Economy

Asia’s developing economies are being squeezed by Donald Trump’s tariff blitz and China’s retaliation after years of benefiting as low-cost hubs for US exports.Stock markets of emerging nations, mainly part of the Asean group of countries in south-east Asia, have been among the year’s biggest losers from the turmoil created by the US president’s trade policies. Despite rallying on Thursday following Trump’s 90-day tariff reprieve, the stock markets of countries such as Taiwan, Thailand and Vietnam are deep in the red this year.Known as China-plus-one nations as western manufacturers snub Beijing and set up manufacturing bases in these countries, they are now hostage to the escalating trade war between the world’s two biggest economies.“With this global tit-for-tat trade war, businesses will probably want to pause fresh investments given all the uncertainty going on,” Brian Lee, an economist with the region’s Maybank Investment Banking Group, warned. “You will probably see slower reconfiguration of supply chains to Asean, at least in the short term.”The main index of Taiwan, where exporters of textiles and electronics have shifted factories from China, is down about 18 per cent for the year in dollar terms, despite a near 10 per cent surge on Thursday. Thailand’s stock market has followed a similar pattern, 18 per cent lower this year in dollar terms, despite a 5 per cent jump on Thursday. Vietnam’s Ho Chi Minh index is still down about 9 per cent for the year in dollar terms, even after rising nearly 8 per cent on Thursday after the US suspended a 46 per cent tariff the day before.Trump’s pause offers immediate relief, but trade uncertainties and rising tensions between the US and China — the main trading partner of Asean countries — pose big challenges.Economists warn that Trump’s focus on Beijing, which is facing US tariffs of at least 125 per cent, could lead to dumping of cheap Chinese products into south-east Asia, putting pressure on domestic manufacturing industries. The broader trade tensions could also slow foreign investments which have driven growth in a region that manufactures goods from Apple MacBooks to Nike trainers.Over the past 10 years, Vietnam’s stock market doubled in dollar total-return terms as investors bet that factories backed by multinationals such as Nike and Samsung would boost the earnings of a young population in an economy officially projected to grow 8 per cent this year.At the same time, the boom also brought diversion of Chinese goods, such as solar panels, through Vietnam to avoid US trade barriers on Beijing from Trump’s first term. That increasingly attracted US ire, even before Trump’s re-election. Vietnam has a $123.5bn trade surplus with the US — the third largest after China and Mexico. The so-called trans-shipment of goods diverted through these Asian economies by Beijing to the US could still pose problems.“China’s retaliation actually complicates Vietnam’s and other [economies’] negotiation with US, due to worries on Chinese firms exploiting Vietnam and others as a backdoor to dodge tariffs,” analysts at Japanese bank MUFG said.However, some investors are looking to markets that are less reliant on US exports or could trade more within the region. “Many of these countries were already moving from US exports to a more intraregional trade model. This trend, which is at a reasonably early stage in many countries, is only going to move forward,” Edward Evans, emerging market equities manager at Ashmore, said. Countries such as Indonesia also have room to cut rates to boost growth if the global economy darkens, he added.In addition, many of these countries, worst hit during the 1997/98 Asian financial crisis, have piled up foreign reserves to avoid a repeat.As the Indonesian rupiah tumbled this week past levels last seen in 1997/98, the central bank could draw on reserves of about $155bn, or enough to cover nearly seven months of imports, to intervene in support of the currency.For Hanoi, however, gross foreign exchange reserves make up less than three months of imports. Vietnam does not have “unlimited firepower to counter FX weakness”, Michael Wan, senior currency analyst at MUFG, said. At the same time, the “country’s competitive edge will ultimately shine over the medium term”, he added. That includes Vietnam’s relatively cheap labour supply and its proximity to trade routes.“The whole reason China is allocating a lot of its own manufacturing to places like Vietnam is because of cost,” James Johnstone, co-head of emerging and frontier markets at Redwheel, said. “The idea that we will have the production of iPhones or textiles in the US is very hard to think [about], even under the most extreme tariff conditions.” More

Among those opposed to President Trump’s tariffs on imports from China: a legal group funded by some of the biggest names in conservative politics.Last week, a Florida business owner challenged the Trump administration’s moves in court, arguing that her company, Simplified, which makes notebooks and planners, was harmed by the dramatic trade war with China that has only deteriorated further since the lawsuit was filed.Her lawyers are from the New Civil Liberties Alliance, a libertarian-leaning nonprofit that counts among its financial backers Donors Trust, a group with ties to the billionaire Leonard A. Leo, who is a co-chairman of the Federalist Society.The Federalist Society is an influential legal group that advised Mr. Trump through the confirmation of justices he appointed to form the current conservative supermajority on the Supreme Court, though some in Mr. Trump’s circle came to believe that its leaders were out of step with the president’s political movement.Another donor to New Civil Liberties Alliance is Charles Koch, the billionaire industrialist and Republican megadonor.In what appeared to be the first tariff-related lawsuit against the Trump administration, the founder of Simplified, Emily Ley, argued that President Trump overstepped his authority in February when he first imposed new import taxes on Chinese goods. Since then, China has retaliated with its own tariffs, and Mr. Trump has escalated the fight with more levies. All Chinese imports face a minimum tariff rate of 145 percent as of Thursday, a dramatic increase.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Economist Erica York said Thursday that the cumulative U.S. tariff rate on China of 145% would cut off most trade between the two countries.
The Tax Foundation estimates that Trump’s new tariffs lead to more than $170 billion increase in federal tax revenues for 2025.
York’s comments come as the market reversed some of the gains seen in Wednesday’s historic rally.

U.S. President Donald Trump attends a cabinet meeting at the White House in Washington, D.C., U.S., April 10, 2025.
Nathan Howard | Reuters

President Donald Trump’s tariff increase on imports from China would basically end most trade between that country and the U.S., according to economist Erica York.
“It depends on how narrowly the tariff is applied or how broadly it’s applied, but generally if you get north of a triple-digit tariff, you are cutting off most trade,” the vice president of federal tax policy at the Tax Foundation’s Center for Federal Tax Policy said on CNBC’s “The Exchange” on Thursday. “There may still be some things without any substitutes that companies just have to foot the bill, but for the most part, that cuts it off.”

Her remarks came amid the market wiping out some of its monster gains seen on Wednesday. The market accelerated declines on Thursday once a White House official confirmed to CNBC that the U.S. tariff rate on Chinese goods now stands at 145%. That total includes the recent hike to 125% from 84% that Trump announced Wednesday as well as a 20% fentanyl-related duty that the president had previously put into effect.
York stressed that the market still isn’t in the clear, saying “it’s not like the threat went away entirely,” as no clarity is expected until July when the tariff reversal is scheduled to end.
On Wednesday, Trump announced that he’s temporarily reducing the tariff rates on imports from most countries, except China, to 10% for 90 days. In a Cabinet meeting Thursday, the president declined to rule out the possibility of extending the 90-day reprieve.
Taking into account the China tariffs, the baseline 10% levies still in place and other sector tariffs, Trump has still taken the country into its most protectionist stance in decades, even with the pause.
“It’ll take the average tariff rate still to highs that we haven’t seen since the 1940s, so this is major,” the economist added. “It’s huge cost increases. It’s an economic hit. It’s clearly not setting us on a very good path.”

The Tax Foundation estimates that all of the new Trump tariffs will lead to an increase in federal tax revenues of $171.6 billion for this year. That would make Trump’s tariffs the biggest tax increase since 1993, more than the hikes under both former presidents George H.W. Bush and Barack Obama, the institution revealed.
China has said it won’t flinch if trade dynamics were to escalate into a trade war. Just hours prior to Trump’s tariff pause announcement, China raised its retaliatory levies on U.S. imports to 84% from 34%, which went into effect Thursday. More

After China unveiled steep retaliatory tariffs on American exports on Wednesday, Treasury Secretary Scott Bessent issued a sharp and somewhat surprising response: “So what?”The question underscored the Trump administration’s argument that America has the upper hand in a trade war with China given how reliant its economy is on exports to the United States.The United States buys far more goods from China than China buys from the United States. But Beijing’s decision to retaliate against President Trump’s punishing tariffs by raising levies on American imports to 84 percent could sting more than Mr. Bessent let on.“American companies that have been selling to China, and have been enormously successful doing that, are not going to be able to do that because of Chinese retaliation,” Sean Stein, the president of the U.S.-China Business Council, said in the hours before Mr. Trump ratcheted up his tariffs again.“Tariffs on the Chinese side and the U.S. side cover everything,” Mr. Stein added, meaning everything from aviation to medical imaging to agriculture would be affected and “trade is going to slow,” he said.The United States exported $143.5 billion of goods to China last year and imported $438.9 billion from that country, according to the Office of the United States Trade Representative.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

On the open 15th floor of a loft building in Midtown Manhattan, about a dozen skilled workers make their way through piles of pants, stitching each piece together with focus and precision. Some of the items are designed by Outlier, a fashion brand that produces its smaller runs and experimental products with the garment district’s ecosystem of contract manufacturers.It’s the kind of work that should get a boost from the stiff tariffs newly imposed on products entering the United States from nearly every other country. But the storeroom where Outlier keeps its fabric tells a more complicated story.The rolls of cloth and boxes of recycled goose down come from Italy and Switzerland, Thailand and New Zealand, countries with specialized industries developed over generations that are unlikely to be recreated in America. Take the linen, made from flax grown in a coastal region stretching from northern France to the Netherlands.“It would take a decade to get a crop growing,” said Tyler Clemens, Outlier’s co-founder. A linen shipment was headed for the cutting room; Mr. Clemens had just gotten the bill from the Department of Homeland Security with a charge labeled “IEEPA-RECIPROCAL,” after the International Emergency Economic Powers Act, one of the laws used to justify President Trump’s tariff measures.A fabric order for Outlier arriving at a factory in Manhattan. The fabric was made in Japan and dyed in Portugal before being shipped to the United States, where it incurred a tariff.Karsten Moran for The New York TimesOutlier’s material comes from abroad, as do some of its finished products. Karsten Moran for The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

The Bank of England ditched its plan to sell some of its holdings of long-term bonds next week, after U.S. Treasuries led a rout in the global government bond market.Stock markets have taken a hit since President Trump announced steep tariffs on dozens of countries, but the turmoil also swept into the bond market this week. Yields on U.S. Treasuries, which move in the opposite direction to prices, jumped higher as investors sold the assets traditionally considered a haven in turbulent times.Mr. Trump on Wednesday paused some of his tariffs, saying the markets were getting “yippy.” The U.S. government bond market is enormous and can influence moves in other assets around the world.Yields on British government bonds, known as gilts, have jumped higher in recent days, particularly long-dated debt. The yield on the 30-year gilt soared to 5.58 percent on Wednesday, the highest since 1998.Even as the yield came down somewhat on Thursday, the Bank of England said it would sell 750 million pounds, or $970 million, from its holdings of short-term bonds instead of longer-maturing ones “in light of recent market volatility.”Since late 2022, the Bank of England has been selling bonds that it bought to bolster the economy during the 2008 financial crisis and the coronavirus pandemic. The plan got off to a rough start: It was delayed when the central bank stepped back in to buy bonds to halt the turmoil triggered when former Prime Minister Liz Truss proposed an aggressive tax-cutting budget that incited market chaos.Andrew Bailey, the Bank of England governor, has previously said that there would be a “high bar” for changes to its plan for gilt sales outside of the regular annual review process.The adjustment to the schedule on Thursday is an unusual move. The bank will sell the same amount of bonds. But by offloading short-term debt the pressure is reduced on long-term bonds — selling of those bonds by other investors has been the most intense and raised interest rates for government borrowing.Long-dated gilt sales will be rescheduled for next quarter, the central bank said. It owns £621 billion in gilts, down from £875 billion at its peak in early 2022. More

The White House on Thursday clarified that China faced a minimum tariff rate of 145 percent on all imports to the United States.A day earlier, President Trump had said that he was increasing tariffs on China to 125 percent after Beijing retaliated against his previous levies. On Thursday, the White House explained that the 125 percent is on top of a 20 percent tariff the president had previously put on goods coming from China for its role in supplying fentanyl to the United States.That is a drastic increase on a country that supplies much of what Americans buy. China is the second largest source of imports for the United States and the primary global manufacturer of cellphones, toys, computers and other products.The 145 percent figure is also just a floor, not a ceiling. That amount is on top of other pre-existing levies that Mr. Trump already put in place including:25 percent tariffs on steel, aluminum, cars and car partsTariffs of up to 25 percent on certain Chinese goods that Mr. Trump imposed during his first termTariffs of varying ranges on certain products in response to violating U.S. trade rulesThe rapid changes in tariffs have caused significant confusion for importers, many of whom depend on Chinese products, including major retailers as well as small businesses. For an importer bringing in a container of products, the difference between a 125 percent tariff and a 145 percent tariff can amount to thousands of dollars.The Trump administration has exempted goods that were already in transit from the new tariffs, meaning importers have not yet started to incur them. In the case of goods shipped by air, this will happen in the next few days, while goods moving by ship will take several weeks to arrive. More

President Trump’s whipsawing tariff policy has prompted bipartisan alarm on Capitol Hill, where Democrats are outraged and Republicans are caught between their deep opposition to tariffs and fear of criticizing Mr. Trump.The president’s abrupt announcement on Wednesday that he would halt most of his reciprocal tariffs for 90 days just a week after announcing them allayed the immediate concerns of some G.O.P. lawmakers, many of whom rushed to praise Mr. Trump for what they characterized as deal-making mastery.But behind those statements was a deep well of nervousness among Republican lawmakers who are hearing angst from their constituents and donors about the impact of Mr. Trump’s trade moves on the financial markets and the economy. Some of them have begun signing onto measures that would end the tariffs altogether or claw back Congress’s power to block the president from imposing such levies in the future.“I’m just trying to figure out whose throat I get to choke if it’s wrong, and who I put up on a platform and thank them for the novel approach that was successful if they’re right,” Senator Thom Tillis, Republican of North Carolina, said of the sweeping tariffs on Tuesday during a hearing with Jamieson Greer, the Trump administration’s top trade official.On Wednesday, after Mr. Trump pulled back most of the tariffs but retained a 10 percent tariff rate for most countries and announced additional penalties on China, Mr. Tillis still sounded anxious. He said the move was likely to “reduce some of the escalation,” but added that there was still considerable work to be done to prevent another market meltdown.“We’ve got to get a deal before we get rid of uncertainty,” he told reporters soon after Mr. Trump announced the change in a social media post.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More