经济与市场影响

Trump Tariffs: Economic andmarket implications Economics and Macro StrategyDBS Group Research 03-04-2025 Trump Tariffs: Economic and market implications Trump’s “Liberation” Day US Unlike any other day Only a mega marketmeltdown andHouse/SenateRepublican revolt couldchange Trump’s mind 10% baseline tariff. These are across-the-board levies on all imports, effective April 5. “Discounted reciprocal tariff” The higher rates are for nations theWhite House considers bad actors on trade. Japan: 24%, EU: 20%,China: 54% (34% plus 20% already levied) The above are in lieu of the universal 10% tariff, effective April 9 Canada and Mexico are excluded from the reciprocal tariff regime. Theyare still subject to plans to impose 25% tariffs on most imports. Auto tariffs will take effect tonight. 25% tariffs on all foreign-madeautos as of midnight. Regional dispersion End of re-shoring? China has reciprocaltariffs and past tariffs.Adds up to over 60% Managing the coming crisis Top-of-mind for a CFO Investment Portfolio Triage.Portfolio impact, manage liquidity, and hedgeexposures where possible against market volatility Rapid Economic Impact Assessment Underwriting & Exposure Review.Trade credit, marine cargo, potentially politicalrisk, D&O for highly impacted industries Stakeholder Communication.Board, regulators, especially MAS, key clients/brokers,and internal teams Capital Adequacy Check.Re-run solvency calculations based on immediate marketmovements and potential future stress scenarios related to the new tariffs. Confirmcapital buffers remain sufficient. Scenario Planning Update Monitor Counterparty Risk Four inconsistencies of Trump’s modelBrewing macro risks US Forcing other countriesto appreciate theircurrencies or stop usingthe USD will open amassive can ofeconomic and financialworms Can’t have the following simultaneously: •Immigration tightening and a lower cost of living •Tax cuts and lower fiscal deficit •Tariffs and competitiveness •Weaker USD and lower interest rates Threats from trade war Auto sector vulnerabilities Threats from trade war Semiconductor sector vulnerabilities Threats from trade war Pharmaceutical sector vulnerabilities Firm levelimpact Profit, market share, solvencyChallenges galore Spread cost across the supply chain, allthe way to the customer Accept hit to margins and profitability Solvency considerations Risks to GDP growth Economylevel impact Trump Tariffs: Economic and market implications China andHong Kong Impact assessment of trade war Source: DBS Tariff impact on China industries China andHong Kong Electronics and machinerycontribute to 42% of totalexports to US Average tariff increasesfrom 13% in 2023 to 54%after the additional tariff Manageable impact on HK China andHong Kong Local manufactured goodsonly contribute to 1.3% ofHK total exports in 2024, ofwhich 10.2% goes to US.This means it representsonly 0.13% of HK totalexports Re-exports via HKbetween China-US dropsfrom 10.6% in 2014 to5.7% in 2024 HK’s share of total trade ofthe US drops from 8.7% in2017 to 5.3% in 2024 vs toChina accounts for 50.9%as of 2024 Threats from reciprocal tariff India •Indiawas mentioned as oneof the countries at risk inTrump’s ‘Fair and ReciprocalPlan’ •UStrade deficit with Indiadoubled between 2015 and2024. US is a key tradingpartner. •Top sectors ranging fromiron & steel, pharma,electronics, chemicals andprecious stones face a tariffgap of 5% to 22%(average~9%). •India lowered sector-specificimport tariffs in theFebruary’s budget. Note: These are not bilateral tariff rates fromcountry averages India •US announced 26% reciprocaltariff on India. This is 2x of thetariff differential•Suggests outsized role of non-tariff barriers•BTA first phase by fall of 2025;keeps the door open for areassessment•Exclusion of pharma andsemiconductors is net positive(for now)•Competitive advantage astariff on others is higher•Impact is likely to be 0.3-0.5% Note: These are not bilateral tariff rates fromcountry averages Ina relatively better position,but exposed to globalslowdown Singapore Singapore is set to besubjected to US baselinetariff rate of 10%, thelowest among ASEAN-6peers The tariffs increase onSingapore is partlymitigated by the US-Singapore Free TradeAgreement Singapore’s goodsexports exposure to theUS is smaller than otherASEAN-6 peers, but isstill amongst its top 5goods exportsdestination in 2024 Indonesia •Indonesia was US’s 15thlargest trade deficit country in2024. •US announced 32% reciprocaltariff on Indonesia •Surprising as Indonesia has amore balanced tariff structurewith the US, with positive andnegative differentials. •A potential flashpoint couldbe Indonesia's stronginvestment/ trade linkageswith China •Growth impact is morenotable after higher reciprocaltariffs Source: CEIC, WITS, US census bureau,DBS Note: Red=High impact;Green=Negligible impact; Yellow=Lowimpact; Orange=Medium impact;Assessed based on relative r