Good morning.

Comment - Today’s news will be full of coverage of the immediate effect of the ‘Liberation Day’ tariff announcements, but three big elements stood out while listening to the ceremony:

1 - The basis for the individual charges was unclear based on the President’s remarks, which included a range of reasons. (Note - The actual calculation released by the USTR is a completely different rationale than the one the President cited and has done little to assuage economists.)

2 - The point of the tariffs remains unclear. These have been described as:

• The opening positions for negotiations to force other countries to lower tariffs

• Enduring import taxes to raise revenue

• A technique to force manufacturing onshore

All three cannot be true.

3 - Markets around the world hated the news and there was a notable absence of CEOs and business leaders celebrating the announcement. JP Morgan issued the note below shortly after the ceremony.

Overall, this means that a huge amount of uncertainty remains making it difficult, if not impossible, for businesses to know what to do with respect to supply chains and mid- to long-term planning. Lots of pro-Trump commentators are saying that businesses need to wait and see what the rules of the game are, but that was what yesterday was supposed to be: instead, we have global macroeconomic Calvinball.

On to the headlines

💥 ‘Liberation Day’ Tariff Shock

President Trump imposed sweeping new tariffs on global trading partners, including a baseline 10% duty on all exporters and substantially higher rates for approximately 60 nations with large trade imbalances with the US. China faces the steepest tariff at 54%, while the EU will see 20% and Vietnam 46%. Trump exempted Canada and Mexico as long as existing 25% tariffs tied to drug trafficking and migration remain in effect, along with exemptions for certain goods covered by USMCA. Markets reacted negatively, with equity benchmarks falling 2% or more despite previous rallies based on hopes for more lenient measures. More - Bloomberg

Asia Stability Ratings and News Summary

More Unstable

🇦🇫 Afghanistan, 🇦🇲 Armenia, 🇦🇿 Azerbaijan, 🇧🇩 Bangladesh, 🇧🇹 Bhutan, 🇨🇳 China, 🇹🇱 East Timor, 🇬🇪 Georgia, 🇮🇳 India, 🇮🇩 Indonesia, 🇯🇵 Japan, 🇰🇬 Kyrgyzstan, 🇱🇦 Laos, 🇲🇾 Malaysia, 🇲🇻 Maldives, 🇲🇳 Mongolia, 🇲🇲 Myanmar, 🇳🇵 Nepal, 🇰🇵 North Korea, 🇵🇰 Pakistan, 🇵🇭 Philippines, 🇰🇷 South Korea, 🇱🇰 Sri Lanka, 🇹🇼 Taiwan, 🇹🇯 Tajikistan, 🇹🇭 Thailand, 🇹🇲 Turkmenistan, 🇺🇿 Uzbekistan

More Stable

No countries were more stable over this period

Unchanged

🇧🇳 Brunei, 🇰🇭 Cambodia, 🇰🇿 Kazakhstan, 🇸🇬 Singapore, 🇻🇳 Vietnam

Regional News Summary

A quick editorial addition before we get to the AI-generated summaries

We mentioned China’s recent drills simulating an attack on Taiwan in yesterday’s SITREP but this was just the culmination of a month of activity in the Taiwan Strait, as shown in this map from OS analyst, Damien Symon (@detresfa_ on X.com)

In Singapore, the stock market is expected to end its recent winning streak as upward momentum slows. Meanwhile, the banking sector is expanding its reach, with UOB opening a foreign direct investment advisory office in Seoul. Additionally, the Widjaja Family, a prominent billionaire family, has made headlines by offering to take developer Sinarmas Land private, leading to a surge in its shares [SOURCE - Forbes].

On the taxation front, the Singapore government has raised the spending limit for election candidates from S$4 to S$5 per voter. In a notable case, a woman was fined S$18,000 for evading GST on luxury goods after boasting about her purchases online [SOURCE - Channel NewsAsia].

In India, the manufacturing sector faces challenges, including high labor costs and inadequate infrastructure, which hinder growth. However, YES India has made strides by becoming the first company to manufacture a tool for a global semiconductor manufacturer. Additionally, Hyundai Motor India has debuted on several major stock indices, signaling a positive outlook for the automotive sector [SOURCE - The Hindu].

India is also actively engaging in international relations, with Prime Minister Narendra Modi set to visit Thailand and Sri Lanka for the BIMSTEC Summit, aiming to bolster regional cooperation [SOURCE - Economic Times]. Meanwhile, the country has rushed aid to earthquake-hit Myanmar, acting as a "first responder" in the region [SOURCE - Times of India].

In Vietnam, the economy is showing signs of growth, with airlines expanding international routes and plans to boost shrimp export prices to the US and China. However, the country faces environmental challenges, particularly in its traditional fish sauce production, which is threatened by climate change and overfishing [SOURCE - Winnipeg Free Press].

Meanwhile, Malaysia's economy is experiencing a surge, with the stock market showing strength. However, analysts caution that this rally may stall. The telecommunications sector is also advancing, with U Mobile receiving a letter of award for its next-generation 5G network [SOURCE - The Sun].

In the realm of international relations, China is actively engaging with various countries, including signing agreements with Bangladesh on investment and infrastructure development [SOURCE - Times of India]. Furthermore, China has been strengthening ties with its neighbors, notably Pakistan, where trade has surged following the opening of the Khunjerab Pass year-round [SOURCE - Daily Times].

In South Korea, the government is grappling with the largest wildfires on record, which have resulted in significant loss of life and destruction of cultural heritage sites. The situation has prompted the deployment of military resources to combat the fires [SOURCE - Manila Times].

Oceania Stability Ratings and News Summary

More Unstable

🇦🇺 Australia, 🇫🇯 Fiji, 🇰🇮 Kiribati, 🇲🇭 Marshall Islands, 🇳🇷 Nauru, 🇳🇿 New Zealand, 🇵🇬 Papua New Guinea, 🇼🇸 Samoa, 🇻🇺 Vanuatu

More Stable

No countries were more stable over this period

Unchanged

🇫🇲 Federated States of Micronesia, 🇵🇼 Palau, 🇸🇧 Solomon Islands, 🇹🇴 Tonga, 🇹🇻 Tuvalu

Regional News Summary

Australia is currently navigating a politically charged landscape as Prime Minister Anthony Albanese has called a national election for May 3. This decision comes amid rising concerns over tariffs and a growing cost of living crisis, with the U.S. tariff decision expected to significantly influence the election campaign [SOURCE - Economic Times]. In the economic sphere, Virgin Australia executives are preparing to meet with investors regarding a potential relisting on the Australian Securities Exchange, while the central bank has opted to maintain current interest rates [SOURCE - Yahoo Finance].

In terms of trade and diplomacy, Australia is set to bolster its relationship with Bangladesh by opening a home affairs office in Dhaka [SOURCE - The Daily Star]. Additionally, the partnership with South Korea is poised for expansion, particularly in defense and trade sectors [SOURCE - Lowy Institute]. Former Prime Minister Scott Morrison has indicated that Australia's nuclear submarines may operate near Taiwan and the Senkaku Islands, a move that could heighten regional tensions [SOURCE - Kyodo News].

On the environmental front, Australia's flagship hydrogen project with Japan faces uncertainty, raising questions about its viability [SOURCE - Japan Times]. Prime Minister Albanese has also suggested that a gas reservation policy may be introduced if deemed necessary [SOURCE - ABC News]. Furthermore, Australia has deployed aircraft to monitor North Korea's illicit maritime activities, reflecting its commitment to regional security [SOURCE - NK News].

In New Zealand, significant social changes are underway as the government has increased benefits, minimum wage, and healthcare funding to combat poverty and inequality [SOURCE - Economic Times]. However, the government's new climate target has been criticized as falling short of expectations, indicating a need for more robust action on climate change [SOURCE - RNZ].

In Fiji, villagers from Navala Village have petitioned Prime Minister Frank Bainimarama to halt a hydro dam project, citing concerns over displacement and environmental degradation [SOURCE - RNZ]. Conversely, there are emerging opportunities for local streaming platforms in Fiji, as demand for regional content from the diaspora grows, potentially revitalizing the local entertainment industry [SOURCE - LiveMint].

Carpe tomorrow!