- US: Trump's sweeping tariffs cause widespread economic concern from trading partners and trigger potential retaliatory measures
- China: Economic growth on track as liquidity conditions improve and new tech emerges, though it faces increasing trade tension from US
- India: GDP growth has slowed to 6.7% in 2024, but a mild uptick is expected in 1Q25, driven by domestic production and a rise in exports
- Singapore: Singapore's strong growth continues in 1Q25 with a robust domestic economy and limited tariff risks, but global trade uncertainties may dampen full-year prospects
US: Sweeping tariffs elicit widespread economic concern. US President Donald Trump announced sweeping tariffs on Liberation Day (2 Apr). Country-specific reciprocal tariffs (starting on 9 Apr) included a 34% tariff on China, 20% on the EU, 46% on Vietnam, 32% on Taiwan, 24% on Japan, 26% on India, and 25% on South Korea. Although Canada and Mexico were exempted from the reciprocal, they were not spared from the baseline tariff of 10% applied to all US imports, effective 5 Apr. The 25% tariff on all foreign-made automobiles became effective on 3 Apr.
Trump’s announcement of sweeping tariffs will likely elicit widespread criticism and concern from trading partners. Although some countries are contemplating retaliatory measures, they have also emphasised seeking dialogue and negotiation to avert an escalation into a full-scale global trade war. By setting his “discounted” reciprocal tariffs lower than those imposed on US goods by other countries, Trump signalled openness to negotiations and trade deals. Trump suggested tariffs could be reduced or eliminated if other countries adjusted their trade policies to be more favourable towards the US, specifically ending their own tariffs and trade barriers. However, Trump did not rule out imposing additional tariffs depending on how America’s trading partners responded.
The Atlanta Fed GDPNow model predicted that US GDP growth would contract by 2.8% q/q sa in 1Q25, driven primarily by a surge in US imports to beat Trump’s tariffs. While the model saw US consumer and government spending weakening, it expected domestic demand growth to remain positive. Unless this Friday’s US monthly jobs (4 Apr) disappoint significantly, Fed officials see Trump’s tariffs posing a greater risk to inflation than growth and have advocated holding rates steady for an extended period. The Fed will, starting this April, reduce the monthly redemption cap on US Treasuries to USD5bn from USD25bn to provide additional liquidity and support to the financial system during this period of heightened uncertainty.
The market will be focusing on the full set of labour market due on Friday (4 Apr). The totality of data needs to be considered as market participants gauge when the Fed would need to cut rates. The reality is that US labour market has not turned meaningfully weak. To be sure, there are some mild stresses from rising jobless claims, lower hours worked and an uptick in U6 unemployment rate. The decline in Job Openings and Labor Turnover (JOLT) job openings (actual: 7568k, consensus: 7658k) has added to worries.
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