Tokyo – The chances of Donald Trump becoming more interested in business deals than business wars are rapidly waning. The US leader stated to reporters that a new trade agreement with China was “possible,” but there are still other important signs that Asia will experience.  ,  ,
The 10 % tariffs Trump imposed on China and the 25 % on aluminum and steel were sufficient economic drag. But the 25 % income Trump announced this week on trucks, chips and medicine, to become formalized on April 2, raises the stakes greatly for Asia’s view.
Newsrooms from Tokyo to Seoul to Bangkok are emitted with waves of stress. Managers at Toyota, Honda, Nissan, Hyundai, Kia and different manufacturers are now bracing for the worst-case situation.
In Thailand, known as the” Detroit of Asia” for its car-making skills, lords and government leaders everywhere are bracing for the way Trump 2.0 might destroy auto supply stores.  ,
” Expected tariffs on cars pose a particular danger to Japan and South Korea”, says Dave Chia, an analyst at Moody’s Analytics.
Yoshimasa Hayashi, the head of Japan’s top cabinet, tells Tokyo to “respond appropriately by looking into the ( tariffs ) details when they are revealed and how they impact Japan.”
Hayashi insists that Toyota and various Chinese automakers must compete in the US. ” We have already raised the issue with the US state, given the importance of the car business”, Hayashi says.
But Southeast Asia is exceedingly in harm’s way, also. Newsrooms in Bangkok are unable to tell whether the market is in a good or bad shape, according to Kringkrai Thiennukul, the president of the Federation of Thai Industries.  ,
Kriengkrai says,” we may advantage if automobile companies decide to travel or increase their production facilities in Southeast Asia, including Thailand, which is a big production base,” taking the view that” we may benefit from such a situation.”
But no one really knows how large, or how far, Trump will go with restrictions on exports into the world’s biggest market. There are very few indications that Trump will leave his” Tax Man” bay at home in the first month of Trump 2.0.
True, Trump’s business limits aren’t as harsh as he has threatened. The taxes on China so far are a far cry from 60 % or even 100 %. Though smaller than feared, in some regards, Trump is going more extensive with his income.
Trump’s most recent obsession with “reciprocal” tariffs indicates that basically every economically important one is now looking over its shoulder. Which, of course, may be the place. The math might be to accumulate preemptive concessions all over the world.
But with Trump using taxes first and then asking concerns later, it’s good to know if the optimists who believe it’s just a negotiating technique have mistaken.
According to analysts at Capital Economics,” Trump’s propensity to work first and discuss later makes it still seem probable that taxes may increase prices this year and that the Federal Reserve will be on maintain as a result.”
Chia points out that Asia is currently having trouble regaining some of its economic rise from the previous five years. “Economic parameters vary extensively across the place”, he says. Several economies can match the outstanding performance of the US when comparing GDP to its pre-pandemic path.
Output in the US, Chia information, “is about where it would have been, if hardly a little higher, had pre-pandemic development continued”.
Established Asian economies — including Japan, South Korea, Taiwan, Singapore and Hong Kong— are about 3 % behind as failure in conventional manufacturing surpasses booming it imports.
For Asia, things may get even worse. Trump stated in explaining his plans for a trade war that taxes on semiconductor chips and medicine may begin at” 25 % or higher and will go very significantly higher over the course of a time.”
Trump’s auto-tax danger definitely comes with a keep-rivals-on-their-toes active, the White House has more consciously refused to identify which countries, sectors or parts it will be targeting.
Japan Inc, though, is wasting no time in assessing the collateral damage to come. According to research firm MarkLines in Tokyo, Trump’s tariffs could cost the country’s six major automakers roughly US$ 21 billion, making it even more difficult for those outside the top three to compete globally, such as Mazda and Subaru.
In 2024, imports made up 52 % of Mazda’s sales in the US and 44 % of Subaru’s versus 17 % for Nissan.
The only positive thing that Xi Jinping’s China has to say is that Trump appears to be more interested in criticizing US allies than his geopolitical rivals. After ruining 2025 for Ottawa and Mexico City, Trump is now focused on showing Brussels who’s boss.
For instance, Trump made an appearance to support Russian President Vladimir Putin in the election, even calling Volodymyr Zelensky a “dictator.”
” Despite Zelensky’s and European leaders ‘ best efforts to get on Trump’s good side, the US is no longer a reliable or a good-faith partner”, says Ian Bremmer, CEO at Eurasia Group.
If Vice President JD Vance’s speech at the Munich Security Conference debating European democracy had not made that clear enough, Bremmer writes that” US Treasury Secretary Scott Bessent’s attempt to shake down Zelensky for 50 % of Ukraine’s present and future mineral wealth revenues — not in exchange for future US support but as payment for past military aid disbursed under the Biden administration — should have.”
Bremmer points out that these terms account for a larger portion of the GDP of Ukraine than the reparations imposed on Germany by the Versailles Treaty of 1919.
Especially troubling, Bremmer says, is Trump’s effort to force a wartime election on Ukraine. Bremmer claims that doing this” to further the imperialist agenda” of Putin’s regime “is a stain on the United States and its role in the world” rather than” to advance American interests.”
All of this places the EU’s leaders in Berlin, Paris, and other locations in a very difficult position. Add in Trump’s vague tariff threats.
So far this year, Trump’s widening tariff blasts haven’t stopped European stock markets from rising.
” Markets are pricing in a deterioration in US-EU relations, a risk premium tied to Sunday’s German elections, and the potential for higher insurance costs as European nations seek to finance a sharp increase in defense spending”, says researcher Michael Brown at broker Pepperstone.
Analysts at Goldman Sach write that, if enacted, reciprocal tariffs front-run Trump’s most severe trade-war tools. The only positive aspect may be that, according to Goldman analysts, “it is also possible that a reciprocal tariff policy could incrementally reduce trade policy uncertainty once it is announced.”
Even before Trump’s tariffs, many of Europe’s biggest carmakers were facing intensifying headwinds, says Michael , Dunne, CEO of auto industry advisory ZoZoGo.
” Privately, European automakers tell me they sense real danger – existential danger”.
Last year, Dunne says, Volkswagen delivered 1 million fewer cars in Europe than it did in 2019. ” Sales in China are collapsing”, he says. VW is shutting down its factories in Germany for the first time in recent memory.
Japan is also anticipating the worst. With each passing tariff threat, hopes that Shigeru Ishiba, the country’s prime minister, will “break” with Trump are thwarted.
Initial expectations were placed on Ishiba pulling off the kind of bond Shinzo Abe and Trump 1.0 created. Though it didn’t earn Japan many deliverables, Tokyo believes Abe shielded Japan from the trade war.
Japan is becoming aware that even the most unlikely scenario could have a devastating impact on the economy. In December, before he took office, Trump talked often about how he had contacts with Chinese leader Xi. ” We’ve had communication”, Trump said. He continued,” I had an agreement with President Xi, who I got along with very well.”
The deal concerned illegal drugs like fentanyl that might be coming from China. Ishiba worries that Trump’s true second-term objective is a “grand bargain” trade agreement with China, leaving Japan with no one else to watch from. So do executives at Toyota, Honda and Nissan.
According to Cody Acree, an analyst at Benchmark Co, the tariffs Trump has proposed would increase the average cost of cars and components from Mexico and Canada by$ 5,790.
Given its sheer volume of trade dollars, the complexity of the intertwined supply and manufacturing channel that has been developed over decades, and the sheer number of our companies that participate in support of this key consumer industry, Acree says,” we believe the auto sector is the most exposed to the risks of increased tariffs.”
Japan values the auto industry even more highly. Tokyo has no choice but to batten down the economic hatches and exploit the worst-case scenarios as Trump expands his tariffs plans to an industry crucial to Japan while keeping deflation in the rearview mirror.
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