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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. In a few moments,

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Speaker 1: I will sign a historic executive order instituting reciprocal tariffs

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Speaker 1: on countries throughout the world.

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Speaker 2: Reciprocal. US President Donald Trump's tariff blitz shocked the world

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Speaker 2: and caused a meltdown of global markets, wiping out trillions

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Speaker 2: of dollars for investors, and less than a week after

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Speaker 2: he announced the steepest American tariffs in more than a century,

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Speaker 2: Trump on Monday threatened China with further tariffs an additional

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Speaker 2: fifty percent if Beijing didn't remove the retaliatory tariffs it

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Speaker 2: recently placed on US imports. Much like China, other export

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Speaker 2: powerhouses in Asia have been hit with reciprocal tariffs far

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Speaker 2: greater than the baseline ten percent Levey placed on all

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Speaker 2: imports to the US. American allies such as your Pan

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Speaker 2: and South Korea are facing tariffs of twenty four percent

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Speaker 2: and twenty five percent, respectively, and the levee for Vietnam,

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Speaker 2: one of the fastest growing trade partners for the US,

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Speaker 2: is almost double that and panicked investors sent stock markets

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Speaker 2: nose diving. Asian stocks from Shanghai to Tokyo to Mumbai,

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Speaker 2: plunged by levels not seen in almost two decades. Hong

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Speaker 2: Kong's benchmark Kansang Index had its worst day on Monday

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Speaker 2: since nineteen ninety seven, wiping out all of its gains

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Speaker 2: for the year.

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Speaker 3: Connage, panic, blood bob doesn't even begin to cut it.

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Speaker 3: And you look at the declines on the region's benchmar

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Speaker 3: since two thousand and eight. It is across all asset classes.

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Speaker 3: We're seeing the reeling from this ramped up tariff walk.

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Speaker 2: In response to Trump's threats, China took the gloves off,

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Speaker 2: vowing to fight to the end if the US insists

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Speaker 2: on going its own way.

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Speaker 4: The tariffs announced on Liberation Day by President Trump comme

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Speaker 4: at the worst time for Chinese economy.

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Speaker 2: John lu Is Bloomberg, Senior executive editor for Greater China,

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Speaker 2: based in Beijing.

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Speaker 4: It takes away the biggest highlight, which was trade, and

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Speaker 4: it also means that China is put in a position

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Speaker 4: where it feels it has to respond and retaliate, which

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Speaker 4: it has done. That means the threat of a real,

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Speaker 4: full blown trade war has escalated tremendously. If that happens,

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Speaker 4: that's going to be bad for the US. It's going

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Speaker 4: to be bad for China. It's going to be bad

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Speaker 4: for Asia and the rest of the world because if

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Speaker 4: the world and Asia cannot trade with the US and

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Speaker 4: the Chinese economy is nowhere in a place to be

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Speaker 4: able to take on that additional burden, then where are

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Speaker 4: people going to send their goods and products? And what

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Speaker 4: are companies going to do about employment?

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Speaker 2: Welcome to The Big Take Asia from Bloomberg News. I'm Wanha.

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Speaker 2: Every week we take you inside some of the world's

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Speaker 2: biggest and most powerful economies and the markets, tycoon and

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Speaker 2: businesses that drive this ever shifting region. Today on the show,

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Speaker 2: the impact of Trump's tariffs on Asia's economic powerhouses. Is

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Speaker 2: this the end of global trade? And how will the

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Speaker 2: US tariffs reorder relationships across Asia? John, can you break

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Speaker 2: down Trump's tariff announcements on China and what it means?

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Speaker 4: The Liberation Day announcement added an additional thirty odd percent

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Speaker 4: to the tariffs. There were already twenty percent levied because

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Speaker 4: of fentanyl, and so that took tariffs on all Chinese

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Speaker 4: products to well over fifty percent. That's crazy, It's the

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Speaker 4: world we live in today.

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Speaker 2: And that was followed by still more from the White House.

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Speaker 2: Last year, Chinese companies shipped more than five hundred and

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Speaker 2: twenty billion dollars in goods to the US, accounting for

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Speaker 2: some fifteen percent of all of its exports. Exports contributed

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Speaker 2: to nearly a third of China's economic expansion. Last year.

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Speaker 2: The country's global trade surplus soared to a record of

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Speaker 2: almost a trillion dollars as higher US tariffs and the

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Speaker 2: threat of more to come drove companies to front load shipments. John,

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Speaker 2: what risks do the latest tariffs pose to China? We

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Speaker 2: know that it just at a GDP growth target of

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Speaker 2: five percent last month, which was already ambitious. Right.

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Speaker 4: Trade has been by far the highlight of China's economy

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Speaker 4: over the last couple of years. At the same time,

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Speaker 4: you had problems like real estate, which was a drag

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Speaker 4: on economic growth. You had sedated consumption in China that

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Speaker 4: was also a drag. You even't actually had government spending

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Speaker 4: falling off and becoming a drag on the economy in

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Speaker 4: twenty twenty four, and so going to twenty twenty five

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Speaker 4: with what was a fairly ambitious target of five percent

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Speaker 4: growth for the year, that looks much harder to achieve

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Speaker 4: if you're not going to have that assistance, that input

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Speaker 4: that benefit from trade.

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Speaker 2: Do we have a sense of what sectors will be

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Speaker 2: hardest hit in China? Are there any companies that stand

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Speaker 2: to lose a lot?

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Speaker 4: The sectors that will be most affected are the ones

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Speaker 4: that have the lower margins, so things like clothing, apparel, toys,

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Speaker 4: lower end electronics. Those things will suffer the most because

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Speaker 4: the companies that were making those things and exporting them

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Speaker 4: to the United States had the thinnest of margins of error,

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Speaker 4: and when these tariffs come in, it will probably wipe

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Speaker 4: out whatever business they had going on in the US.

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Speaker 2: It sounds like the tariffs are going to bring on

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Speaker 2: a lot of pain for some Chinese manufacturers and exporters.

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Speaker 2: How has China then responded to Trump's tariffs so far so?

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Speaker 4: In addition to announcing a thirty four percent tariff on

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Speaker 4: all American goods and retaliation, China also announced that it

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Speaker 4: was going to limit exports of the several rare earth

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Speaker 4: metals to the United States. And these metals are used

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Speaker 4: in lots of high in manufactured goods, high tech goods,

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Speaker 4: and China is the world's largest supplier of rare earth metals.

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Speaker 4: It has lots of technologies when it comes to refining

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Speaker 4: these metals, and so if China cuts off that supply,

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Speaker 4: it's going to have a real impact on the ability

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Speaker 4: of American manufacturing to keep going.

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Speaker 2: Beijing is now pledging to retaliate and vowing to fight

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Speaker 2: to the end. Does that reflect the sentiment on the ground.

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Speaker 2: Is Beijing feeling pressure to take off the gloves now?

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Speaker 4: Everything so far points to relatively widespread support for retaliation

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Speaker 4: against the tariffs that President Trump announced on Liberation Day.

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Speaker 4: I think President Trump, having introduced to the tariffs in

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Speaker 4: such a loud way in the Rose Garden, I think

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Speaker 4: that has gotten populace around the world, certainly here in

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Speaker 4: China feeling more aggrieved and wanting more for their governments

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Speaker 4: or definitely for the Chinese government to retal to defend

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Speaker 4: the Chinese rights.

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Speaker 2: John Trump says his policies are designed to bring back

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Speaker 2: manufacturing to the US. Is anybody in China talking about

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Speaker 2: relocating to the US. Is that even feasible?

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Speaker 4: So if you look at some of the companies, foreign

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Speaker 4: companies that have pledged to invest in the United States,

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Speaker 4: you have companies like TSMC, they make semiconductors. That's a

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Speaker 4: very high margin product. They can afford to do something

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Speaker 4: like invest one hundred billion dollars in the United States

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Speaker 4: to build a factory that manufacturing does not depend on

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Speaker 4: cheap labor. It doesn't need to be in China as much.

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Speaker 4: The problem there, though, is I think a lot of

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Speaker 4: those processes are very automated. I'm not sure how much

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Speaker 4: employment they will generate, certainly not as much as President

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Speaker 4: Trump wants, and the other things. They are more labor intensive,

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Speaker 4: lower in manufacturing. Even if those things are not being

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Speaker 4: done in China, it's very hard to imagine how they

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Speaker 4: can be competitive in the United States relative to Latin

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Speaker 4: America or Southeast Asia or some of these other lower

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Speaker 4: cost places. Working in a factory for ten hours a

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Speaker 4: day doing hard manual labor is not i would say,

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Speaker 4: the American dream.

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Speaker 2: No, it's definitely not. Now. The US certainly isn't making

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Speaker 2: any friends with this policy. How will this reshape relationships

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Speaker 2: in Asia? And really, when you look at China's footprint

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Speaker 2: in the region, what does that.

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Speaker 4: Mean in Asia? You have many countries in this region

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Speaker 4: who have really prospered over the last twenty to thirty

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Speaker 4: years by participating in Chinese economic growth. Sending commodities, sending machinery,

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Speaker 4: sending all sorts of goods to China, selling to China,

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Speaker 4: but at the same time enjoying the security of being

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Speaker 4: partnered allied with the United States, and so really in

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Speaker 4: a goldilock situation. But that is very clearly coming to

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Speaker 4: an end with the tariffs. It raises lots of questions

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Speaker 4: about how much countries here in Asia can depend on

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Speaker 4: the US, not only for security, but also for economic ties,

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Speaker 4: for trade, and when they compare how tumultuous and unexpected

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Speaker 4: and uncertain policy is coming out of Washington, DC with

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Speaker 4: what has been relative stability from Beijing. I think it

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Speaker 4: will lead countries to reconsider how they balance their relationships

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Speaker 4: between the United States and China. I don't think that

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Speaker 4: necessarily means that we're going to see a broad migration

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Speaker 4: away from the US and towards China, because ultimately you

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Speaker 4: have a lot of countries Japan, for example, the Philippines,

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Speaker 4: Australia that are very suspicious of Chinese intent and they

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Speaker 4: have territorial disputes, and so it means they are not

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Speaker 4: going to be wholeheartedly embracing Beijing, but they will be

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Speaker 4: tweaking the balance of their relationship between Beijing and Washington.

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Speaker 2: After the break, how Asian countries plan to navigate the

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Speaker 2: tightrope between Beijing and Washington, and how Trump's tariffs are

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Speaker 2: rattling manufacturers in Asia's emerging economies. Alongside China, other Asian

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Speaker 2: countries Vietnam, Thailand, and India are also hit hard by

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Speaker 2: Trump's latest tariffs. These countries are often referred to as

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Speaker 2: China plus one economies. That's where companies hedge their bets

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Speaker 2: by not just having factories in China, but also setting

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Speaker 2: up supply chains in other countries, hence the plus one

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Speaker 2: to protect themselves against geopolitical risks. These China plus one

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Speaker 2: economies have come to rely on the US as a

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Speaker 2: major trading partner. Vietnam, for example, gets about thirty percent

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Speaker 2: of its GDP from exports to the US and around

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Speaker 2: the world. The country had the third biggest trade deficit

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Speaker 2: with US last year, and it's now facing a forty

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Speaker 2: six percent duty now. To understand better how the latest

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Speaker 2: tariffs are going to affect these emerging China plus one economies,

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Speaker 2: we spoke with John Boudreaux, a Bloomberg Southeast Asia editor

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Speaker 2: based in Hocheman City, Vietnam's financial capital, John, factory owners

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Speaker 2: in Vietnam that supplied to the US are they freaking

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Speaker 2: out right now? You know?

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Speaker 1: I don't think anyone saw this coming. Words like stunned, shocked, terrifying,

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Speaker 1: of being uttered on streets, cafes, factory floors, even in

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Speaker 1: government offices. There's fears of lost jobs and incomes for

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Speaker 1: many Vietnamese, particularly those who's lies. They were desperately poor,

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Speaker 1: and the shifting global supply chains just profoundly change their lives.

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Speaker 2: Now, John Trump has been talking about teris for a while,

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Speaker 2: and there have been some early indications that Vietnam might

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Speaker 2: be targeted. Did Vietnam totally not see this coming or

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Speaker 2: was it just not prepared for terras to be so high?

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Speaker 1: Yeah, it was the high that that shocked them back.

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Speaker 1: During Tom's first term, he actually at one point said

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Speaker 1: that Vietnam took advantage of the US quote even worse

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Speaker 1: than China. So that could have been an early warning sign.

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Speaker 2: And how much can these latest tariffs damage Vietnam's economy.

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Speaker 1: Vietnam's exports represent roughly ninety percent of GDP. It's huge,

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Speaker 1: and the US is its largest market. Your Nike shoes,

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Speaker 1: your Samsung phone, your Apple gadget is coming from Vietnam

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Speaker 1: and other countries. And so if suddenly you're seeing a

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Speaker 1: you know, forty six percent tax hike on that, that's

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Speaker 1: going to hurt. I'm in Vietnam has very aggressive growth

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Speaker 1: plans this year eight percent. If this continues, they're going

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Speaker 1: to have to be dialing back.

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Speaker 2: You mentioned Apple, John, Do we have a sense of

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Speaker 2: what other businesses in industries might be the hardest hit

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Speaker 2: at first?

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Speaker 1: Well, certainly industries like the garment industry here just so

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Speaker 1: relies on the US market. Vietnam is like the second

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Speaker 1: largest supplier of shoes and clothes to the US. Anything

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Speaker 1: that makes their products prohibitedly expensive for consumers just absolutely

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Speaker 1: freaks them out. Nike makes about half of its shoes

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Speaker 1: in Vietnam. Adidas it's thirty nine percent. Abercrombie and Fitch

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Speaker 1: gets thirty percent of its merchandise from Vietnam, On and

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Speaker 1: on and on. It's like a who's who of global

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Speaker 1: clothes brands and shoe brands are here.

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Speaker 2: Is there a risk that could really change very quickly?

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Speaker 4: Now?

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Speaker 1: I don't know if it could change quickly in the

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Speaker 1: sense of suddenly people pivoting away from Vietnam because I

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Speaker 1: don't think it's easy to set up a factory. These werekers,

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Speaker 1: even workers making shoes. They're very specialized and the factories

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Speaker 1: are specialized, so it's not something you can just pick

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Speaker 1: up and move. Plus, so many other countries are being

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Speaker 1: hit with tariffs too, so the fear would be okay,

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Speaker 1: so we all back up and moved to country ts Well,

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Speaker 1: who to say you're not going to suddenly have a

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Speaker 1: major bullseye on your economy too.

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Speaker 2: After Trump made the shock announcement, Vietnam Communist Party chief

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Speaker 2: Though Lum reached out to Trump in a phone call

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Speaker 2: and offered to drop all tariffs on US goods. Trump

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Speaker 2: described the call between them as very productive and indicated

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Speaker 2: that the two leaders would meet. Meanwhile, Trump trade advisor

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Speaker 2: Peter Navarro suggested that Vietnam's initiative didn't go far enough,

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Speaker 2: since that doesn't get rid of the trade deficit it

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Speaker 2: has with the US. Now, John, apart from Vietnam, you've

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Speaker 2: got Cambodia, Philippines, Thailand, India. These are all emerging countries

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Speaker 2: that rely on exports for growth. How are the Southeast

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Speaker 2: Asia and South Asian countries interpreting the new tariffs pasink.

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Speaker 1: If this continues, if this isn't just a quick shock

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Speaker 1: and all move by the US to get people to

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Speaker 1: the negotiating tables to cut deals, I think it's gonna

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Speaker 1: dent a lot of economies. I think it's very disconcerting

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Speaker 1: for a lot of these countries as governments.

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Speaker 2: And John do you see these emerging economies perhaps trying

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Speaker 2: to make a deal like Vietnam. Will they try to

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Speaker 2: play nice by saying, we'll cut all our teriffs if

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Speaker 2: you drop yours.

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Speaker 1: I think you're going to see a lot of delegations

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Speaker 1: going to Washington. These economies in the Southeast Asia, they

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Speaker 1: can't match the firepower of China or the EU, and

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Speaker 1: their economies are much smaller, so I don't think they

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Speaker 1: could make this kind of threats. They have to just

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Speaker 1: negotiate their way through this and just hope that they

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Speaker 1: can come up with a package of deals that will

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Speaker 1: cause the White House to relent and ease some of

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Speaker 1: these terrors.

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Speaker 2: All of these emerging economies we've mentioned, they've been caught

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Speaker 2: between the two superpowers, between the US and China. How

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Speaker 2: do the tariffs and Trump's policies change the way that

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Speaker 2: they're walking this tight groupe.

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Speaker 1: You know, Vietnam has long relied on what it calls

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Speaker 1: bamboo diplomacy, the idea that the bamboo moves in the

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Speaker 1: wind can move the direction when it has to, and

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Speaker 1: perhaps that could be a template for other governments in

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Speaker 1: dealing with the Trump administration. They are very adept at

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Speaker 1: figuring out what the great powers want and how to

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Speaker 1: make sure they don't get caught between the disputes so

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Speaker 1: their great powers or get entangled in issues like this. Now,

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Speaker 1: it still is not an easy situation to deal with.

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Speaker 1: I think this could possibly alter some of the US's

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Speaker 1: relationships with countries in this region. Certainly China spends a

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Speaker 1: lot of time and effort willing them. Yeah, she's in things,

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Speaker 1: planning a trip fairly soon to Vietnam and some other countries,

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Speaker 1: and he's not coming in with a big stick of

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Speaker 1: terrors and yelling at people. So in the long term

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Speaker 1: this could really benefit China geopolitically in this region.

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Speaker 2: This is the Big Take Asia from Bloomberg News. I'm wanh.

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Speaker 2: This episode was produced by Young Young and Naomi. It

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Speaker 2: was edited by Grace Jennings Ed quist and fact check

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Speaker 2: by Naomi and David Fox. Mixed and sound designed by

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Speaker 2: Taka Yesuzawa and Alex Uguira. Our senior producer is Naomi Shaven.

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Speaker 2: Our senior editor is Elizabeth Ponso. Our deputy executive producer

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Speaker 2: is Julia Weaver. Our executive producer is Nicole Beemsterbower. Sage

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Speaker 2: Bowman is Bloomberg's head of podcasts. If you like this episode,

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