Key points
- Potential trade flow changes
- Supply chain disruptions
- Likely retaliations
- Chipmakers in spotlight
- Currencies at risk
ISLAMABAD: As the inauguration of United States (US) president-elect Donald Trump looms, his pledges to voters in the run-up to the presidential elections have already started impacting trends in the Asian markets.
According to Bloomberg, his tariff threats wreaked havoc on the region’s stocks and currencies.
While the most hostile trade measures will likely be targeted at China, few companies in the region will be spared an impact as Trump’s “America First” policies force a rethink of supply chains.
But a trade war between the world’s biggest economies would also destabilise markets everywhere, with Asia – which contributes the largest share of global growth – the most affected.
Trump’s promise
Trump has pledged sweeping tariffs of up to 10 per cent on all imports.
He has promised even harsher measures for China and neighbouring trading partners. The outcomes of such actions are likely to have Ramifications for global economies, including the US itself.
This could potentially reshape trade flows, disrupting supply chains and spur retaliation from global powers.
If Trump pushes forward with his promises, some Asian countries are likely to gain. Massive tariffs on China can trigger a new wave of factory relocations to the rest of the region.
Trump vowed during his campaign to slap 60 per cent tariffs on all Chinese goods entering the United States in an attempt to balance trade between the two nations.
Chinese economy
According to The Economist, analysts question whether the new president will stick to such high figures.
They dispute the blow such tariffs could inflict on the Chinese economy, estimating GDP could be lowered by between 0.7 per cent and 1.6 per cent.
Adam Ahmad Samdin of Oxford Economics told The Economist after Trump’s election that “Lower US demand for Chinese goods due to higher tariffs on China will translate into lower demand for ASEAN exports, even if there aren’t US tariffs levied directly onto those economies.”
Indonesia is particularly exposed through its strong exports of nickel and minerals, but China is also the top trading partner of Japan, Taiwan and South Korea.
The cooling effect would also make waves throughout Southeast Asia, where production chains are closely linked to China and enjoy significant investment from Beijing, the publication reported.
