Dealing with Trump is half the story

This will be an eyeopening article. It is an analysis that readers have not read anywhere. No one seems to realise that after a mega-earthquake in the ocean, giant tsunamis will always follow. If Donald Trump's reciprocal tariffs are comparable to a mega economic earthquake, President Xi Jinping’s reactions will have the impact of a giant economic tsunami.

- Chartchai Parasuk

Because the US is loud and threatening, the world bows to US high tariff demands for transshipment products, massive market openings, trillion dollars of investment commitments, and huge product purchase promises. That is because the US is the largest buyer in the world with imports valued at US$3.3 trillion in 2024. The world conveniently ignores that there is a country affected most by the US onslaught called China — the second largest buyer with a $2.6 trillion import demand. Its import volume is 78.8% of the US: Despite its import volume, the world pays no attention that a shrinking Chinese economy could drastically affect global trade as well.

The main objective of Mr Trump's reciprocal tariff scheme is to reduce China's trade surplus with the US. The direct surplus is $300 billion but after including indirect surplus through transshipments, the total surplus would be $350 billion. That is why Asean nations could not reach an agreement with Mr Trump without accepting a 40% or more tariff on transshipment products to block China from avoiding proper taxation.

After accepting the penalty tax rate for transshipment products, many Asean countries seem to be overjoyed with their reciprocal tax rates being reduced to 19%-20%. Hail President Trump. They are unaware that for Asean, China is a bigger trading partner with $389 billion of import purchases. The US imports less from Asean, or $352 billion. Subtracting “transshipments” from China, US imports of Asean products would fall to $302 billion.