This is a thread on Trump's latest barrage of tariffs:
1) What are they?
2) Who is most impacted?
3) And what are the Asian economies going to do about it, short-term and medium term?

@sharp_writing
asia.nikkei.com/Opinion/Vietna… Trump reciprocal tariffs are not about "cheating" and differential in "tariff rates" or "non-tariff" barriers. They are simply benchmarked using outcome & calculation using bilateral trade balance divided by US exports divided by 2. Yep, basically, trade balance. So?
a) Everyone gets 10% at the minimum - so Australia, which has a trade-surplus and an ally, whelp, gets 10%; Trump team high-fiving each other on this win.
b) And then there's the mid range of 20s - Yes, Japan + Malaysia, South Korea and India. SK is supposedly having an FTA with the US or free-trade and there's no tariff barrier between the two but you know, who cares, let's slap this one because they somehow "cheat" and "rip us off" because, well, we import Korean stuff like cars and ships and makeup.
c) Indonesia, Taiwan and Thailand get slapped with 30s ish level and it doesn't really make sense but whatever. Oh, interestingly, semiconductor is exempt, which is like more than 50% of Taiwan's export to the US so I mean, why be so mean unless they are exempting it to tax later.
d) China gets 54% or actually part of the 30s - 34% to be precise and with 20% that means it's 54% and not sure if this is on top of what other tariffs. Anyway, we know they are hawkish on China so Vietnam is interesting because, little Vietnam has been a good trade partner but gets slapped anyway with 46%. Yep, 46%.

Link to research:
research.natixis.com/Site/en/public…

At the Asia Society to listen to Asia’s view of Trump 2.0. Will share later ideas shared!

https://twitter.com/Trinhnomics/status/1906588239588454537

China:

Highly popular in China as he is entertaining as he has made China great again. His pressure has pushed China reforms forward. China has become more resilient and less reliant against the US. Chinese indigenous tech is decent & confidence domestically is highest ever. External pressure has rallied stakeholders around the central leadership for advancing tech & expanding domestic demand. Exports will not be a key driver & infra ROI down. China has benefited from Trump pressure.

Trump has a good story teller for China as Trump has helped the China story. The Chinese is projecting stability in a more volatile world & saying that China is open for business while the door is closing by the US.

DowJones & SPX down while China is up. Nasdaq down & HSI up. All thanks to Trump.

Trump "Liberation Day" is coming & if it is anything to go by like other tariff days, it won't feel "liberating." Why? Because he is front-loading bad news.

It sounds crazy but I have given it some thoughts and here are what I think his short-term objectives. First, we know he has 20% tariffs on China on top of others so we are now got a lot of friction to trade with China, which the Trump administration sees as its #1 security threat.

But isn't happy with this friction to trade and investment and keen to close loop holes. Remember that Biden also increased tons of investment and tariff curbs with China.

How to close it is the question? It requires others to do it. Who are the others? The easiest is Mexico and Canada as they have USMCA, which Trump agreed in 2020 (previously NAFTA).

I have a thread that I was going to make about auto tariffs but instead, I decided to just read/listen. The Peterson Institute has a good paper on modeling 25% tariff on the EU I am listening to this one by Paul Krugman because, well, he's a free trader and a great trade economist. And most importantly, he's old enough to have some historical perspective. Interesting to listen to him (I am a student of Fukuyama as well) because I think what's interesting is that people of his generation couldn't imagine the world we are in today in the 1980s when they recommended the policies they did.

tradetalkspodcast.com/podcast/206-pa… If you don't like listening, here's the transcript: tradetalkspodcast.com/wp-content/upl…

Let's go to the last part of the Miran's paper, which is currencies (Chapter 4 & 5).

Remember that his articulation of all the ills of the US trade imbalance is about the USD as a reserve currency & also the security support the US has to do (two burdens) that has grown, dwarfing the US economy RELATIVE size.

So let's talk about it. But before we even talk about, we have to go through a bit of economics history, if that is okay with you. We'll keep it pretty brief. Triffin was a famous guy. He famously testified before Congress in 1959 & predicted the collapse of the Bretton Wood system, which happened in 1971 when the US broke away from the gold-dollar link.

What did he say? Well, simply, that as a gold-dollar reserve currency, the US would have to expand its liabilities as fast as required for global trade. But since it's backed by gold, which grows SLOWER than global trade, then we got a problem as lower rates would cause a run on the gold stock or dollar liabilities > gold stock.

And if the US didn't accumulate fast liabilities, well, global liquidity would shrink as US rates would go to high and cause global deflation.

If you want to learn more about it, see the paper below. The author btw isn't a fan of Triffin so says he got a bunch of stuff wrong and whatever he got right, it was probably not by design but accident.

Either way, he predicted that & got very famous obvs. What else did he predict?

bis.org/publ/work684.p…

Okay, let's talk about Trump end game. To do that, let's read Stephen Miran's "A User's Guide to Restructuring the Global Trading System" together.

Note that there's a disclaimer that this is not a policy advocacy but catalog of tools available for them to "reshape the global trading system."
hudsonbaycapital.com/documents/FG/h… Trump has been talking about global trade & how he thinks the US trade deficit is unfair since the 1980s (see his Oprah interviews) so this is beef he carries and he has the power to do it.

Trump 1.0 was a test case and Trump 2.0 is going to go full steroid on what he views as the current world order not working for the US. It may work for u, but not for him & his team is going to change it. Here's how Miran is laying it out.

Emerging Asia Braces for Trade War Impact: Losers and Winners of Trumponomics

A thread. Let's go!

research.natixis.com/Site/en/public… Let's start with the basics. What's on & what's promised/threatened. So far, on 12th March 2025, we have:
+25% on steel & aluminum on everyone (for steel, not new for everyone & just those that got exemptions. In Asia, that's AU, SK, and Japan. Canada & Mexico got exemptions and so did EU).
+20% on China, including Hong Kong.

Hello, I want to point one thing out. Vietnam is not just a rerouting place for China. How do we know that? Because Vietnam's biggest exports are not even Chinese investment - it's South Korean, yes Samsung Electronics.

People don't just invest in Vietnam because China is targeted. The shift happened before Trump trade war. See Samsung Electronics.

They do it because Vietnam WANTS that investment. It wants manufacturing. It puts it as a priority above all else.

And because Vietnam's cheap. It got cheap labor. It got supportive policy, both hard and soft infra. Example, Samsung Electronics started moving out of China into Vietnam way before Trump trade war of 2018.

Why did they move to Vietnam? Well, the Vietnamese wanted it & provided tons of incentives.

And why did the Koreans move there? China was GETTING EXPENSIVE. And the Chinese are starting to compete with them.

And then there's the geopolitical issue between China and South Korea.

So South Korea started to move to Vietnam and once that became a success, it INCREASED INVESTMENT and then other South Korean firms came.

Trump is exempting autos from Canada and Mexico 25% and my guess is more exemption is coming (energy is an easy one I guess even with 10% it seems ill-advised).

There is a ceiling to Trump tariffs and that's economic reality of higher prices (domestic production can't suddenly increase at the same pace as tariffs). If he paces his tariffs, targeting only certain sectors/country, then he can mitigate inflation fallout and shift supply chains. If too fast and furious, it leads to demand destruction.

And so here we are. He is backtracking but w/ looming threats of auto and reciprocal for 2 April. But markets sense that something has got to give. And so US growth slowdown in the short-term as imports blow up with front-loading (even gold is getting front-loaded), and any surge of industrial production will take time, esp with capex intensive sectors like auto.

This leads to rate cut odds & stagflation risks. And so the dollar falls.

But it's falling from great heights so definitely due Trump tariffs or not.

Okay, I'm going to talk about what Trump has done & what I think he will do & then I'll talk about Vietnam. It's a long-winded way to get to that answer but necessary.

To understand what he will do, we must know his end game. Some people say, "Well, dude doesn't know himself. Look at his rambling."

Let's take a look. Trump has been President for a month and 1 week. So far, in chronological order, what he has done:

4 February, slapped an additional 10% tariffs on China. This time, this is the first time that it includes Hong Kong. So while the amount is smaller than 60% mentioned, it widens in territory. This hasn't been rescinded and is ON. This covers roughly 14% of total US imports.

26 Jan he threatened Columbia 25% tariffs, mostly because they didn't want to take his deportees (remember he wanted to deport but to do that need origin countries to accept) - that was then solved immediately.

At the same time (Feb), threatened Canada & Mexico w/ 25% tariffs, also basically want them to take deportees and hold the borders so to speak, and that is delayed until 4th March but last night he rambled something like April. Irrespective, this is not yet implemented.

Good morning,

Everyone wants me to have an opinion on that FT article why Vietnam is going to be targeted by Trump just because China has invested in Vietnam. First, before we talk about the article I want to talk about what I think Trump would do.

And no, he's not going just put tariffs on everyone. Why? Let's talk about the US. 1st, everyone cares about what the US does because it is the largest importer of goods or 4.1trn of it.

So what it does regarding domestic policy or trade policy (import tariffs are basically tax on importers so one can argue that it is a measure to help domestic sectors or if it doesn't help w/ domestic production then it will raise costs). Either way, the tariffs themselves just add to costs of goods imported so that should theoretically help relative costs of domestic vs foreign.

I'm listening to Jonas Kaufmann thinking about tariffs and Asia. His voice is beautiful (we got tickets to see him 22 Feb - highly recommended). I'll do thread later on regarding tariffs etc but my bandwidth is limited lately given the admins.

Remember that US tariffs only matter for the 4.1trn that it imported from the world in 2024 - making it the biggest importer in the world or #1 customer.

Despite higher tariffs, the US has one of the lowest trade-weighted average tariffs in the world. What does that mean? If Trump wants & gets reciprocal tariffs, others will have to fall to US levels or the wall of protectionism rises to reciprocate others' wall of protectionism.

An example is the EU 10% tariff on auto for the US while the US has 2.5% on the EU auto.

So either the EU drops tariffs to 2.5% or the US can raise to 10% or pick at other items.

Meaning, it's the EU choice & rightly so to have 10% on the US, just like it's the US choice to do whatever it wants with goods coming from the EU.

The issue here of course is that the US is the largest importer of goods globally. There lies the headlines.

If you import almost nothing from the world and u raise tariffs, no one actually says you are protectionist because they gain nothing and lose nothing.

Who is good at dealing w/ the US? Look to Japan. They are the pros. They have an FTA & has been deploying tons of FDI to the US. Hence I think Japan will be unscathed. Are tariffs the only trade barriers you can pose? Absolutely not. Non-tariff barriers are also huge barriers to global trade.

Anyway, talk soon! Don't get depressed by the headlines - they tend to make you think something is bigger than it is.

The news' job is to shock and awe. The reality is global markets are taking everything w/ stride because, well, much worse news was priced in.

President Trump was inaugurated and the big question is to whom tariffs will be applied, not whether. Markets priced 8-9% tariffs on world before inauguration & so the dollar softened as he did not do this on Day 1.

But rest assure, it's coming. Let's talk about consequences through answering 3 key questions.

Ready? First, I talked about tariffs here on this thread if you didn't read before () & this is a follow-up.

Question #1: Who is most vulnerable to Trump 10% tariff to the world in Asia?

https://x.com/Trinhnomics/status/1859475504132390955

Okay, yesterday, you had China rocking global trade with a USD1trn merchandise trade surplus, but by Friday (17th), we'll get news that China industrial profits are FALLING for a 3rd year in row.

What's going on? How does this work? And finally, what does it mean for the rest of the world? Let's look at China industrial profits for 2024 from Jan to November.

It's down -4.5% & in 2023 it was down & in 2022 it was down.

Fine, but not all sectors experienced decline. These are the sectors with some profit: food manufacturing, textile, tobacco, furniture manufacturing, electricity, waste, and basically a few sectors kind of not that negative or flat - general equipment.

Big news: China trade surplus reached 1trn in 2024. What are the losers of China trade surplus and what does that tell you about the world?

First, let me go through China's NOMINAL (volume is much higher) trade relationship with the world.

https://twitter.com/fbermingham/status/1878727621967782371

First, let's talk about the losers, as in DECLINE IN CHINA IMPORTS.

Germany saw imports from China decline by -10.7%, followed by France (-5.9%) and then Italy (-3.2%). Meaning, the Dutch still got something China want (ASLM chip making machine) but others saw decline of goods.

To add salt to injury, not only is Europe losing market share in China, Chinese goods have RISEN in Europe in nominal term or exports rose to 516bn.

But that's just Europe. It likely also lost out in other markets too, but the US. Europe gained US market share.

It is a beautiful day in HK. I’m at lunch, well, waiting for my bff at a wonderful Italian place called Cantina (next door was our wedding reception 5 yrs ago) & opened up my fav pink paper & the FT Big Read was Ursula choking Europe with regulations (she also chairs a paper that also supposed give her more money to deregulate). There lies the rub. Can u let the person who has led Europe down this rabbit hole be the person to lead it out of it? Some pics from my walk from home to lunch. Hong Kong 🇭🇰 is lovely, best time to visit is October, November & December.


“Inflexible EU rules set Europe’s car 🚗 industry for failure” says critics according to the paper.

“Conservatives & far-right lawmakers accuse the bloc’s ambitious green & digital agendas of punishing citizens & businesses.”

Interesting the definition of conservative & far-right. But irrespective, you can see the results.

She & Draghi chaired a report that says the EU is uncompetitive & too regulated & strangled. Behind.

Okay, but who has been in charge?

The RBI just cut the cash rate by 50bps and kept the policy rate on hold at 6.5% as slowing government spending and a weakening manufacturing sector is dragging down GDP growth.

This is my short thread on examining the India-Japan investment and trade relationship & why they haven't changed much in 10 years despite India being a big domestic demand market that Japan needs.

I argue that this is symptomatic of what is happening to Indian firms themselves. They find it hard to scale and leverage the labor endowments the country has.

How do we change this? Well, by changing the norms of thinking that the government needs to micro manage everything. It should set framework but let Indian private sector flourish.

Let's go. First, what is the India Japan relationship? Well, it's getting better but remains SMALL relative to the ASEAN Japan (Vietnam Japan for example). Japan investment to India despite India being a huge domestic demand market that is super complementary to Japan weak demographic trends is at 4% of total. Look at ASEAN. Yes, at peak around 28% and settling about 24% of total.

India is a ginormous market. So why growing just from 2 to 4% of total???

I'm going to Delhi this Thursday for the India Japan Conference. Excited to go. The key thing I will emphasize while India is how much India needs manufacturing.

The contraction of manufacturing in Q3 2024 led to sharp slowdown of GDP to 5.4%YoY.

India needs manufacturing not just for cyclical growth but social stability. There is no way you can absorb that many people from the rural sector without manufacturing.

The government needs to put all its effort behind this. Manufacturing is the future. It is an essential ingredient to growth.

Why? Because we still live in a material world. How do I know? India has about USD100bn deficit with China in manufactured goods. Shared my views in this documentary:

Guys,

Are you ready for a Trump tariff thread and what this means? This is going to be a bit of a technical one but I'll make it easy & fun & we'll go through literature & analysis.

Let's go.

https://twitter.com/Trinhnomics/status/1014791235452588032

We start with the basics. How does tariff work? First, as you know, the US is a big free trader. Still is despite tons of tariffs on China. So goods in the US generally are tariff free to import & hence proliferation of foreign goods in the US.

But that being said, it does impose tariffs & duties. Sometimes overtly targeting a specific product to protect domestic sector due to lobbying. Anti-dumping duties is an example. A country that is not a market economy is an easy target (China, Vietnam) as u can say those countries have subsidized excessive production & hence duties.

But comes Trump. He has been consistent since the 1980s about the US trade deficit which he has railed against in public interviews and what does he do.

He started a US-China trade-war on washing machine duties.

Before we talk about what has Trump 1.0 (=first term 2017 to 2020) & Biden (2020 to 2024) done in terms of tariffs, I want to talk about the practicality of WHO PAYS FOR TARIFFS.

Two days after the elections & as Trump team prepares their team, let's talk about economic impact. This morning, I will read with you a few papers that have analyzed what he said as literal policy translation.

https://twitter.com/Trinhnomics/status/1854326137713025037

First, Trump 2.0 will not be as messy as Trump 1.0. Why? Well, dude is gonna prolly get enough people to approve his thousands of people that will be appointed so DC.

This is what you get when you have total power (likely House, Senate).

Second, he has done it already so got a few people in the bags to choose from and the troops in the GOP have rallied behind him.

What does that mean? Trumponomics is going to be pretty forceful, whatever that may be.

Prabonomics Wish List: Higher Tax Revenue, More Social Welfare and Rapid GDP Growth.

A thread on Indonesia's 8th President who will lead Southeast Asia's largest economy & fourth most populous in the world in the next five years. Let's go! 🇮🇩

https://twitter.com/Trinhnomics/status/1755422312718045482

First, what is Prabonomics? Well, we don't know yet but he won on the promise of continuity of Jokonomics that comprised of infra capex, fiscal prudence, and downstreaming of metals (nickel).

Still, let's talk about his objectives. On the economy, he wants:

GDP to rise by 8% in the next 2-3 years (Jokowi only managed 4.1% on average in 10yrs and excluding Covid years then 5.1%) so that is raising GDP growth by 3-4% higher than its current batting average.