Under former President Donald Trump, the administration unilaterally imposed several rounds of tariffs. These measures have created serious shockwaves throughout the world economy, especially rattling Asian countries. These tariffs, which President Trump promised would restore American manufacturing, have included tariffs on targeted products—like steel and cars. The effects of these policies are deep, as export is the backbone of most of the Asian countries, including China’s economic success.
In a clumsy attempt to save domestic manufacturing, Trump has set Asian economies on edge. The region can boast of its strong, export-driven growth, but now, the new tariffs have pushed fears of an economic recession to near record highs. While the Trump administration is still in talks with China attempting to hammer out a tariff deal, those talks seem deadlocked at best. At present, Trump has not decided whether or not to further extend the US-China trade truce.
Specifically, on July 31, 2023, the White House made a major announcement. When President Trump signed an executive order that added 90 days to the ongoing tariff truce between the United States and China, it brought the expiration date to November 10. This extension occurs against the background of an 18 month long negotiation process to finalize a full, binding trade agreement. Trump launched an aggressive new national tariff schedule. Some of these rates jump all the way up to 41%, devastating countless industries.
The industry’s ongoing plight of challenges with imports has led to retaliatory global tariffs. These tariffs are being applied under Section 232 of the Trade Expansion Act of 1962. Remarkably, the Trump administration doubled tariffs on Indian imports of Russian oil to 50%, creating an even more convoluted set of international commercial relations. Meanwhile, on July 3, an agreement was reached between the United States and Vietnam to lower tariffs, indicating some flexibility in trade negotiations.
Though the administration tried to keep some semblance of consistency, the Trump administration has been lambasted in the courts for its tariff squabbles. As of May 28, a US trade court has declared that the majority of these new tariffs are unlawful. Even with such a ruling, the tariffs continue to be collected as they sit for a potential review by an appeals court.
The possible consequences of Trump’s tariffs go far deeper than economic indicators alone. As a result, Asian firms across the tech supply chain are under increased duress. For example, Uniqlo and Adidas are currently looking at increasing their prices in response to new US tariffs on garment exports. On top of all of that, Japan is considering a 15% tariff rate on US chips, matching European Union proposals.
The broader trade picture is clouded as China suspends investments in companies headed to the US during the continuing US-China trade war. As noted in our July 31 story, this tactical decision reflects increasing bilateral tensions and suggests significant economic fallout may be on the horizon for both countries.