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Across Asia, policymakers and business leaders are once again trying to make sense of a tariff whiplash, this time after the Supreme Court ruled President Donald Trump's signature tariff strategy illegal.
A top official in Japan's ruling Liberal Democratic Party call the tariff situation a real mess, while sources say Indian officials are postponing talks to finalize New Dali's pact with the US.
Much of the confusion comes from Trump's workaround response to the Supreme Court ruling and his threats to impose fresh tariffs on trading partners. He announced a temporary ten percent global tariff that went into effect Tuesday, and said he plans to raise it to fifteen percent. Trump's also getting ready to launch a series of investigations that could pile on even more import duties. Some are tied to national security, others are connected to Section three oh one of a
trade act. They could allow the US to impose retaliatory levies on countries carrying out unreasonable or discriminatory actions against American trade.
The President is sending out a series of warnings today via truth Social about any country that doubts his ability to impose tariffs in this fashion, He said, any country that wants to play games with the ridiculous Supreme Court decision buyer beware.
After Trump announced his Liberation Day tariffs almost a year ago, countries in Asia race to negotiate trade deals with the US. Now they're wondering if they're going to have to renegotiate, and this time around, many are finding they're in a much better position.
President Trump, by most accounts, has lost a lot of leverage here.
Brendan Murray oversees Bloomberg's trade coverage from London, and.
If you're sitting in Brussels or Beijing right now, you're saying, perhaps maybe we have more leverage than we did last week, so maybe we could think about retaliating. Maybe this is where the countries look at what President Trump has lost and they say, you know, we're not going to put up with that, and we do have ways to fight back.
One of the countries that stands to win big out of all of this China.
If you're Beijing, you're sort of now on a level playing field with US allies.
Jenny marsh oversees Bloomberg's coverage of North Asia's economy and politics.
You've gone from the biggest target when Trump first came into now sort of you know, you have a fairly level playing ground.
She says.
The Supreme Court's decision shifts the power dynamics ahead of an important summit between President Trump and President hijin Ping next month. So what was achieved by the trade war?
Yeah?
What was achieved? I think China realized is not half as dependent on America as everyone thought.
This is the big Take Asia from Bloomberg News. I'm Wanha. Every week we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever shifting region. Today on the show, a legal blow in Washington, d C. Just added more trade uncertainty, how the Supreme Court tariff ruling is playing out in Asia, and the surprise advantage it could give to Beijing. Thank you so much, both of you for
making time to join us. Between the three of us, we've got big parts of the world covered. Brendon, you're based in London. Jenny, you're here with me in Hong Kong. Before we get into what this ruling means, for countries and manufacturers. I have to ask, what's been the reaction to the Supreme Court ruling on the ground where you are a lot.
Of people have more questions right now than they do answers. President Trump came out pretty assertively after the Supreme Court ruled against him and said, in effect, nothing's changed. I still have teriff authorities, and I may even use them to a greater degree than I did before. The story is the same. The US is going to use tariffs to try to reshore manufacturing, create factory jobs, and essentially, as President Trump would say, rebalance the global trading system back in the US's favor.
That's interesting. So he's trying to say nothing's changed here.
Yeah, nothing's changed, but you know, in a sense, a lot of things have changed. President Trump, by most accounts, has lost a lot of leverage here.
Jenny, what about here in Hong Kong and broadly in China. What's been the reaction.
It's been pretty mute in measured, I would say, But also when you sort of look at this, China sort of came out from the ruling as one of the winners, so you know, in a way, it's half of them to sort of come out sort of threatening anything because they've probably benefited from the Supreme Court ruling. I think, you know, particularly ahead of the she Trump's summit as well, they have to be thinking this sort of weakens Trump's hand just a couple of weeks before he fires into Beijing.
I think that being said, China realizes this still is a Section three zero one investigation pending against them, so in that sense, they're actually weaker than other countries, and that this sort of investigation has already sort of been in trained for months that could be expedited now so they could quickly see more tariffs, and those tariffs under that investigation have no upper limit and they're pretty sticky.
The ones imposed under Section three zero one from Trump's first term is still in place, so I think that probably also is why they're sort of waiting and seeing before coming out with a sort of a strong reaction. And then I think for exporters in this region, particularly sort of ones that had the China plus one strategies for them, I think there's a big question right now over was it a good idea to invest in new factories in Cambodia and Vietnam. Is it as useful as I thought it was going to.
Be Jenny, Who are the winners in this and what does this victory mean for them?
The biggest winners so far, it's China, India, and Brazil. They were facing the highest tariffs and they're the ones that have seen the biggest sort of percentage point decreases. But I think everyone's aware that this is just the holding pattern, right. This is what Trump has done is sort of to bridge the gap until he can sort of then use his other tools to get tariffs really
where he wants them. And it's going to be much more complicated and harder for business to navigate because rather than thinking a sort of broad tariffs, it's going to be this sort of like jumble of different sort of
sectorial tariffs. So Japan, South Korea, and Taiwan, the big thing they are looking at still now is a section two three two investigation into chips, And for Taiwan, actually that was always the case because the trade deal they struck had a carve out for chips, which is sort of the biggest thing in the export to the US. So in some respects it was always going to be around these specific investigations into sort of really contentious sect
and I think that hasn't really changed. So even though it's sort of a headline win in some of these ways, for some of these countries, there are sort of more potent measures down the pipeline.
And it seems like countries like Japan and South Korea that had negotiated a fifteen percent terror freight, it looks like they've now just also lost their competitive advantage as well, right if everyone else gets fifteen percent?
Yeah, absolutely. And I think if you're these trade negotiators and you've spent like the last year painstaking me having these meetings and sort of working out these deals, convincing your companies to get behind you, it must be so frustrating to wake up and to sort of realize that
hard work has sort of been for nothing. At the same time, it makes it harder for Japan South Korea to sort of say that their trade deals are invalid because the tariffs are actually where they negotiated them to be at, So in a way, it's kind of status quo for them.
After the break, how the tariff drama of the past year has remapped global trade and how the Supreme Court ruling could play Deshijan thing's advantage at a high stakes summit next month. I'm back with Brendan Murray, who runs Bloomberg's trade coverage, and Jenny marsh who oversees North Asia's
economy and politics. Regardless of how President Trump responds to the upending of his tariff regime by the Supreme Court, the global trading system has already been transformed in ways that don't necessarily favor the US, even if America's trade numbers and key partners remain relatively the same. Certainly, the US as it stands is still at this point the biggest destination for global manufacturers. To what degree do you think the trade war changed that.
We just got the US's year end trade balance figures, and if you look at the top ten US trading partners, they really didn't shift around all that much. China's share of trade fell quite a bit, It's been falling for a couple of years now as the tariffs do take effect. But it's still Canada and Mexico at the top. You know, a couple of European countries, South Korea, Japan are in the top ten. Nothing has really changed to a significant
degree in a sort of like structural way. This is much more of a slow burn change in the global trading system than a sudden shock to the system. But we're heading into a new chapter now, and I guess in.
Some ways, I mean that the trade war has also caused this fundamental shift as well, right, I mean in terms of certainly companies feeling that they can't rely just on the US as the main dominant market. They've got to find other customers in other parts of the world. Jenny, how has a country like China taken advantage of this asymmetry in global trade.
I think China's one of the best and most stark examples of just trade re routing. You know, by the end of last year, China's exports to the US just for ten percent of its total exports, and that's half from the first trade war, you know, and you saw the surge and exports instead to Europe, Latin America, Africa.
Export has just found other markets. And then you know, China finished the year with that one point two trillion dollar trade surplus, which no one was expecting it would be able to record in a year where it's facing the highest US tariffs, you know, in nearly a century, so they prove that you can diversify and find other markets.
And it's also then, you know, it's taken an advantage of not only the trade war, but I think just the general volatility of Trump right just sort of warm its relationships and warm its trade ties with other countries.
You know, you saw Mark Carney come at the beginning of this year and talk about a new world order in China, striking a bunch of trade deals with Beijing, and then Beijing kind of you know, handing out an olive branch or rolling back to tariffs that it had imposed on Canada, and then Canada are saying, okay, right, you know, we're going to let in a certain quoture of Chinese electric vehicles into Canada, which was something they had resisted to align with the US. That seemed like
a landmark moment. And then you had kiss Arma coming just very shortly afterwards and trying to achieve something similar.
So I think China sees that other countries now need to diversify, and it's repositioning itself as sort of a land of opportunity at a time when people really are desperate from new growth drivers and there now worring to sort of overlook some of the different issues or the difficult issues that had sort of stopped them being so favorable to trade with Beijing, such as the war in Ukraine,
human rights issues. People are now kind of they're being more pragmatic because it's a more kind of dangerous world in terms of trade. Going into the trade war, economists was saying tariffs at sixty percent are going to like decimate the Chinese economy. No way, They're going to sort of come out of this unscathed, quite stark economic predictions.
None of that came to pass. You know, exports surged and they hit their growth target of about five percent, so it didn't really have a negative impact on China at all.
In some ways. I mean, that's a feather in China's cap.
Br Absolutely, yeah. I think the trade war went better for shuji Ping than he probably ever realized it would do, and it probably has rewired trade. Like if those tarrists went away now wood companies start selling back into American markets, maybe they would, and they'd have even more trade. You know, it's hard to predict, Jenny.
Trade obviously goes hand in hand with geopolitical ties. How might the trade shifts affect political ties between the US and its biggest trading partners.
I think it's already handing an impact right because it's this volatility. So US allies are realizing that the US is not as a reliable partner, not just in terms of sort of military spending, but in terms of trade as well. You know, you embraced Trump's trade war. You say, Okay, we'll make the deals, we'll do the investment, we'll put in the hours, and then turns out they aren't legal after all, and then you have to sort of renegotiate and go back all over again. So I think it
just dnse US credibility. No one's going to turn their back on the US. It's too powerful, and it still is a huge military guaranteeur particularly countriesie Japan in this region. But at the same time, there is a clear need to make sure you have a range of partners in all of your eggs and not just in one basket.
Now President Trump is expected to meet President she at a summit embing at the end of March. How does the Supreme Court ruling change the balance of power at the negotiating table when they meet.
This could be the sort of the first test, if you like, real test of how the Supreme Court sort of changes some of these deals. It's hard to imagine Trump arriving with any less sort of swagger than he would do normally. And he knows that he has these sort of Section three zero one investigations that he could still threaten more tariffs, and with China, he's already got an investigation going where he could impose them at the
same time. One of the big deliverables they were meant to extend the trade truths they have and that's predicated. And you know, China keeps supplying where earth if America doesn't raise tariffs, if it keeps the tariffs down, or the tariffs are gone. So if you're China, you know, maybe you ask something extra now to keep up your half of the deal. The only reason they were buying the soybeans from the US was again to get the
tariffs down. Well, if the tariff's not there anymore, it just gives she an opening to say, if I'm going to keep doing this for you, what are you going to do for me? And maybe Trump's answer to that is will go easy on you when it comes to some of these other sort of sectorial tariffs. But even if that is the answer, that's a win for she because before he didn't have that leverage, he would have
had to find something different. So it will be interesting to see sort of how strongly the Chinese play their hand. On the other hand, I don't think they want to rock the boat too much, so maybe they just decide the status quoba is a good thing. You know, it's better to have a bed in the hand and two in the tree, and they keep sort of targeting that. But certainly she has more options now than he did a few weeks ago.
What would be the dream scenario for a president?
Shoe h Jinping has two things he really cares about getting from the US. It is access to the highest end in video chips, and it is some kind of concession on Taiwan. And I think if you're sat in beaging thinking what's the biggest thing I can get here? If it's my best moment, then you're going to push. And Trump has already signaled that he actually is. He's much more open to giving them those top chips than
any other US leader or politician is. And then on Taiwan, they want stronger language around opposing Taiwan independence, which would be a big blow for Taiwan if that language changes. And they want Trump to stop selling Taiwan so many weapons so.
He could actually get what he wants.
It should Yeah good.
This is The Big Take Asia from Bloomberg News. I'm wanha. To get more from The Big Take and unlimited access to all of Bloomberg dot Com, subscribe today at Bloomberg dot com slash podcast Offer. If you liked the episode, make sure to subscribe and review The Big Take Asia wherever you listen to podcasts. It really helps people find the show. Thanks for listening, See you next time.