They were responding to US President Donald Trump’s imposition of steep tariffs on imports from many countries, including 34 percent on China, 20 percent on the European Union, 46 percent on Vietnam and a baseline tariff of 10 percent for a wide range of other nations.
“Generally speaking, I do think that the tariffs imposed on all countries are definitely more than people expected, especially in some regions, even in the European Union,” Dickie Wong, executive director of research at Kingston Securities, said in an interview with RTHK.
He said the higher levies could complicate the already heightened trade tensions between the United States and almost “every single country” in the world, while having a negative effect on global financial markets, which plunged significantly following Trump’s announcements.
Wong also noted that the across-the-board tariff spikes will add to the pressures on the US Federal Reserve as it tries to reduce interest rates in the short to long term, especially now that the personal consumption expenditures price index – the Fed’s preferred inflation gauge – has already shown signs of edging up.
For his part, Ben Emons, chief market strategist at Strategic Fortune Wealth, said that “what we’re seeing to be playing out is that the US gross domestic product will contract even further from here [on].
“The markets have already been very efficient to drag down the benchmark S&P 500 index by 10 percent from the peak.”
He added that such declines are only the tip of the iceberg of a broader impact as the tariffs are gradually implemented and, in turn, reflected in hard data in the coming months.
Nick Marro, principal economist for Asia at the Economist Intelligence Unit, said that “we have already revised down our growth forecast for the US currently to 1.4 percent for this year, and it’s likely going to be revised down further.
“This is quite incredible because heading into Donald Trump’s presidency, the US economy was in a very strong state, but within the time span of just a couple of months, he’s managed to potentially undo all of that.
“That story of a strong American growth is dissipating and that will carry consequences for the rest of the world given that it’s not just China but the entire Asian region that really relies on US demand as a driver of their own economic growth.”
The latest tariffs are going to sting China as the 34 percent comes on top of an existing 20 percent that, when it comes into effect on April 9, will be closer to Trump’s campaign pledge of a 60 percent rate.
Also among Trump’s moves was an order to end duty exemptions on low-value shipments from China under the “de minimis” rule starting on May 2, which analysts said brings the trade war “closer to home”, as many middle-income American households rely on the exemptions as part of daily e-commerce purchases.
Noting that China was always bearing the brunt of America’s trade policies, Marro said that Beijing this time must act more pro-actively in its response to such trade shocks, such as by boosting domestic consumption to offset the trade impact.
“Chinese officials need to act pro-actively respond to these shocks, not just in terms of cushioning exporters and producers, but also over what this means for reviving domestic consumption, ensuring that they can reflate the economy in ways that are sustained,” he said.
“Domestic demand is really going to be one of the only ways for China to offset this external demand shock,” he added.
Singapore-based investment veteran Olivier d’Assier noted that Trump’s tariffs will draw a backlash from many nations, as the level of increase far exceeds expectations and may not serve as the negotiation tool that the American president may have been hoping for.
“[So] if you say 10 percent or 15 percent, it gets people’s attention,” said d’Assier.
“They [the nations] come to the table, they negotiate some kind of deals.
“But if you say 30 percent, 40 percent, 54 percent, this would be unacceptable to most of these trading partners, and they will retaliate.
“And they have means to retaliate.
“I don’t think Trump realizes this, but there are options for people [nations] to stay and wait.
“And I think that’s the reaction he’s going to get on these trade tariffs from China, from the EU, from Canada, and others.”
D’Assier added that [the nations] will say, ‘well, since your economy is the one that’s going to take the pain initially, we’ll just wait and see how long you can take it'”.
