Introducing

Tian Yong Woon

Tian Yong joined Haver Analytics as an Economist in 2023. Previously, Tian Yong worked as an Economist with Deutsche Bank, covering Emerging Asian economies while also writing on thematic issues within the broader Asia region. Prior to his work with Deutsche Bank, he worked as an Economic Analyst with the International Monetary Fund, where he contributed to Article IV consultations with Singapore and Malaysia, and to the regular surveillance of financial stability issues in the Asia Pacific region.

Tian Yong holds a Master of Science in Quantitative Finance from the Singapore Management University, and a Bachelor of Science in Banking and Finance from the University of London.

Publications by Tian Yong Woon

Asia| Jun 23 2025
Economic Letter from Asia: Maintaining Currency
In this week’s letter, we analyse the performance of Asian currencies so far this year. While US dollar weakness has broadly supported regional currencies, economy-specific factors have driven significant divergence (chart 1). Advanced Asian currencies—such as the Taiwan dollar, Japanese yen, South Korean won, and Singapore dollar—have outperformed, not simply due to their advanced status but because of unique domestic drivers. Conversely, currencies like the Vietnamese dong, Indian rupee, Indonesian rupiah, and Chinese yuan have lagged, reflecting country-specific challenges.

Trade exposure has been a key influence on currency movements. The wave of US tariffs has spotlighted economies’ links to the US, making export-reliant nations more vulnerable to downside risks (chart 2). Vietnam’s high exposure to US exports helps explain its currency weakness, while India remains relatively insulated overall despite significant US trade ties. Markets remain cautious as the US 90-day tariff pause nears expiry.

Investor growth outlooks have also shaped currency trends. Taiwan’s 2025 GDP forecasts were upgraded after strong Q1 data, helping explain some currency divergence (chart 3), though growth alone does not fully determine currency strength. Monetary policy developments matter too. Most Asian central banks have held or cut rates this year, except the Bank of Japan, which has tightened policy, supporting the yen (chart 4). India’s rate cuts narrowed its interest rate differentials, pressuring the rupee, while Vietnam and Taiwan saw currency moves despite steady policies, underscoring other influences.

Policy uncertainty and geopolitical risks have also remained critical. South Korea’s political instability eased after recent elections, boosting sentiment (chart 5). India has faced challenges from Middle East tensions and resulting energy price pressures. Our Asia Currency Scorecard (chart 6) summarises these dynamics: the Taiwan dollar leads on growth optimism, the Japanese yen benefits from tighter monetary policy, and the South Korean won from reduced uncertainty. In contrast, the Vietnamese dong struggles with trade exposure, the Indian rupee is weighed down by rate cuts and geopolitical risks, and the Indonesian rupiah faces pressure from past policy uncertainty and recent easing.

Asia’s currency performance The performance of Asian currencies so far this year has been mixed. A common tailwind has been the weakness of the US dollar, which has provided some support to regional currencies. However, individual economy-specific factors have driven significant divergence in overall performance. On balance, advanced Asian currencies—such as the Taiwan dollar, Japanese yen, South Korean won, and Singapore dollar—have led the pack, recording the strongest year-to-date gains on a nominal effective exchange rate (NEER) basis, as shown in chart 1. That said, their outperformance is not due to their status as advanced economies, but rather to distinct, economy-specific factors, which we will explore further. Conversely, currencies such as the Vietnamese dong, Indian rupee, Indonesian rupiah, and Chinese yuan have been among the weakest performers in NEER terms. As with the top performers, their relative weakness also stems from country-specific factors.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jun 16 2025
Economic Letter from Asia: India Rising
This week, we focus on India’s economic developments, which continue to demonstrate resilience amid persistent global headwinds. In Q1, GDP growth accelerated to its fastest pace in a year, surpassing expectations. Services remained the primary growth driver, bolstered by gains in construction and manufacturing (chart 1). Despite widespread global downgrades, the World Bank still expects India to be the fastest-growing major economy in 2025.

While services have long underpinned India’s growth, the country is gradually pivoting toward manufacturing, including higher-end, IP-intensive sectors. Progress has been made—such as attracting iPhone production—but manufacturing has yet to significantly shift the composition of GDP, which remains heavily weighted toward services (chart 2). India’s rising role as a “China Plus One” destination has enhanced its global appeal, though the shift has drawn criticism from former US President Trump, who favours bringing manufacturing back to the US.

India’s strategic ties with both the US and China require a careful balancing act. The US is India’s top export destination, with major exports including pharmaceuticals, jewellery, and smartphones (chart 3). At the same time, India relies heavily on China for critical inputs such as Key Starting Materials (KSMs) and Active Pharmaceutical Ingredients (APIs), both vital to its pharmaceutical sector (chart 4). As a result, India is seeking to deepen trade relations with the US while avoiding actions that might provoke China. Trade negotiations with the US are reportedly progressing, with an interim deal possible ahead of Trump’s July 9 tariff deadline.

On the monetary front, the Reserve Bank of India cut policy rates by 50 bps in June and announced a phased 100 bps reduction in the Cash Reserve Ratio (CRR), in response to falling inflation and risks of weaker demand (chart 5). As a partial consequence, the rupee has underperformed its Asian peers—though the primary pressures stem from persistent foreign outflows and narrower interest rate differentials (chart 6).

India’s economic developments India’s economy grew faster than expected in calendar Q1, with growth accelerating to 7.4% y/y—exceeding economists’ expectations and marking the fastest growth rate in a year. By sector, and based on gross value added at basic prices, services remained the primary growth driver, as shown in chart 1. However, contributions from the construction and manufacturing sectors also improved. More broadly, many investors and economists continue to view India as one of the few economies expected to deliver robust growth this year. This remains a rare distinction, given the growth-dampening effects of US tariffs and the associated retaliatory actions. That said, recent US-China breakthroughs on trade-related agreements have eased much of this latent risk.

Despite enacting widespread forecast downgrades in its latest projections just last week, the World Bank still expects India to post the fastest growth among major economies in 2025. Nonetheless, India’s outlook has been somewhat dampened by weaker export potential and slowing investment amid rising global trade barriers. Similarly, panellists in our recent Blue Chip Economic Indicators survey continued to rank India as the top-growing major economy among those covered.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jun 09 2025
Economic Letter from Asia: Systems Critical
This week, we focus on critical minerals, which have moved into the spotlight following China’s recent restrictions on rare earth exports. The move triggered widespread supply chain disruptions and renewed attention to an issue that had long flown under the radar. A closer look reveals that just a handful of countries dominate global production—chief among them, China, as shown in chart 1. This concentration highlights the growing geopolitical and economic importance of mineral-rich nations in supporting key industries such as automotive, aerospace, and defence. The implications for national security are significant.

China’s influence goes well beyond raw material reserves. It has also positioned itself as a leading refiner of critical minerals such as copper and nickel—even though it is not the top producer of the raw ores (see chart 2). In the case of rare earths, China has become a key supplier to Western economies, including the United States and the Euro area (chart 3). Its recent export restrictions on rare earth elements (REE) are a direct response to ongoing trade actions and have already triggered disruptions across key industries. Ford in the US and Suzuki in Japan, for example, have reportedly paused production due to shortages of these inputs. Meanwhile, non-US automakers—particularly in Japan—face additional pressure from US auto tariffs. These have forced firms to slash export prices (chart 4), squeezing profit margins and weakening overall financial performance.

But not all signs point to prolonged disruption. There is a glimmer of hope. In Europe, negotiations with China suggest a possible easing of REE-related disruptions, although any concrete relief will likely depend on broader trade discussions. One likely sticking point is the surge in Chinese EV exports to Europe, which has saturated local markets and drawn import tariffs (chart 5). Meanwhile, US–China trade talks resume in London this week, with rare earths a central topic. Markets and policymakers alike are watching closely, hoping for signs of de-escalation. That said, the impact of these mutually imposed trade actions is already visible, as shown in chart 6. While negotiations continue, disruptions remain an active threat to supply chains, industrial output, and economic stability.

Global critical minerals production While headlines are often dominated by breakthroughs in high-end and essential technologies, what tends to be overlooked are the raw materials that make those innovations possible. These foundational inputs are known as critical minerals—so named because of their vital role in enabling advanced technologies and their often-fragile supply chains. Critical minerals include rare earth elements (REEs)—a group of 17 chemically similar elements essential to high-tech, clean energy, and defence applications. Also considered critical are minerals used in various battery chemistries, including those for electric vehicles (EVs) and associated infrastructure. These include nickel, cobalt, graphite, and copper. Additionally, elements like gallium and germanium are indispensable for semiconductors, fibre optics, and other high-tech systems.

In their raw form, the global production of critical minerals is highly concentrated. As shown in chart 1, only a handful of economies account for the majority of the world's production—and this pattern repeats across most critical minerals. Countries such as China, Russia, South Africa, and the Democratic Republic of the Congo consistently emerge as dominant producers across several of these materials. While production dominance alone may not always present a risk, it becomes strategically significant when geopolitical tensions interfere with trade flows. This issue has come into sharper focus as China’s central role in global mineral supply chains is increasingly scrutinized—especially in the wake of renewed US-China trade tensions following President Trump’s second term in office.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Jun 02 2025
Economic Letter from Asia: Bifurcation
This week, we examine the deepening divisions between the US and China, which are affecting not just trade but also investment flows, monetary policy, and technological development.

On the trade front, China has shifted from modest trade shares with its partners (chart 1) to capturing significantly larger shares across Asia, Africa, and Latin America (chart 2), while US progress in these regions has been more subdued. This signals a clear bifurcation, with China forging its own trading blocs, often at the expense of US market share. However, economies like Vietnam have managed to deepen trade ties with both countries (chart 3).

China’s efforts to strengthen relationships extend beyond trade to direct investment abroad (chart 4) and loan financing, particularly in Africa, where it has become a major investor in new projects. This has allowed China to cement a foothold in regions where US influence is limited. The bifurcation also extends to the monetary and currency space, with China gradually reducing its US Treasury holdings while increasing its gold reserves, possibly as part of a diversification push (chart 5). Concurrently, China’s push for de-dollarisation continues, despite significant hurdles.

Finally, US–China bifurcation is also playing out in the technological sector, where China has made significant advancements in critical areas, driven in part by substantial R&D investment over the years (chart 6). In response, US efforts to limit China’s access to key technologies may have inadvertently accelerated China’s development of its own systems and infrastructure, deepening the bifurcation further.

Shifts in China and US trade shares While economists may differ on when the broader US–China bifurcation began, many agree that the more significant phase of decoupling was triggered in 2018, when President Trump initiated the first wave of trade restrictions and tariffs against China during his first term. Prior to these sharp policy shifts—and before Trump took office—China’s share of total trade with several major global economies remained relatively modest, generally below 20%, as shown in chart 1. Similarly, the US also maintained a relatively balanced trade share with most partners, though its trade was more concentrated with neighbouring countries such as Canada and Mexico.
by:Tian Yong Woon
|in:Economy in Brief
Asia| May 27 2025
Economic Letter from Asia: On China and ASEAN
This week, we explore a series of interconnected themes—from China’s accelerating AI ambitions to evolving geopolitical dynamics in Southeast Asia, shaped in part by the United States’ increasingly inward focus and protectionist trade measures. Despite US chip export restrictions, some—including Nvidia’s CEO—have questioned their effectiveness. Indeed, select indicators suggest that China’s AI capabilities continue to advance (chart 1), even as broader dimensions of development—beyond raw performance—reveal areas where significant progress is still needed (chart 2).

In Indonesia, we discuss last week’s central bank rate cut, which some economists saw as necessary to support the economy amid external trade-related headwinds and reduced government spending. The move was also made possible by recent signs of rupiah stability (chart 3). In response to global trade uncertainties, Indonesia is also deepening regional ties, particularly with China—a relationship that has been strengthening even prior to this year’s US trade measures (chart 4).

Zooming out to broader regional issues, this week’s ASEAN-related summits reflect a growing inclination to expand ties with both China and the Middle East. As such, ASEAN’s already substantial trade with China (chart 5) may be poised to grow further. At the same time, ASEAN is now exploring a collective approach in trade talks with the US—alongside ongoing bilateral efforts—potentially to stave off further tariff increases on its exports (chart 6).

China’s AI push It has been another revealing week in US–China developments. Nvidia CEO Jensen Huang remarked that US chip export controls have not only failed but may have accelerated China’s drive for self-reliance in AI chips—particularly at the high end. Indeed, this trend appears to be playing out. China has steadily increased investment in its AI capabilities over the years, bolstered by a strategic government push that includes substantial funding. This has led to tangible progress, such as a rising number of large-scale AI systems (see chart 1). Notably, China’s advances have continued despite sustained US efforts to hinder its technological progress—many of which were introduced under previous administrations.
by:Tian Yong Woon
|in:Economy in Brief
Asia| May 19 2025
Economic Letter from Asia: Just Chipping In
This week, we continue to monitor developments stemming from US trade actions across Asia. China’s latest monthly data reflects encouraging resilience, even as initial impacts from recent steep US tariffs become visible (chart 1). Notably, despite heightened US restrictions on chip exports, China's semiconductor imports from the US remain robust (chart 2), highlighting the careful balance US producers are maintaining between complying with regulatory constraints and preserving valuable commercial relationships. Meanwhile, in India, trade discussions with the US have remained prominent, showing early signs of meaningful progress. Economists continue to highlight India’s strong growth potential for the year (chart 3). However, a potential tension has surfaced around Apple's shift of iPhone production to India—a trend already evident in rising Indian exports (chart 4)—with US President Trump openly criticizing the move and reaffirming his commitment to boosting domestic manufacturing. In Japan, economic indicators were already signalling weakness prior to the introduction of the US “Liberation Day” tariffs (chart 5). Further anxiety stems from the risk of stalled US-Japan trade negotiations, which could potentially trigger renewed tariff hikes, exacerbating Japan’s already faltering trade performance (chart 6).

Latest Chinese data releases China released its usual batch of monthly data today, offering a mixed set of results. While not uniformly strong, the figures showed no clear signs of the significant drag on growth that might have been expected from the initial impact of US tariffs. Industrial production outperformed expectations, rising 6.1% y/y in April (see chart 1). In contrast, retail sales and fixed asset investment growth came in below forecasts but remained in positive territory. Meanwhile, the unemployment rate edged lower, while house prices continued to decline. Overall, April’s data suggests a degree of resilience in China’s economy, despite the 145% US tariffs that took effect earlier in the month. With a 90-day pause on further tariff escalation currently in place, there may be some short-term relief—provided no new adverse developments emerge.
by:Tian Yong Woon
|in:Economy in Brief
Asia| May 13 2025
Economic Letter from Asia: Tariff Pause
This week, we focus on US-China trade developments in light of the economies’ joint 90-day tariff pause announcement. The extent of the interim tariff cuts has surpassed investors’ expectations. As such, the cuts have understandably boosted sentiment in Chinese equity markets (chart 1), though sentiment had already been buoyed by the increasingly conciliatory tone in US-China communications leading up to the announcement. The tariff cuts are a significant reprieve for both economies. The US is likely to see reduced price pressures on producers and consumers in the near term, while China stands to gain from a temporary easing of growth drags amid ongoing domestic challenges (chart 2).

Turning to the hard numbers, China’s April trade readings were relatively resilient, partly due to significant front-loading ahead of the prior US-imposed 145% tariffs taking effect (chart 3). As shown in chart 4, sharp declines in shipments to the US were more than offset by rising exports to Asian partners, including ASEAN, India, and Taiwan. Looking ahead, with the tariff pause beginning around mid-May, we may not see a full month’s data capturing trade responses to the earlier steep tariffs.

Next, we turn to how investors and analysts are responding. In the May survey, our Blue Chip panellists continued to mark down growth forecasts across several economies relative to end-2024 expectations (chart 5). At the same time, they raised US inflation forecasts and lowered China inflation forecasts (chart 6). However, these forecasts are likely to see favourable revisions in future surveys—barring new adverse developments—especially in light of this week’s positive news.

Latest US-China trade developments Financial market sentiment has remained fairly buoyant despite the flare-up in US-China trade tensions in April. Recent messaging from both sides has moved away from the fiery rhetoric of previous months, adopting a more conciliatory tone aimed at de-escalating rather than intensifying frictions. Encouragingly, developments earlier this week reinforced this shift: the US and China issued a joint statement agreeing to a 90-day cooling-off period as they pursue trade talks following a relationship “reset.” During this time, the US will reportedly reduce its 145% tariffs on Chinese imports to 30% by May 14, while China will lower its 125% tariffs on US imports to 10%. Markets have understandably reacted positively, as seen in chart 1, with this move representing a significant rollback of mutual tariffs and bringing rates much closer to their pre–“Liberation Day” baseline. As a result, the growth-dampening effects from elevated tariffs are now considerably more muted—though it is worth noting that these measures remain temporary.
by:Tian Yong Woon
|in:Economy in Brief
Asia| May 06 2025
Economic Letter from Asia: Art of the Deal
This week, we focus on trade developments between the US and major Asian economies. Early indications coming out of US-India trade talks seem encouraging, with terms such as “forward most-favoured-nation” for the US and “zero-for-zero” tariffs appearing in news reports — terms which, if enacted, would represent a significant win for the US. India stands to benefit greatly as well if key exports to the US, such as pharmaceuticals (chart 1), receive substantial tariff relief. The benefits could be strongly mutual if a deal also grants the US greater access to India’s large auto consumer market, particularly for major US electric vehicle (EV) producers, given that EV adoption in India remains at a very early stage (chart 2).

Turning to South Korea, discussions also appear to be progressing at a healthy pace, although details remain limited and ongoing domestic political challenges continue to hinder substantive breakthroughs. Nonetheless, the South Korean won has shown signs of stabilisation, while local equity markets have remained buoyant (chart 3). Recent trade data for April has also provided some investor relief, as weak exports to the US were more than offset by a strong performance in semiconductor shipments (chart 4).

In Japan, the race to secure a trade deal with the US is well underway, with automotive exports expected to be a key focal point given their significance to Japan’s economy and the US being a major export destination (chart 5). China, however, remains a notable outlier, with formal trade talks with the US not yet underway. Still, the US-China trade relationship continues to be the most closely watched, given its scale and potential impact on global growth and trade dynamics. While markets await China’s official April trade data, early indicators such as port activity already suggest a decline in bilateral trade flows (chart 6).

US-India trade talks US-India trade discussions have reportedly been progressing rapidly, with both sides having already finalized in April the terms of reference for talks, setting the stage for formal negotiations. One early sign of favourable momentum is India’s possible offering of a “forward most-favoured-nation” clause to the US. This would ensure the US always receives the most favourable tariff terms, ahead of any other trade partner. If enacted, this would be a significant win for the US and a major leap forward in the US-India trade relationship. Another reported breakthrough involves India’s reported proposal of “zero-for-zero” tariffs on steel, auto components, and pharmaceuticals—offered on a reciprocal basis up to a certain quantity. If agreed, this would be mutually beneficial, especially as pharmaceuticals remain one of the US economy’s key imports from India, as shown in chart 1. On a separate note, and more recently, India’s phone exports to the US have reportedly gained prominence. With steep US tariffs on China, firms like Apple are increasingly incentivised to accelerate production shifts to India.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Apr 29 2025
Economic Letter from Asia: How Freightening?
This week, we focus on the immediate impacts of the recent US-China trade escalation. As we discuss below these are already being exhibited in the data. While still within historical ranges, high-frequency estimates of US and China cargo trade volumes have begun to deteriorate (chart 1). In tandem with these volume declines, freight rates on certain Shanghai-to-US routes have fallen (chart 2), suggesting reduced shipping demand. This has been further corroborated by widespread reports of large-scale shipment cancellations from China to the US. A potentially clearer signal comes from South Korea’s trade data for the first 20 days of the month, often viewed as a bellwether for global trade. The figures point to a notable slump compared with a year ago (chart 3). More complete April data are expected later this week.

Turning to broader developments in China, we observe that the dominant shifts in the country's financial balances over the past decade have occurred between the general government and the private sector. In contrast, China’s foreign sector balance—essentially its current account—has remained relatively stable (chart 4). As we further discuss financial balances and the underlying causes of the US’ persistent current account deficit (chart 5) have been a recurring topic in recent conversations with clients in Asia. It is argued that the US dollar’s role as a global reserve currency effectively necessitates the US running a current account deficit. Consequently, attempts to narrow the deficit through tariffs may address symptoms rather than root causes. Finally, we revisit the China Plus One strategy adopted by firms since the initial US-China trade fallout in 2018. This approach has contributed to ballooning trade deficits between the US and some of its other major trading partners (chart 6), prompting renewed scrutiny under President Trump’s early “Liberation Day” trade actions.

US and China cargo trade Financial markets have recently found some reason for relief, as both the US and China appear to be lowering the temperature on further trade tariff actions. Recent messaging has leaned more toward a de-escalation of trade tensions, though concrete details remain sparse, and it is unclear how or when formal negotiations might begin. That said, the substantial and mutually imposed tariffs between the US and China remain firmly in place, and a significant rollback does not seem likely in the near term. In the meantime the economic impact of these tariffs is beginning to surface in the data, as shown in charts 1 to 3. Chart 1, based on IMF estimates, shows a sharp decline in daily activity at several key ports involved in US-China trade. However, while the drop is notable, port activity still remains within historical ranges, so a more fundamental shift is not yet evident.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Apr 15 2025
Economic Letter from Asia: Game of Chicken
This week, we maintain our focus on global trade, particularly following the decision by the US administration to reverse its “reciprocal” tariffs coupled with its significant escalation of trade tensions with China. Markets have been understandably volatile over the past week (chart 1), with President Trump’s decision to hold “reciprocal” tariffs at 10% and pause a further increase offering a temporary reprieve. Still, China’s significantly increased exposure to US tariffs (chart 2) remains a key concern for investors, even as weekend announcements of exemptions for certain electronics and semiconductor products provide some relief—albeit a partial one. Nonetheless, the reality is that the US and China remain deeply interdependent when it comes to trade. Neither can be independent of the other without substantial economic costs. The latest escalation is reminiscent of a game of chicken between the two global powers—except this is not a game. It is real life, with real consequences for businesses, consumers, and economies around the world. That said, the degree of mutual reliance is not equal. The US is arguably more dependent on Chinese imports, particularly in goods trade, despite some signs of decoupling in recent years (chart 3). This becomes especially clear when looking at specific product categories: many of the US economy’s low export-to-import ratio goods (chart 4) are primarily sourced from China (chart 5). Without readily available and complete alternatives, the latest round of tariffs may soon be felt in the form of rising consumer prices. Looking beyond goods, however, the US continues to maintain a strong services trade surplus globally, including with much of Asia (chart 6). This may serve as an alternative channel for the US to manage its trade balance going forward.

Latest US-China trade developments Just days after US President Trump unveiled his sweeping “reciprocal” tariffs on April 2, he announced a 90-day pause for all economies except China, opting instead to maintain a 10% additional tariff on others in the interim. What followed was a flurry of tit-for-tat measures between the US and China. Within days, the US raised its additional economy-wide trade tariffs on China from 20% in March to a staggering 145%. In response, China’s retaliatory measures saw its additional tariffs on US goods jump from 0% (excluding product-specific tariffs) to 125%. Amid the escalation, China’s Customs Tariff Commission declared it would no longer respond to additional US tariff hikes. It explained that American exports to China are no longer economically viable under the latest tariffs, underscoring just how severely tensions have deteriorated. Unsurprisingly, the markets have been on a nerve-racking roller coaster over the past few weeks. Initial reactions to President Trump’s “reciprocal” tariffs were clearly negative, although a brief sense of relief emerged after he narrowed the scope of his most recent trade escalations to target China alone.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Apr 07 2025
Economic Letter from Asia: Just Tariffic
This week, we focus on the sweeping "reciprocal" US tariffs announced by President Trump last week. As shown in chart 1, these tariffs are primarily based on US trade deficits with its trading partners. This is in contrast to earlier indications that suggested other factors, such as tariff and non-tariff barriers, would also be considered. Using the tariff formula provided by the US Trade Representative, we derive the announced tariff rates. We also highlight the factors contributing to Vietnam’s relatively high "reciprocal" tariff rate, compared to other Asian economies such as Singapore (chart 2). However, we argue that focusing solely on trade deficits does not fully capture the trade dynamics between the US and its partners. The applied tariff rates of other economies should also be factored in (chart 3), especially in relation to trade with the US. Moreover, non-tariff trade barriers (chart 4) should also be considered, as tariffs and trade deficits alone may not provide a complete picture of trade dynamics. To present an alternate view, we introduce a “tariff scorecard”, which incorporates these factors and offers a perspective on how US "reciprocal" tariffs could have been applied (chart 5). Looking ahead, with the "reciprocal" tariffs already in place, we also discuss the initial and varying responses from Asian economies, considering their significant exposure to these tariffs (chart 6).

US “reciprocal” tariffs Last week, US President Trump’s announcement of “reciprocal” tariffs caught many economists by surprise. While the tariffs themselves were anticipated, their scope and scale were far more severe than expected, contradicting much of the messaging leading up to the announcement. Prior statements—both before and during the unveiling of the tariffs—suggested that the "reciprocal" measures would account for various factors, including trade barriers (both tariff and non-tariff) and currency manipulation. However, the formula revealed by the US Trade Representative’s Office showed that the tariffs were simply based on the US trade deficit with other countries, as outlined in chart 1. This approach was far simpler than expected, relying solely on trade deficits without factoring in the other economic considerations. Also, many investors and observers were shocked by the announcement, as it contradicted earlier messaging that the tariffs would be “lenient.” Some had also expected bilateral negotiations with trading partners to influence the final tariff structure. Instead, the formula was purely based on the US trade deficit. Furthermore, even countries with low or no tariffs on US imports—or those with which the US runs a trade surplus (such as Singapore)—were still subjected to a 10% tariff floor.
by:Tian Yong Woon
|in:Economy in Brief
Asia| Apr 01 2025
Economic Letter from Asia: Liberation Day
This week, we turn our focus to India in the context of US President Trump’s upcoming “Liberation Day” tariff announcements on April 2. Investors are likely on edge, uncertain about the specifics of Trump’s proposed “reciprocal” tariffs. However, early indications suggest that initial concerns may have been overstated, with significant impacts likely limited to only a handful of economies. As we noted in our previous letter, India could be among the most exposed in Asia to these tariffs, given its relatively high tariff rates (chart 1) and specifically those on imports from the US. Beyond tariffs, India also maintains comparatively high non-tariff trade barriers—both in contrast to the US and its more trade-liberal Asian peers (chart 2). Despite these concerns, India’s financial markets have demonstrated strong performance lately. The Indian rupee has staged a strong recovery from earlier selloffs, while equities have rallied (chart 3). The rupee’s resurgence may be partly driven by seasonal flows, whereas equities appear to have benefited from a sharp rebound in foreign portfolio inflows (chart 4). Looking at longer-term structural challenges, one area where India has yet to fully capitalize is its workforce. Despite a relatively young population, a significant portion remains unemployed (chart 5). A closer examination reveals several contributing factors, including insufficient job creation, a persistent skills mismatch, and, more fundamentally, the need for improved access to basic education (chart 6), among other challenges.

US “reciprocal” tariffs As discussed in last week’s economic letter, India is among the most exposed countries in Asia to US President Trump’s upcoming “reciprocal” tariffs, set to be unveiled later this week (April 2). This exposure stems from the fact that not only does the US run a significant trade deficit with India, but India also imposes comparatively high tariff rates on imports in general, and not just from the US, as shown in chart 1. While there are concerns about the potential impact of these tariffs, India has already begun trade deal talks with the US to mitigate the effects if they are implemented. It seems that Trump’s underlying strategy may be working: US-India trade talks are reportedly progressing well, with India considering tariff reductions or even eliminations on more than half of its imports from the US.
by:Tian Yong Woon
|in:Economy in Brief