministry's secretary-general for trade. Washington has named an assistant US trade representative as its chief negotiator. Olson said although domestic political pressures are likely to be a key consideration, the Malaysian delegation must take into account an 'even more important factor'. 'And that is the fact that the US president views himself as the 'trade negotiator in chief',' said Olson. 'How much authority do US negotiators actually have? Will the final call actually be made in the Oval Office? It's unclear right now.' Tengku Zafrul, who led a Malaysian delegation to Washington last month, told the media that American bureaucrats had expressed concern about Malaysia's non-tariff barriers and their country's US$25 billion trade deficit with Malaysia. However, the minister said he reminded them that Malaysian GLCs had invested nearly US$45 billion in US equity and bond markets. At the press conference, Tengku Zafrul also said he had assured Washington that Malaysia would maintain an open and neutral trade policy, which would include good ties with partners such as China, the European Union and Gulf Cooperation Council countries. The minister also said the US has made four demands, calling on Malaysia to address non-tariff barriers, reduce the trade deficit, safeguard US technology, and increase investment in American industries. Malaysia's halal import restrictions and Bumiputera equity requirements have been listed as non-tariff barriers in the Office of the United States Trade Representative's 2025 National Trade Estimate Report. Olson said he was uncertain whether Malaysia's US$45 billion investment in US markets, highlighted by Tengku Zafrul, gave Putrajaya any meaningful bargaining power. He said that would largely depend on how much Trump cared about the constituencies or business interests that would be adversely affected if Malaysia pulled these investments. Olson also said Zafrul's pledge of trade neutrality was unlikely to win much favour with Washington. 'The Trump administration seems to be looking for something much more than neutrality in these negotiations – it wants countries to join US efforts to isolate China,' he said.
