Berliner Boersenzeitung - Asia, the world's economic engine, prepares for Trump shock

EUR -
AED 3.850499
AFN 71.008773
ALL 98.203623
AMD 408.181205
ANG 1.878426
AOA 957.117815
ARS 1052.802845
AUD 1.611799
AWG 1.889601
AZN 1.78073
BAM 1.95685
BBD 2.104369
BDT 124.546819
BGN 1.955321
BHD 0.395093
BIF 3078.681071
BMD 1.048322
BND 1.404767
BOB 7.242022
BRL 6.068274
BSD 1.042269
BTN 88.462435
BWP 14.238911
BYN 3.410895
BYR 20547.119472
BZD 2.100867
CAD 1.464763
CDF 3009.733788
CHF 0.933259
CLF 0.036948
CLP 1019.505987
CNY 7.59717
CNH 7.598032
COP 4601.873352
CRC 530.889885
CUC 1.048322
CUP 27.780544
CVE 110.939365
CZK 25.31071
DJF 185.603117
DKK 7.458186
DOP 62.814299
DZD 140.452152
EGP 52.010209
ERN 15.724836
ETB 127.59287
FJD 2.383151
FKP 0.827459
GBP 0.834234
GEL 2.872224
GGP 0.827459
GHS 16.558655
GIP 0.827459
GMD 74.431168
GNF 8983.905538
GTQ 8.090178
GYD 219.26283
HKD 8.156945
HNL 26.338382
HRK 7.477955
HTG 136.814706
HUF 410.177472
IDR 16634.465696
ILS 3.851683
IMP 0.827459
INR 88.359061
IQD 1365.358559
IRR 44108.165823
ISK 144.899116
JEP 0.827459
JMD 166.040664
JOD 0.743572
JPY 161.920737
KES 135.495088
KGS 90.983275
KHR 4196.291327
KMF 495.32971
KPW 943.489782
KRW 1470.40793
KWD 0.322684
KYD 0.868583
KZT 520.409126
LAK 22893.719185
LBP 93333.853984
LKR 303.348533
LRD 189.169904
LSL 18.807949
LTL 3.095423
LVL 0.634119
LYD 5.089828
MAD 10.54339
MDL 19.010562
MGA 4864.702709
MKD 61.551564
MMK 3404.910334
MNT 3562.199534
MOP 8.356543
MRU 41.470644
MUR 49.09263
MVR 16.206881
MWK 1807.304094
MXN 21.343897
MYR 4.667134
MZN 66.998095
NAD 18.807949
NGN 1763.687131
NIO 38.350941
NOK 11.598951
NPR 140.756858
NZD 1.793396
OMR 0.403607
PAB 1.048071
PEN 3.95212
PGK 4.196291
PHP 61.870958
PKR 289.43114
PLN 4.324697
PYG 8136.52045
QAR 3.822234
RON 4.9767
RSD 117.002216
RUB 109.041694
RWF 1422.776888
SAR 3.936062
SBD 8.788669
SCR 15.763705
SDG 630.565511
SEK 11.518181
SGD 1.412426
SHP 0.827459
SLE 23.827917
SLL 21982.801994
SOS 595.625233
SRD 37.209173
STD 21698.157582
SVC 9.120067
SYP 2633.941386
SZL 18.801446
THB 36.275119
TJS 11.161648
TMT 3.669128
TND 3.32964
TOP 2.455279
TRY 36.262506
TTD 7.078798
TWD 34.040064
TZS 2778.054341
UAH 43.118956
UGX 3872.539951
USD 1.048322
UYU 44.570933
UZS 13371.173597
VES 49.410144
VND 26648.355968
VUV 124.458945
WST 2.926487
XAF 656.315372
XAG 0.034032
XAU 0.00039
XCD 2.833144
XDR 0.79284
XOF 656.315372
XPF 119.331742
YER 262.001981
ZAR 18.935062
ZMK 9436.158367
ZMW 28.791996
ZWL 337.559392
  • JRI

    -0.0200

    13.21

    -0.15%

  • RBGPF

    59.2400

    59.24

    +100%

  • CMSC

    0.0320

    24.672

    +0.13%

  • SCS

    0.2300

    13.27

    +1.73%

  • RELX

    0.9900

    46.75

    +2.12%

  • BCC

    3.4200

    143.78

    +2.38%

  • RIO

    -0.2200

    62.35

    -0.35%

  • CMSD

    0.0150

    24.46

    +0.06%

  • BCE

    0.0900

    26.77

    +0.34%

  • NGG

    1.0296

    63.11

    +1.63%

  • RYCEF

    -0.0100

    6.79

    -0.15%

  • VOD

    0.1323

    8.73

    +1.52%

  • AZN

    1.3700

    65.63

    +2.09%

  • GSK

    0.2600

    33.96

    +0.77%

  • BTI

    0.4000

    37.38

    +1.07%

  • BP

    0.2000

    29.72

    +0.67%

Asia, the world's economic engine, prepares for Trump shock
Asia, the world's economic engine, prepares for Trump shock / Photo: Nhac NGUYEN - AFP

Asia, the world's economic engine, prepares for Trump shock

Some Asian countries stand to gain if US president-elect Donald Trump pushes ahead with his promised massive tariffs on China and triggers a new wave of factory relocations to the rest of the region.

Text size:

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, who won a crushing presidential victory this week, vowed during his campaign to slap 60 percent tariffs on all Chinese goods entering the United States in an attempt to balance trade between the two nations.

Analysts however question whether the new president will stick to such a high figure, and dispute the blow such tariffs could inflect on the Chinese economy, estimating GDP could be lowered by between 0.7 percent and 1.6 percent.

The cooling effect would also make waves throughout Southeast Asia, where production chains are closely linked to China and enjoy significant investment from Beijing.

"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," said Adam Ahmad Samdin, of Oxford Economics.

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.

In addition to China, Donald Trump has also warned of an increase of 10 to 20 percent on duties for all imports, as part of his protectionist policies and fixation that other countries take advantage of the US.

"The extent of these effects likely depends on the direct exposure of each economy to the US," said Samdin, who added that America accounts for a 39.1 percent share of Cambodian exports, 27.4 percent from Vietnam, 17 percent from Thailand and 15.4 percent from the Philippines.

- India to be targeted? -

Trump first slapped China with heavy tariffs in 2018 during his first administration, leading to the emergence of "connector countries", through which Chinese companies passed their products to avoid American taxes.

Those countries could be in the line of fire now.

"Vietnam's electronics exports to the US could also be targeted by Trump, in a bid to halt the diversion of Chinese electronic products to the US via Vietnam since 2018," said Lloyd Chan, a senior analyst at MUFG, Japan's largest bank.

"This is not inconceivable. Trade rewiring has notably gained traction in the region's electronics value chain."

"India could itself become a target of protectionist measures by the US due to the large share of Chinese components in Indian products," added Alexandra Hermann, an economist with Oxford Economics.

Trump could also impose higher tariffs on Indian goods in sectors such as "automobiles, textiles, pharmaceuticals and wines, which could make Indian exports less competitive in the US", said Ajay Srivastava of the New Delhi-based Global Trade Research Initiative.

A trade war would be dangerous for India, said Ajay Sahai, director of the Federation of Indian Export Organisations.

"Trump is a transactional person. He may target higher tariffs on certain items of Indian exports so he can negotiate for lower tariffs for US products in India," he told AFP.

- Supply chain rejig -

In the medium term, these negative effects could be counterbalanced by establishing factories outside China to escape the fallout.

The "China+1" strategy initiated during Donald Trump's first term saw production shifts to India, Malaysia, Thailand and Vietnam.

With its geographical position and cheap skilled labour, Vietnam has already been one of the main beneficiaries.

The country has notably received investments from Taiwanese Apple subcontractors Foxconn and Pegatron and South Korea's Samsung, becoming the second-largest exporter of smartphones in the world behind China.

"The likelihood increases that even more businesses will want to... have a second, or third, production base outside China," said Bruno Jaspaert, chairman of the European Chamber of Commerce in Vietnam.

Chinese firms themselves are investing massively from Vietnam to Indonesia in sectors including solar, batteries, electric vehicles and minerals.

"American companies and investors are very interested in opportunities in Vietnam and this will continue under the incoming Trump Administration," said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi.

But whether it is low-end or high-tech production, China's competitive advantage in terms of price, scale and quality is difficult to reproduce, warns Nomura bank.

A reorganisation of production chains could lead to a "loss of efficiency" and increased prices, "with a negative impact on global growth", Thomas Helbling, deputy director of the IMF for Asia, recently explained to AFP.

Asian countries could therefore gain export market share but ultimately see their situation deteriorate amid weakening global demand.

(S.G.Stein--BBZ)