Trump launches long-awaited tariff broadside, some nations hurt more than others

Asia Market Update: Trump launches long-awaited tariff broadside, some nations hurt more than others; Uncertain global reaction thus far in Asian trading.

General trend

- “Liberation Day” finally arrived, and in terms of a spectacle US Pres Trump did not disappoint, using charts to clearly label the worst trade offenders in his eyes. China may be feeling particularly aggrieved, having 34% tariffs added to the existing 20% Fentanyl tariff for a total of 54%. Trump did appear to have a method to his uneven imposition of tariffs across nations – with the “worst offending nations” essentially having US tariffs imposed at a level equal to about half the average charged against US products by each such nation. Thus Japan was hit with 24% tariffs compared to the 46% Japanese tariffs against the US that the Trump Admin calculated across a basket of products.

- The luckiest countries, including Australia, New Zealand and the UK, received only the blanket minimum to be applied to all imports to the US of 10% .

- International reaction to the tariffs during the Asian session was somewhere between consternation and cautious, with most countries that did comment essentially saying they would examine in more detail, avoiding direct confrontation for now, with the exception of China, vowing to take 'resolute' countermeasures.

- South American nations Colombia and Brazil expressed some relief at receiving lower levels. Kiwi and Ozzie also escaped with the minimum threshold of 10% tariffs, and avoided poking the bear saying there would be no retaliatory tariffs. South Korea is receiving a higher than expected 25% and said it would hold an emergency meeting to discuss while ordering emergency support measures for local industries, similar to Japan at 24%, likely higher than it expected. UK celebrated escaping with only 10% tariffs with the Pound Sterling shooting back above the 1.30 handle (back to Oct 2024 levels), and officials saying “our approach to US tariffs is to remain 'calm and committed’”

- A common theme from most Asian countries was to say they would double down on actively engaging with US authorities to seek solutions, while domestically engaging with affected industries with support programs.

- EU’s Von der Leyen agreed with Trump on one point, “that others are taking unfair advantage of the current rules”, while also saying EU was preparing for further countermeasures on US tariffs if negotiations fail.

- Asia-specific tariffs announced by Pres Trump from highest-to-lowest: Cambodia 49%; Vietnam 46% Sri Lanka 44% Thailand 36% China 34% (plus earlier 20% fentanyl tariff maintained, for total 54%) Taiwan 32%; Indonesia 32%; India 26% South Korea 25%; Japan 24%; Malaysia 24%; Philippines 17%; New Zealand 10% Australia 10%. Singapore 10%.

- Asian chipmakers made up some early losses after the US White House published a fact sheet post-Trump tariff announcement stating that semiconductors would Not be subject to reciprocal tariffs; along with steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; as well as copper, pharmaceuticals, semiconductors, and lumber article, as well as bullion, energy and other certain minerals that are not available in the US. Pharma shares were up on pharma products Not being subject to US reciprocal tariffs.

- Asia stocks were down heavily at the open, with Nikkei 225 now off the worst lows but still underperforming-3.2%; US equity FUTs opened sharply lower: Nasdaq FUTs -2.3%, S&P 500 FUTs -3.4%,

- For today at least, China PBOC avoided any major devaluation in the Yuan, with a daily fix maintained below 7.20, though the weakest since Jan 17th.

- China overnight said it will restrict local companies from investing in the US, no doubt keen to avoid a stampede of Chinese rushing to set up shop in the US to avoid tariffs.

- Japanese stocks off heavily included: Toyota 6%, Nissan -6.3%, Honda -4.8%, Mazda -9% Tokyo Electron -7% Renesas -8% Softbank -7% Advantest -5% TOPIX banking index 6%.

- Mag 7 stocks after-hours: Tesla -6.0% A/H; Apple -7.0% A/H; Nvidia -4.7% A/H; Amazon -6.2% A/H; META -4.9% A/H; Microsoft -2.9% A/H; Alphabet -3.0% A/H

- Vietnam -6% with Vietnam Dong hit fresh record low, after receiving 46% tariffs from the US.

- Hyundai Motors -3.5% said no price increases in the US, and Ford -1.6% (after hours) will offer employee level discounts to consumers. Meanwhile VW will add an import fee. Stellantis chose today to say it plans to shut Canada [Windsor] assembly plant for 2 weeks; cites union, while Nissan Reportedly to suspend part of production line at Mexican plant. [A reminder of Thursday's midnight activation of 25% tariffs on vehicle imports].

- Crude Oil -2.6% and Copper -2.5% under $5/lb portending slower growth, while spot gold hit fresh new highs above $3,160 but fell back $30 late in the session.

- Separately, Pres Trump signed an Executive Order removing the $800 de minimis rule, specifically calling out low-value imports from China as a “National Emergency”, affecting PDD -6.0%, Alibaba -5.2%, Shein and others.

- UST 10-year yields down to Oct 2024 lows at 4.04% with Fed probability of a hold jumping to 91% over 81% day before.

- JP 10-year yields -13bps to 1.35% with the OIS chance of a 25bp hike in May 15.0%, vs 18.5% yesterday with July probability at 78.0%, vs 79% yesterday , implying a lower probability of Sept BOJ rate hike.

- China Treasury yields down 6bps across the curve.

Looking ahead (Asian-weighted, on Asian time zone)

- Thu Apr 3rd (Thu night US Mar ISM Mnfg PMI).

- Fri Apr 4th JP Feb Household Spending, (Fri night US Mar NFP, Fed Chair Powell).

Holidays in Asia this week

- Mon Mar 31st India, Indonesia, Malaysia, Philippines, Singapore.

- Tue Apr 1st Indonesia, Malaysia.

- Wed Apr 2nd Indonesia.

- Thu Apr 3rd Indonesia, Taiwan.

- Fri Apr 4th China, Hong Kong, Indonesia, Taiwan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.4% at 7,902.

- Australia Feb Trade Balance (A$): 3.0B v 4.5Be.

- Australia Mar Final PMI Services: 51.6 v 51.2 prelim (confirms 14th month of expansion).

- Australia Feb Job Vacancies Q/Q: -4.5% v 5.2% prior.

- Australia Central Bank (RBA) Financial Stability Review; Tariff response may have chilling impact on activity.

- Australia PM Albanese: Will not impose reciprocal tariffs; US tariffs are unwarranted and has no basis in logic.

- New Zealand Mar CoreLogic Home Value M/M: 0.5% v 0.4% prior.

- New Zealand Mar ANZ Commodity Price M/M: -0.4% v 3.0% prior.

- New Zealand Trade Min Mcclay: Still have positive relationship with the US; Tariffs push up prices and are not good for trade; We're no worse off than anyone else on tariffs.

China/Hong Kongh

- Hang Seng opens -2.4% at 22,638; Shanghai Composite opens -0.9% at 3,319.

- CHINA MAR CAIXIN PMI SERVICES: 51.9 V 51.5E (26th month of expansion).

- China Commerce Ministry (MOFCOM): Reiterates strongly opposes US tariffs, vows countermeasures to safeguard interests; will take 'resolute' countermeasures.

- Deutsche Bank said to 'raise question' on Yuan devaluation amid tariff impact - US financial press.

- Xinhua Commentary: US tariff move is 'self-defeating bullying'.

- Reportedly US Pres Trump plans announcement today to outline TikTok deal proposal that includes Bytedance retaining a 19.9% stake; New company will be named TikTok America - The Information.

- CHINA SAID TO RESTRICT COMPANIES FROM INVESTING IN THE US – PRESS [overnight update].

- (EU) China Commerce Ministry (MOFCOM) extends anti-dumping probe into EU brandy to July 5th from April 5th [overnight update].

- China PBOC sets Yuan reference rate: 7.1889 v 7.1793 prior.

- China PBOC Open Market Operation (OMO): Injects CNY223B in 7-day reverse repos; Net injects CNY4.9B v drains CNY225B prior.

Japan

- Nikkei 225 opens -1.9% at 35,043.

- Japan Mar Final PMI Services: 50.0 v 49.5 prelim (prelim saw 1st contraction in 5 months).

- Japan Trade Min Muto: Held online meeting with US Commerce Sec before the tariff announcement; continues to seek exemption from the US.

- IMF: Reiterates sees Japan ‘sustainably’ hitting BOJ 2.0% inflation target, urges BOJ to keep phasing out monetary support; says BOJ must raise rates in ‘flexible’ manner – Article IV Consultation.

- Japan Chief Cabinet Sec Hayashi: 'Consultation desk' made for auto industry on tariffs; extremely regrettable that the US announced tariffs while mentioning Japan's rice

- Japan JGB FUTS rise by 140bps or 1.1% amid safe haven demand.

- Japan releases weekly flows data [period ended Mar 28th]: Foreign buying of Japan equities: -¥450.4B v -¥1.21T prior; Japan buying of foreign bonds: -¥5.9B v -¥233.7B prior.

- Japanese Prime Minister Ishiba is said to plan visit to the Philippines and Vietnam in late April or early May for diplomatic efforts – press.

- Japan sells ¥2.6T vs. ¥2.6T indicated in 10-year JGB Bonds; Avg Yield: 1.405% v 1.4040% prior; Bid to cover: 3.15x v 2.66x prior.

- Former Bank of Japan (BOJ) Board Member Adachi: See chance for May rate hike by BOJ, unless US tariffs trigger global market turmoil [overnight update].

- Fast Retailing Mar Domestic UNIQLO Sales +11.5% y/y [overnight update].

Korea

- Kospi opens -2.7% at 2,437.

- South Korea Market Watchdog: Reiterates will preemptively respond to risk factors; sees 'high' possibility of market volatility heightening after US tariffs, ahead of South Korea impeachment ruling.

- (KR) South Korea Trade Min Cheong; To prepare emergency support measures for each industry; Top trade negotiator to visit the US for 'close consultations' - financial press.

- Bank of Korea (BOK): To closely monitor markets, take steps if necessary - financial press.

- South Korea Fin Min Choi: Govt to work to "minimize impact" from US tariffs on economy - financial press.

- South Korea Mar Foreign Reserves: $409.7B v $409.2B prior.

Other Asia

- Singapore Central Bank (MAS): Issues Statement on Market Conditions.

- Taiwan Cabinet: US tariffs 'very unreasonable"; Will take up the matter with the US - financial press.

- Malaysia Govt: Not considering retaliatory tariffs despite US tariffs - financial press.

- Hong Kong Mar PMI (whole economy): 48.3 v 49.0 prior.

- Singapore Mar PMI (whole economy): 52.7 v 51.0 prior.

- Singapore Mar Purchasing Managers Index (PMI): 50.9 v 50.7 prior (18th month of expansion) [overnight update].

North America

- (US) White House Council of Economic Advisers Chair Miran: Absolutely will be short-term cost increases; There will be 'short term bumps' as a result of Pres Trump's tariffs.

- Ford Reportedly to offer employee-level vehicle discounts across multiple models beginning tomorrow – press.

- Stellantis plans to shut Canada [Windsor] assembly plant for 2 weeks; cites union; effective from Apr 7th [reason not initially disclosed].

- (US) House Speaker Mike Johnson: Markets will 'settle out' after tariffs - financial press.

- US equity FUTs open sharply lower: Nasdaq FUTs -2.3%, S&P 500 FUTs -3.4%.

- (US) Treasury Sec Bessent: We'll have to wait and see on negotiations of tariffs; These tariffs announced today are at the high end of the number.

- (US) White House: Baseline tariffs will go into effect April 5th; Higher tariffs will take effect on April 9th; Pharmaceutical products will be exempt from the reciprocal tariffs.

- *(US) Pres Trump: To charge reciprocal tariffs at half the rate foreign countries charge US, with a minimum rate of 10% tariff; 25% tariff on all foreign autos; Tariffs go into effect at midnight - Rose Garden Event.

- (US) Senior White House Official: US Pres Trump will sign an EO to close the de minimis loophole; To declare national emergency due to national security and economic security concerns over US trade deficits.

- (US) MAR ADP EMPLOYMENT CHANGE: +155K V +120KE; Notes March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors.

- (US) FEB FACTORY ORDERS: 0.6% V 0.5%E.

- (US) FEB FINAL DURABLE GOODS ORDERS: 1.0% V 0.9%E; DURABLES (EX-TRANSPORTATION): 0.7% V 0.7%E.

- (CA) Ontario Premier Ford: We are willing to take our tariffs off if President Trump does the same; Need sit down and talk about USCA deal because Mexico is hurting US and Canada - CNBC.

- (US) DOE CRUDE: +6.2M V -1ME; GASOLINE: -1.6M V -1.5ME; DISTILLATE: +0.3M V -0.5ME.

- (MX) Mexico Pres Sheinbaum: Won't be imposing tit-for-tat tariffs; Spoke to Canada PM Carney about strengthening Mexico-Canada bilateral trade deal.

- (US) Reportedly US Pres Trump tells some in the inner circle that he expects in the coming weeks Elon Musk will step back from his role of Governing Partner - press.

- (US) Reportedly US tariffs will be banded by country and industry; Tariffs will be in 10%, 15%, and 20% increments - Sky News.

- (US) Reportedly US President Trump is considering announcing External Revenue Service as early as today.

- (US) Senate and House budget versions have $1T gap between them; Senate allows for $5T increase, House allows $4T increase - press.

Europe

- (EU) European Council Pres Costa: Time to ratify agreements with Mercosur, Mexico and decisively advance negotiations with India and other key partners - financial press.

- Switzerland Business Economiesuisse: US tariffs on Swiss imports are 'harmful' and not justified.

- (EU) Commission Pres Von der Leyen: US tariffs a major blow to the world economy; I agree with Pres Trump that others are taking unfair advantage of the current rules; Preparing for further countermeasures on US tariffs if negotiations fail - financial press.

- Vokswagen plans to add an 'import fee' to the stickers on its cars that are impacted by the 25% US vehicle tariff - WSJ.

-(DE) German Auto Industry Assn (VDA): US tariffs mark a departure from rules-based global trade order and this will cost jobs - financial press.

- (IE) Ireland Mar PMI Services: 55.3 v 53.2 prior (48th month of expansion).

- (FR) French wine and spirits exporters expect fall in sales of at least 20% due to the latest US tariffs.

- (EU) European Commission Spokesperson: EU response to 'Liberation Day' will happen at 'appropriate time'.

- (EU) ECB's Schnabel (Germany): Euro area economy is gradually recovering while disinflation remains on track; Uncertainty about geopolitics, protectionism and economic policy has surged; Sharp rise in tariffs weighs on stocks in affected sectors, with US underperforming.

- (IT) Italy PM Meloni: Clear that introduction of new US tariffs would hit Italian producers hard; Doesn't rule out adequate responses to US tariffs to defend our products

- (PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 5.75%; AS EXPECTED.

- (EU) ECB's Holzmann (Austria, dissenter): Rates are at neutral level; No reason to become accommodative - press interview.

- (UK) Chancellor of the Exchequer (Fin Min) Reeves: Even if we reach trade deal with the US, we're not out of the woods; UK will be hit by tariff effects even if there's a deal with US - comments to Treasury Committee.

- (EU) EU said to be planning emergency measures to guard economy from US tariffs - press.

Levels as of 00:20 ET

- Nikkei 225 -3.2%, ASX 200 -1.0%, Hang Seng -2.3%; Shanghai Composite -0.5%; Kospi -1.2%.

- Equity S&P500 Futures -2.7%; Nasdaq100 -3.3%; DAX -1.9%; FTSE100 -0.1.4%.

- EUR 1.0805-1.0925; JPY 147.12-149.31; AUD 0.6226-0.6299; NZD 0.5682-0.5753.

- Gold -0.3% at $3,154/oz; Crude Oil -2.6% at $69.90/brl; Copper -2.5% at $4.9033/lb.