US steel and aluminium tariffs are coming into effect, and they are coming without exemptions.
Australia and Japan were hoping to avoid the tariffs, but they're out of luck.
Asia Business Correspondent Peter Lewis talks to Ryan Bridge about what this means, Singapore Deputy PM's comments on Asia, and how imports and exports went for China in January.
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Speaker 1 (00:00):
Paid Lewis Is with US Asia Business correspondent paid good
(00:02):
Evening Hi Ryan. Now the US still and aluminium tariffs
come into effect, and China is going to be affected
as well. Is that how badly?
Speaker 2 (00:13):
Well, it's it's important because these twenty five percent tariffs
don't have any exemptions, which is upset some countries like
Australia and Japan, which we're hoping they were going to
get exempted. But everyone has to pay them. And what's more,
it doesn't just affect raw steel and aluminium, because Trump
has expanded these metal tariffs to apply to a wide
(00:36):
range of products that contain aliminium and steel. So things
like tennis, rackets, exercise bikes, furniture, air conditioning units all
have tariffs on them. So that means there's about one
hundred and fifty billion dollars worth of imported consumer goods
into the US that get hit with these new tariffs
(00:56):
in addition to raw steel and aliminium. Now this China.
China's highly vulnerable to the risk of a global trade
war because although the US only directly takes about fifteen
percent of China's exports, a lot more goods end up
in the US being shipped via third countries like Vietnam, Mexico,
(01:19):
Thailand and so on. So if the US continues to
raise tariffs, this will slash quite an important driver of
growth for China. That's contributed to about a third of
China's economic expansion last year. The problem China has it
just doesn't really know what it's got to do to
(01:42):
please Donald Trump, because in the case of China, this
isn't just about trade deficits and moving manufacturing back to
the US, boosting US industrial production. They're being blamed for
the fentanyl crisis. The US thinks it should do more.
China says we've already done a lot in terms of
(02:04):
trying to deal with this, and this is really your problem.
And there were some quite strong words in fact from
the Foreign Minister Wangyi, who called Trump two faced and
said what he was doing was just not good for
bilateral relations. They haven't responded specifically yet to these tariffs.
But then interesting development yesterday was that Chinese government summoned
(02:29):
Walmart executives to tell them that they couldn't put pressure
on Chinese suppliers to cut their prices. This is one
of the ways in which US importers and retailers could
try and deal with Trump tariffs, or China has made
it very clear, these are your tariffs, these are US tariffs.
Don't expect to pass them on to Chinese suppliers because
(02:51):
they're not going to pay. So that means really, companies
like Walmarts and other importers, they only had two ways
of doing this. They're either all the tariffs themselves, which
is going to cut substantially into their profit margins, or
they passed it on to US consumers, which is going
to be inflationary, or maybe a combination of both. But
China has made it clear, don't come to us and
(03:14):
expect us to bear the cost of these tariffs.
Speaker 1 (03:17):
I do have some sympathy for China in this position
because it's not like Mexico, where it's clear cut what
the issue is and that's the border and it's immigration.
Here they are saying, and I listened to the press
conference from the White House this week, they said, you know,
China is getting rich off ventanyl. I mean almost like
(03:38):
the government was involved in the shipment of ventanyl, you know,
I mean, how do you respond to that?
Speaker 2 (03:45):
Well, that's been their problem, and they say that under
the Biden administration, they made a lot of progress in
cutting the components of fentanyl that were being exported to
the US, and that was so they don't understand why
Washington is taking this approach, and if it has a problem,
(04:06):
why not talk to us and so that we can
try and figure it out what it is we need
to do, because at the moment we just don't know.
Speaker 1 (04:13):
Now, Singapore's Deputy Prime Minister is really on the selling
path here talking about Asia being the beacon of growth opportunities.
Speaker 2 (04:22):
Yeah, that's right, and in some ways is right because
one of the things about smaller nations like Singapore is
that they have to be open to global trade otherwise
they just can't grow their economy and they're very prone
to disruption from global supply chain. So you find that
(04:43):
a country like Singapore is virtually tariff free, same as
Hong Kong. You can export to Hong Kong without any
tariffs whatsoever, and they won't go and respond either to
US tariffs and they want to be major open economies.
And it may be in some ways, you know, that's
the right approach, and there is reasons to be optimistic
(05:07):
about Southeast Asia because it's going to expand from around
fifty percent of the world's GDP to about sixty percent
by twenty thirty. And you know, Southeast Asia will be
the fourth largest economy in the world within the next
few years. And we have here a lot of trade
agreements already which have been very effective in cutting or
(05:30):
reducing tariffs on a wide range of goods. There's the
Asian Trading Goods Agreement that's eliminated almost all tariffs on
a whole range of products. We also have regional free
trade agreements like the Six Asian Plus, which New Zealand
is part of. Is also the Reset Agreement which New
(05:50):
Zealand is part of as well, and they have been
very successful in reducing tariffs. So really the way for
Donald Trump to go is not to go increase tariffs,
but maybe to try and join some of these regional
agreements and reduce their own tariffs and get the benefit
of tariffs being reduced back. So Singapore is onto something here.
Speaker 1 (06:12):
We are after the UK and just a few seconds paiter,
but how are the imports exports looking for China for
generary not.
Speaker 2 (06:19):
Good imports fell eight point four percent year on year
in the first two months for January February, the data
gets combined because of the effects of the China Chinese
Lunar New Year holidays. Now they did grow in December,
not much, by about one percent, but nevertheless, this is
the biggest decline in exports that we've seen for quite
(06:42):
a while. Imports also fell quite strongly as well, so
this gives us a glimpse to how these tariffs are
starting to affect China. Chinese exporters have been trying to
get around this by front loading shipments to the US,
but it does show how vulnerab or China is to
these tariffs, and the way outs for China is to
(07:04):
try and boost its domestic demand, gets consumers spending more
and absorb goods into its own economy rather than trying
to export them abroad.
Speaker 1 (07:15):
Nice one, Peter, Thank you for that. Peter Lewis that
Asia Business Correspondence. For more from Hither Duplessy Alan Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio.
Paid Lewis Is with US Asia Business correspondent paid good
(00:02):
Evening Hi Ryan. Now the US still and aluminium tariffs
come into effect, and China is going to be affected
as well. Is that how badly?
Speaker 2 (00:13):
Well, it's it's important because these twenty five percent tariffs
don't have any exemptions, which is upset some countries like
Australia and Japan, which we're hoping they were going to
get exempted. But everyone has to pay them. And what's more,
it doesn't just affect raw steel and aluminium, because Trump
has expanded these metal tariffs to apply to a wide
(00:36):
range of products that contain aliminium and steel. So things
like tennis, rackets, exercise bikes, furniture, air conditioning units all
have tariffs on them. So that means there's about one
hundred and fifty billion dollars worth of imported consumer goods
into the US that get hit with these new tariffs
(00:56):
in addition to raw steel and aliminium. Now this China.
China's highly vulnerable to the risk of a global trade
war because although the US only directly takes about fifteen
percent of China's exports, a lot more goods end up
in the US being shipped via third countries like Vietnam, Mexico,
(01:19):
Thailand and so on. So if the US continues to
raise tariffs, this will slash quite an important driver of
growth for China. That's contributed to about a third of
China's economic expansion last year. The problem China has it
just doesn't really know what it's got to do to
(01:42):
please Donald Trump, because in the case of China, this
isn't just about trade deficits and moving manufacturing back to
the US, boosting US industrial production. They're being blamed for
the fentanyl crisis. The US thinks it should do more.
China says we've already done a lot in terms of
(02:04):
trying to deal with this, and this is really your problem.
And there were some quite strong words in fact from
the Foreign Minister Wangyi, who called Trump two faced and
said what he was doing was just not good for
bilateral relations. They haven't responded specifically yet to these tariffs.
But then interesting development yesterday was that Chinese government summoned
(02:29):
Walmart executives to tell them that they couldn't put pressure
on Chinese suppliers to cut their prices. This is one
of the ways in which US importers and retailers could
try and deal with Trump tariffs, or China has made
it very clear, these are your tariffs, these are US tariffs.
Don't expect to pass them on to Chinese suppliers because
(02:51):
they're not going to pay. So that means really, companies
like Walmarts and other importers, they only had two ways
of doing this. They're either all the tariffs themselves, which
is going to cut substantially into their profit margins, or
they passed it on to US consumers, which is going
to be inflationary, or maybe a combination of both. But
China has made it clear, don't come to us and
(03:14):
expect us to bear the cost of these tariffs.
Speaker 1 (03:17):
I do have some sympathy for China in this position
because it's not like Mexico, where it's clear cut what
the issue is and that's the border and it's immigration.
Here they are saying, and I listened to the press
conference from the White House this week, they said, you know,
China is getting rich off ventanyl. I mean almost like
(03:38):
the government was involved in the shipment of ventanyl, you know,
I mean, how do you respond to that?
Speaker 2 (03:45):
Well, that's been their problem, and they say that under
the Biden administration, they made a lot of progress in
cutting the components of fentanyl that were being exported to
the US, and that was so they don't understand why
Washington is taking this approach, and if it has a problem,
(04:06):
why not talk to us and so that we can
try and figure it out what it is we need
to do, because at the moment we just don't know.
Speaker 1 (04:13):
Now, Singapore's Deputy Prime Minister is really on the selling
path here talking about Asia being the beacon of growth opportunities.
Speaker 2 (04:22):
Yeah, that's right, and in some ways is right because
one of the things about smaller nations like Singapore is
that they have to be open to global trade otherwise
they just can't grow their economy and they're very prone
to disruption from global supply chain. So you find that
(04:43):
a country like Singapore is virtually tariff free, same as
Hong Kong. You can export to Hong Kong without any
tariffs whatsoever, and they won't go and respond either to
US tariffs and they want to be major open economies.
And it may be in some ways, you know, that's
the right approach, and there is reasons to be optimistic
(05:07):
about Southeast Asia because it's going to expand from around
fifty percent of the world's GDP to about sixty percent
by twenty thirty. And you know, Southeast Asia will be
the fourth largest economy in the world within the next
few years. And we have here a lot of trade
agreements already which have been very effective in cutting or
(05:30):
reducing tariffs on a wide range of goods. There's the
Asian Trading Goods Agreement that's eliminated almost all tariffs on
a whole range of products. We also have regional free
trade agreements like the Six Asian Plus, which New Zealand
is part of. Is also the Reset Agreement which New
(05:50):
Zealand is part of as well, and they have been
very successful in reducing tariffs. So really the way for
Donald Trump to go is not to go increase tariffs,
but maybe to try and join some of these regional
agreements and reduce their own tariffs and get the benefit
of tariffs being reduced back. So Singapore is onto something here.
Speaker 1 (06:12):
We are after the UK and just a few seconds paiter,
but how are the imports exports looking for China for
generary not.
Speaker 2 (06:19):
Good imports fell eight point four percent year on year
in the first two months for January February, the data
gets combined because of the effects of the China Chinese
Lunar New Year holidays. Now they did grow in December,
not much, by about one percent, but nevertheless, this is
the biggest decline in exports that we've seen for quite
(06:42):
a while. Imports also fell quite strongly as well, so
this gives us a glimpse to how these tariffs are
starting to affect China. Chinese exporters have been trying to
get around this by front loading shipments to the US,
but it does show how vulnerab or China is to
these tariffs, and the way outs for China is to
(07:04):
try and boost its domestic demand, gets consumers spending more
and absorb goods into its own economy rather than trying
to export them abroad.
Speaker 1 (07:15):
Nice one, Peter, Thank you for that. Peter Lewis that
Asia Business Correspondence. For more from Hither Duplessy Alan Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio.
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