In April, US President Donald Trump announced sweeping tariffs against over a dozen countries, hitting allies and enemies all across the board. The tariffs amounted to a staggering 25% burden on Japanese products. This abrupt announcement has reverberated across the bearish Asian economy, throwing a pall of confusion over firms and paupers alike. As the stakes have risen, Trump has continually delayed the tariff negotiation deadlines. This provides countries with additional time to reach deals, but it also creates a tsunami of uncertainty on where exactly US trade policy is headed.
This implied extension of these deadlines has generated celebration and dismay. Reasonably, countries are allowed a brief period to negotiate terms, but this restarts the tariff clock. Consequently, companies are left with no idea as to what their future input costs and trade relationship will be. Trump’s administration has already resisted pressure from allies to increase their military spending. Simultaneously, they have engaged in a tariff barrage of their own, creating a further diplomatic quagmire.
Japan’s Prime Minister Shigeru Ishiba quickly rushed to voice his displeasure with the imposed tariffs, calling the action “deeply regrettable.” This sentiment captures the larger fear and concern among Asian countries that believe they are trapped in a geopolitical great game. Jesper Koll, then one of Japan’s most acclaimed economists, nailed how dangerous Trump’s play was.
“Despite its close economic and military relationship with the US, Japan is being treated the same as other Asian trade partners.” – Jesper Koll
The Trump administration’s insistence on leaving its asks vague has only compounded that confusion. Several analysts warn that failure to adequately communicate the move could hurt the US in the long run, eroding US leverage during negotiations. Although David Jacks, a Stanford economic historian and expert in international trade, welcomed the ambition of the strategy, he warned against these sticky wickets.
“The bargaining position of the US has actually been diminished as they have revealed that their hand isn’t actually as strong as they would like.” – David Jacks
The tariffs have had a particularly disproportionate impact on transhipped goods and hurt 22 countries, 14 of them in Asia. This extremely broad approach has not only hurt US exporters, but it has imposed a heavy burden on US importers and US consumers. Global companies such as Samsung find themselves in a bind. Now they’re fighting to survive the boom and bust trade environment created by these tariffs.
Trade expert Alex Capri noted the challenges at play in untangling these matters.
“It’s going to be a slow, long-term and evolving process involving many third parties, tech companies and logistic partners.” – Alex Capri
Though not always in agreement, analysts caution that Trump’s approach could backfire and help China come out as the winner. With continuing tariff battles still not resolved in a clear manner, China can take advantage of the fissure within Asia. This change in economic realities would realign trade partnerships and dictate the pace of future economic development on either side of the continent.