A survey in Japan found that 32% of companies there said that they had experienced a cyberattack.
Cyber Threats
A May 2025 survey by Teikoku Databank found that around a third of Japanese companies had experienced a cyberattack. The online survey was aimed at 26,389 companies nationwide, receiving 10,645 valid responses.
A total of 32.0% of companies said that they had experienced a cyberattack, while 52.4% said that they had not and 15.6% said that they did not know. Large companies were more likely to have experienced such an attack at 41.9%, compared with 30.3% for small and medium-sized companies and 28.1% for small businesses alone.
Overall, 6.7% of companies experienced a cyberattack in the past month, but for this time period it was more common at smaller enterprises, affecting 6.9% of small and medium-sized companies and 7.9% of small businesses. Teikoku Databank noted the rapid recent rise in risk for such firms.
Data Sources
Cyberattack survey data (Japanese) from Teikoku Databank, 2025.
Business size categories are defined differently for various industries, with small and medium-sized firms having fewer than 300 employees in the manufacturing sector and fewer than 50 or 100 in other sectors, and small businesses having fewer than 20 employees in manufacturing and fewer than 5 in most other sectors.
Trump has made his lack of support for EVs no secret, and his newly implemented ‘Big Beautiful Bill’ led to the nation’s US$7500 (A$11,450) tax credit for battery-powered cars being repealed.
As reported by Nikkei Asia, this has spelt bad news for Honda, which the publication claims has cancelled plans for one of its three upcoming EVs, specifically a large SUV originally due to launch in the US in 2027.
Honda hasn’t shown off a concept of the large SUV, only its mid-size SUV and sedan counterparts, which were previewed by the 0 SUV and 0 Saloon concepts earlier this year. Both of these models are reportedly still set to launch in North America from 2026.
While SUVs account for approximately 60 per cent of all vehicle sales in the US – Honda’s largest market globally – large SUVs aren’t as popular as their mid-size alternatives, and the axing of the federal tax credit has made Honda’s electric offering unviable.
Honda 0 SUV
It’s not known how affected Honda’s plan to launch seven EVs in the US from its upcoming 0 Series will be, due to the reported cancellation of the large SUV.
The report comes just over a month after Honda itself announced it was unlikely to meet its previous EV sales estimation of 30 per cent by 2030.
“Due to the recent market slowdown, the Honda EV sales ratio in 2030 is now expected to fall below the previously announced target of 30 per cent,” the carmaker announced in May.
“In light of this outlook, Honda is reassessing its EV strategy and roadmap, including plans for the EV product lineup and the timing of relevant investments including one to build a comprehensive EV value chain in Canada.
Honda walks back EV sales goals
“In the meantime, there is no change in the Honda position that EVs are the optimal solution to achieve carbon neutrality of passenger vehicles. Therefore, Honda will steadily carry out initiatives being undertaken to prepare for the future EV shift at the appropriate timing.”
While Honda hasn’t said how much further below the 30 per cent target it expects to be, it had previously committed 10 trillion Yen ($108 billion) towards EV development until early 2032.
This investment was subsequently reduced to seven trillion Yen ($75 billion), with some of that reduction understood to be from postponing its Canadian EV value chain.
Honda had previously earmarked CAD$15 billion (A$16.75 billion) to establish an EV assembly and battery plant in Ontario for the North American market, with the facility to be shared with a joint venture partner.
Trump has hit out at Elon Musk’s newly launched political outfit, calling the billionaire’s plan to start a third party “ridiculous” and confusing
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US President Donald Trump on Sunday mocked billionaire Elon Musk’s plan to launch a new political party, calling it “ridiculous” and saying it would only create more confusion. Musk recently announced the formation of the America Party in the US.
“I think it’s ridiculous to start a third party,” Trump told reporters before boarding Air Force One in Morristown, New Jersey, en route to the White House. “Starting a third party just adds to confusion. He can have fun with it, but I think it’s ridiculous.”
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He added, “Third parties have never worked. He can have fun with it.”
Further taking a dig at Musk, once a close ally of the president, Trump wrote in a post on Truth Social:
“I am saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks. He even wants to start a Third Political Party, despite the fact that they have never succeeded in the United States – The System seems not designed for them. The one thing Third Parties are good for is the creation of Complete and Total DISRUPTION & CHAOS, and we have enough of that with the Radical Left Democrats, who have lost their confidence and their minds!”
Trump also accused Elon Musk of seeking special favors by asking him to nominate Musk’s friend, Jared Isaacman, as NASA administrator. After Musk left his role as a special government employee during Trump’s administration, Isaacman’s nomination was withdrawn.
Earlier on Sunday, Trump’s treasury secretary said Musk should focus on running his businesses instead of getting involved in politics. This came a day after Musk, the world’s richest person and a former White House adviser, announced he was launching a new political party.
“The principles of Doge were very popular—but if you looked at the polling, Elon was not,” Scott Bessent said on CNN’s State of the Union. He was referring to the so-called “Department of Government Efficiency” (nicknamed “Doge”), which Musk briefly led at the start of Trump’s second term.
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Polls showed that Doge—and Musk’s aggressive budget cuts and layoffs in the federal government—were deeply unpopular. Bessent noted that investors in Musk’s companies, such as Tesla, which saw declining sales during Musk’s government involvement, wanted him to return to focusing on his businesses.
“So I believe the boards of his companies wanted him back to focus on running those businesses,” Bessent said. “I imagine those boards weren’t happy about his announcement yesterday and will urge him to stick to business, not politics.”
Bessent’s comments came after Musk followed through on his promise to form a new party and accused his former ally Trump of “bankrupting” the country with a massive tax-and-spending bill.
Musk announced his new party, called the America Party, in a series of posts late Saturday and early Sunday on X, the social media platform he owns.
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South-east Asia is rapidly growing as a critical link in global supply chains as manufacturers rush to shift production from China amid an escalating trade war. It is also fast emerging as a focal point for new data centres as demand for AI surges.
Yet, as the economies attract billions of dollars in investments from the energy-consuming industries that are also increasingly demanding greener power, investment into renewables is sorely lacking.
South-east Asia accounts for only 2 per cent of global clean energy spending even though it accounts for 5 per cent of global energy demand, according to the International Energy Agency. For every dollar invested in fossil fuels in the region, about 80 cents go to clean energy — far lower than the global ratio of nearly 2:1 in favour of clean energy, the IEA says.
Indonesia, Vietnam and other countries in the region have set out ambitious climate targets — most want to achieve net zero emissions by 2050 — but there remains a massive investment gap. The region generates nearly three-quarters of its power from fossil fuels, and is still building new coal plants.
The IEA estimates south-east Asia will need to spend $190bn annually by 2030 to meet its climate goals — five times the current level.
The US withdrawal in March from a Just Energy Transition Partnership (JETP), a multilateral climate financing programme that promised $45bn for three countries, has come as a much-needed reminder to south-east Asian countries that they cannot just rely on external financing. Indonesia and Vietnam are major recipients, along with South Africa.
“[JETP and other multilateral programmes] cannot be solely relied upon . . . which is why governments should focus on finding solutions that can catalyse private investments,” says Amy Kong, a researcher at Zero Carbon Analytics. She says multilateral financing, which has played a big role in climate financing in the region, is slowing as President Trump retreats from climate goals and reduces US aid globally, but bilateral public finance could help.
Also in Asia-Pacific Climate Leaders
While the JETP and other multilateral agreements remain a viable source of funding, they offer a fraction of the investment needed. Experts say south-east Asian countries should undertake extensive policy reforms to create a conducive environment for investment in renewables.
“The private sector will be the main source of finance. However, they will not go in alone,” says Grant Hauber, strategic energy finance adviser for Asia at the Institute for Energy Economics and Financial Analysis. “What they need support for is the government policies and the fiscal environment that is created around those policies.”
Hauber says there is a mismatch between countries’ climate goals and policy frameworks that make renewable investments unviable.
Indonesia, the region’s biggest economy, is a good example. Last November, President Prabowo Subianto said Indonesia would achieve net zero emissions by 2050 — bringing forward an earlier target by 10 years. He also vowed to phase out Indonesia’s coal plants by 2040. The country is one of the world’s largest carbon emitters.
But Indonesia continues to allow new coal plants to be built. It also continues to impose a price ceiling on coal sold to power plants, essentially subsidising the fossil fuel and making it far cheaper than alternatives.
As a result, Indonesia has been one of the laggards in clean energy adoption. Government data shows investment in Indonesia’s renewable energy sector totalled $1.5bn in 2023, and it has stayed around the same level for the past six years.
“Indonesia is not competitive enough compared to the other countries based on the renewables capacity installed and policy developments,” says Shabrina Nadhila, Asia energy analyst at think-tank Ember. “The government needs to level the playing field for gas, coal and renewables.”
Indonesia’s energy minister Bahlil Lahadalia recently said Jakarta would retire coal plants early if it could get below-market loans from donors.
Other developing countries have also called for more concessional finance to speed energy transition. And, in fact, that has been one of the sticking points of the JETP programme.
JETP has been criticised by recipient countries for not offering enough grants or concessional loans, and relying too much on loans at market rates. Only a fraction of the promised funds has been disbursed so far.
However, despite the US withdrawal from the programme, other partner countries have promised to make it work. Germany stepped in immediately as the co-lead in the Indonesian JETP plan — the largest of the three at $20bn.
IEEFA’s Hauber said the US withdrawal could actually help JETP progress as US climate policies have recently prioritised oil and gas drilling, and increasing LNG exports. Its continued involvement may have led to delays, he says. “So if anything, a stumbling block has been removed with the US decision to leave.”
But south-east Asian governments still have to remove policy ambiguity and help the private sector.
Ember’s Shabrina says governments could offer guarantees, de-risking instruments or co-finance early stage projects for newer technologies to help draw private companies. “The bottom line is policy consistency and effective governance are key to building investor confidence,” she says.
Xi Jinping’s economic and industrial planners in Beijing are hammering out the final details of China’s new climate change targets.
Given that China is responsible for about one-third of global greenhouse gas emissions, these targets, mandated by the 2015 Paris Agreement, hold the potential to shape the future of the world’s fight against global warming.
The Chinese leader said in April that the country would announce its 2035 Nationally Determined Contribution (NDC), covering all economic sectors and all greenhouse gases, before this autumn’s UN Climate Change Conference in Belém, Brazil.
“However the world may change, China will not slow down its climate actions, will not reduce its support for international co-operation, and will not cease its efforts to build a community with a shared future for mankind,” Xi said, in a thinly veiled criticism of President Donald Trump’s administration, which has drastically rolled back US climate change commitments.
According to analysis published in June by US think-tank the Asia Society Policy Institute, China must hit peak emissions immediately and reduce them by 30 per cent from current levels by 2035 to align with the Paris Agreement goal of limiting the average global temperature rise to 1.5C this century and to make the country’s 2060 carbon neutrality goal achievable.
However, when it comes to the headline target in Beijing’s NDC, many climate campaigners are bracing for a low level of ambition, possibly a 2035 emission reduction goal of 10-15 per cent, according to Yao Zhe, Greenpeace’s Beijing-based global policy adviser.
Also in Asia-Pacific Climate Leaders
And some observers, cognisant that China’s emissions targets, by the numbers, are likely to disappoint, are instead calling for the world’s biggest polluting nation to strike a tone of ambition.
Li Shuo, director of the China Climate Hub at the Asia Society, says the “landing zone” for China’s future climate target is likely to have already been decided by Beijing, and is “very much determined by the energy, political, and economic realities”.
However, Li is optimistic that the NDC could be framed as a “floor” with an “upward-moving spirit”, meaning that as technology allows or economic conditions improve, then the commitments could be enhanced and, in the end, deliver more than is “put on paper”.
“This will be a very nuanced decision-making process . . . In addition to the headline target, there could be many different elements and numerical targets in China’s NDC,” says Li, who is also a veteran of global climate negotiations.
Many experts acknowledge that the development of the new NDC targets has been complicated by a range of problems which make economic growth — and therefore also emissions trajectories — very difficult to predict.
At home, business and consumer confidence remain weak, having failed to bounce back after the dual shocks of China’s rigid pandemic response and the deleveraging of the country’s property market. And abroad, Russia’s invasion of Ukraine and Israel’s attacks on Iran are driving fears over energy security just as Donald Trump’s trade war threatens the profitability of China’s exporters.
Against that backdrop, Greenpeace’s Yao suggests that Beijing could offer more ambitious sectoral targets, including in areas such as transport sector electrification, renewable energy installations and other technologies that enable faster decarbonisation.
“This ambition could sustain confidence in the market and also guide investment going forward,” she says.
Indeed, in a report published in June, the Centre for Research on Energy and Clean Air (Creca), a Helsinki-based group, highlighted that if ambitious policy targets were included in both the NDC and China’s next five-year economic plan, due to be released next year, China’s clean energy industries could double in value by 2035. This, the research suggested, could add as much as Rmb15tn ($2.1tn) to the Chinese economy and deliver the 30 per cent emissions reduction needed to meet the Paris targets.
“Weak targets, by contrast, risk slowing China’s momentum, creating uncertainty, and missing a historic opportunity to lead the global energy transition,” noted Belinda Schäpe, China Policy Analyst at Creca and one of the authors of the report.
As it stands, Beijing’s current climate targets and policies are “highly insufficient”, according to Climate Action Tracker, an independent scientific project that tracks the government’s action against the Paris Agreement.
Coal remains the paramount hurdle. Despite the costs of renewable energy and battery storage plummeting in recent years, support for coal persists from vested power sector interests and broader fears over potential economic losses from electricity system instability and social issues resulting from mine and power plant closures.
CAT argues that China needs to integrate “clear targets for coal consumption reduction” in the updated NDC as well as introducing an absolute emissions cap.
Greenpeace’s Yao agreed that while Beijing might not budge from its previously stated commitment to hit peak coal during the period of the 15th Five Year Plan, from 2026-2030, more clarity could be given in the NDC, defining at least “when” the peak will be hit and “how high”.
For many years, international engagement helped propel China’s climate agenda, including by Europe in the lead up to Xi’s blockbuster dual carbon commitment in 2021 — of peak carbon by 2030 and neutrality by 2060 — and by the US ahead of Beijing’s 2023 promise to track and reduce harmful methane emissions.
Over the past two years, while Beijing has continued to rapidly build out renewable energy, there has been concern that it has not done enough to cut coal use. And experts are now also worried that a breakdown in ties between major global powers — including Europe, the US and China — is harming the chances that foreign interlocutors can influence Beijing’s decision making.
“It’s certainly true that no one can just easily sway Beijing and increasingly in recent years the trend is that the space for influence is becoming more limited,” says Li, of the Asia Society Policy Institute. But he adds: “That does not mean that there is just not space or that international engagement doesn’t matter, or doesn’t carry any value.”
July 7 2025, 9:23 am | BY Ricki Green | No Comments
Socially-led creative agency We Are Social Australia has been appointed as the new social agency of record for KFC Australia, following a competitive pitch.
As KFC continues to evolve its role in culture and deepen its connection with younger, social-first audiences, We Are Social joins the brand’s agency roster to strengthen its social presence and cultural impact.
Following the launch of KFC’s new brand platform, FLG, We Are Social will lead social strategy and execution, delivering content that builds cultural relevance while driving retail.
The remit includes always-on content, socially-led campaigns, influencer partnerships, and real-time activation. Work will be developed in close collaboration with Ogilvy and media partner EssenceMediaCom, as part of the KFC agency village.
“Some briefs just hit different. KFC has real cultural clout, and we don’t take that lightly. We’re here to build on that equity with ideas that earn attention and spark the kind of conversations Australians actually want to be part of,” says Suzie Shaw, APAC CEO at We Are Social.
Says Sally Spriggs, Group Marketing Director of KFC Australia: “We’re excited to be partnering with the team at We Are Social as we continue to build a strong connection between our iconic brand and young Australians.”
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Rick Woldenberg says he believes in taking action rather than just “hoping for the best”
A 90-day pause on Donald Trump’s sweeping tariffs plan is about to expire on Wednesday, which could upend US trading relationships with the rest of the world. But the uncertainty of the last few months has already forced several companies to rethink their supply lines in radical ways.
When an Illinois toymaker heard that Trump was introducing tariffs on Chinese imports, he was so incensed that he decided to sue the US government.
“I’m inclined to stand up when my company is in genuine peril,” says Rick Woldenberg, who is the CEO of educational toy firm Learning Resources.
The majority of his company’s products are made in China, so the tariffs, which US importers have to pay, not Chinese exporters, are now costing him a fortune.
He says his import taxes bill leapt from around $2.5m (£1.5m) a year to more than $100m in April when Trump temporarily increased tariffs on Chinese imports to 145%. That would have “devastated” the company, he says.
“This kind of impact on my business is just a little bit hard to wrap my mind around,” he says.
With US tariffs on Chinese imports now at 30%, that’s still unaffordable for many American companies such as Learning Resources.
So in addition to its continuing legal fight, it is changing its global supply chain, moving production from China to Vietnam and India.
These two countries, like most others around the world, have seen the US hit them with general 10% tariffs, two-thirds lower than those on China. Although these 10% tariffs are due to run out on Wednesday, 9 July, uncertainly remains over what they may be replaced by.
Meanwhile, many Canadian companies, who often trade in both their home country and in the US, are now facing a double hit to their supply chains.
These hits are the 25% tariffs put in place by Trump on many Canadian imports, and the reciprocal ones of the same level that Canada has placed on a host of American exports.
And other businesses around the world are looking at exporting less to the US, because their American import partners are having to put up prices to cover the tariffs they now have to pay, which makes their products more expensive on US shelves.
At Learning Resources, Mr Woldenberg has now moved about 16% of manufacturing to Vietnam and India. “We have gone through the process of vetting the new factories, training them on what we needed, making sure that things could flow easily, and developing relationships.”
Yet he admits that there are uncertainties: “We don’t know if they can handle the capacity of our business. Much less the whole world moving in there at the same time.”
He also points out that switching production to another country is expensive to organise.
In the meantime, his legal case against the US tariffs, called “Learning Resources et al v Donald Trump et al” is continuing its way through the US court system.
In May a judge at the US District Court in Washington DC ruled that the tariffs against it were unlawful. But the US government immediately appealed, and Learning Resources still has to pay the tariffs for the time being.
So the firm is continuing to move production away from China.
Learning Resources
Learning Resources has moved some of its production from China to Vietnam and India
Global supply chain expert Les Brand says that it is both expensive and difficult for companies to switch manufacturing to different countries.
“Trying to find new sources for critical components of whatever you are doing – that’s a lot of research,” says Mr Brand, who is CEO of advisory firm Supply Chain Logistics.
“There’s a lot of quality testing to do it right. You have to spend the time, and that really takes away from the business focus.”
He adds: “The knowledge transfer to train a whole new bunch of people on how to make your product takes a lot of time and money. And that effects already razor-thin margins businesses have right now.”
For Canadian fried chicken chain Cluck Clucks, its supply chain has been significantly impacted by Canada’s revenge tariffs on US imports. This is because while its chicken is Canadian, it imports both specialist catering fridges and pressure fryers from the US.
While it can’t live without the fridges, it has decided to stop buying any more of the fryers. Yet with no Canadian company making alternative ones, it is having to limit its menus at its new stores.
This is because it needs these pressure fryers to cook its bone-in chicken pieces. The new stores will instead only be able to sell boneless chicken, as that is cooked differently.
“This was a substantial decision for us, but we believe it’s the right strategic move,” says Raza Hashim, Cluck Clucks CEO.
“It’s important to note that we do plan to retain the necessary kitchen space in new locations to reintroduce these fryers should the tariff uncertainty be completely resolved in the future.”
He also warns that with the US fridges now more expensive for the company to buy, the price it charges for its food will likely have to go up. “There is a certain amount of costs we cannot absorb as brands, and we may have to pass those on to consumers. And that is not something we want to do.”
Mr Hashim adds that the business is continuing with its US expansion plans, and it has set up local supply chains to source American chicken. It currently has one US outlet, in Houston, Texas.
Cluck Clucks
Raza Hashim says he’ll likely have to put up prices
In Spain, olive oil producer Oro del Desierto currently exports 8% of its production to the US. It says that the US tariffs on European imports, presently 10%, are having to be passed on to American shoppers. “These tariffs will directly impact the end consumer [in the US],” says Rafael Alonso Barrau, the firm’s export manager.
The company also says it is looking at potentially reducing the volume it sends to the US, if the tariffs make trading there less profitable, and exporting more to other countries instead.
“We do have other markets where we can sell the product,” says Mr Barrau. “We sell in another 33 markets, and with all of them, and our local market, we could cushion US losses.”
Mr Brand says that firms around the world would have been less impacted if Trump had moved more slowly with his tariffs. “The speed and velocity of these decisions are really making everything worse. President Trump should have gone slower and been more meaningful about these tariffs.”
Back in Illinois, Mr Woldenberg is also concerned about where Trump will go next in his trade battles.
“We just have to make the best decision we can, based on the information we have, and then see what happens,” he says.
“I don’t want to say ‘hope for the best’, because I don’t believe that hope is a strategy.”
Trump’s tariffs spell turmoil for firms, like chipmaker GlobalFoundries, that rely on Asian supply chains
Tan Yew Kong, who works at one of the world’s largest chipmakers, says his company is like a tailor’s shop – it customises chips to meet client’s needs.
“We provide the fabric, we provide the cufflinks and everything. You tell us what you like, what design you like and we make it for you,” says Mr Tan, who runs GlobalFoundries’ operations in Singapore.
Nowadays, the firm is also customising its future to accommodate US President Donald Trump’s unpredictable tariff policy.
Businesses and countries have been offering to appease Washington ahead of 9 July, when the 90-day pause on Trump’s steep “Liberation Day” tariffs ends. And yet again, it’s unclear what happens next.
The president said on Friday that the US government is to start sending out letters with details of higher tariff rates that will take effect on 1 August.
He said as many as 12 letters will be sent out over the coming days and the levies will range from “60% or 70% tariffs to 10 to 20% tariffs” but did not name the countries due to receive them.
So far, semiconductors are exempt from tariffs but Trump has threatened levies on them several times, and that uncertainty is making it near impossible for businesses to plan for the future.
Also last week Bloomberg reported the White House is planning to further tighten controls over artificial intelligence (AI) chips by restricting shipments to Malaysia and Thailand to crack down on suspected smuggling of the technology to China.
The US Commerce Department did not immediately respond to a BBC request for comment.
You cannot “flip the switch every other alternate week or day. That makes it very difficult for businesses to plan long term”, Mr Tan says.
US-headquartered GlobalFoundries is contracted by some of the world’s biggest semiconductor designers and manufacturers – AMD, Broadcom, Qualcomm – to make their chips.
Its operations are spread across the world, with many in Asia, from India to South Korea. It recently announced plans to increase its investments to $16bn (£11.7bn) as demand for artificial intelligence (AI) hardware skyrockets.
To protect that sprawling footprint, the company has also pledged to work with the Trump administration to move parts of its chip manufacturing and supply chain to US soil.
Chip manufacturers, textile producers and car industry suppliers – whose tightly-knit supply chains run through Asia – are rushing to fulfil orders, cut costs and find new customers as they navigate a market in turmoil.
“Businesses need to rethink buffers, increasing their inventory and lead times to account for volatility,” said Aparna Bharadwaj of Boston Consulting Group. She adds this could create new opportunities, but also impact their competitiveness and market share in certain countries. In other words, it’s hard to say.
“Uncertainty is the new normal.”
Winners and losers
When Trump announced levies in April against much of the world, some of the steepest rates were aimed at Asian economies – from long-time allies Japan (24%) and South Korea (25%) to major trading partner Vietnam (46%).
He then hit pause soon after, lowering tariffs on most countries to 10% for the next 90 days. Still the higher rates could return as early as Wednesday.
Getty Images
Trump promised 90 deals in 90 days after his “Liberation Day” tariffs announcement
Malaysia’s prime minister has said tariffs will adversely affect many industries, including textiles, furniture, rubber and plastics. Singapore will be subject to a 10% levy despite having a free trade deal with the US – the prime minister said these are “not actions one does to a friend”.
South East Asian countries accounted for 7.2% of global GDP in 2024. So the extra costs that come with tariffs could have severe, long-lasting effects.
In the region only Vietnam has managed to strike a deal so far – US imports from there will now face 20% tariffs, while US exports to Hanoi will face no levies.
Japan and South Korea have been pursuing trade negotiations during the pause, although Trump has threatened Tokyo with an even higher rate – up to 35% – as the deadline looms.
Japanese car makers could be amongst the worst hit. Companies including Mazda have said they are in survival mode because of the time and lengthy processes involved in changing suppliers and adapting their business.
Australia, despite being a key security ally and importing more US goods than it exports, has said it has been telling Washington the rate on it “should be zero”.
Indonesia and Thailand have offered to buy more American products and reduce taxes on US imports.
Poorer countries like Cambodia, which have limited bargaining power, face a staggering 49% tariff but cannot afford to buy more US goods.
“Asian economies are reliant on both China and the US… they sort of sit at the heart of the global supply chain,” said Pushan Dutt, professor of economics and political science at INSEAD.
“If there are shifts in this global supply chain, if there are shifts in trading patterns, it is going to be much more difficult for them.”
He adds that countries with big domestic demand like India may be insulated from trade shocks, but economies that are more reliant on exports – like Singapore, Vietnam and even China – will see a major impact.
A new world order?
In the years after Trump was first elected, Singapore and Malaysia invested in growth industries like chip manufacturing and data centres.
It was partly about so-called friend-shoring – where companies make goods in countries that have good relations with the US. Asian economies also benefited from a “China + 1” supply chain strategy, which involved firms diversifying supply chains beyond China and Taiwan to South East Asian countries.
All of this was to be able to continue reaching the US, which Ms Bharadwaj says is “a critical market for many”.
“No matter what happens with tariffs, the US remains an important customer for many Asian businesses,” she adds. “It’s the largest world economy and has a dynamic consumer base.”
Getty Images
Nike says it is raising some of its prices due to tariffs
Beyond the South East Asian producers, Trump’s tariffs also raise costs for American companies that have been operating in the region for decades.
The clothing and footwear industry stands to suffer – brands like Nike have long outsourced manufacturing to countries like Vietnam and Indonesia.
Some US brands have already said they’ll need to pass costs onto customers because tariffs make the price of imported goods significantly higher.
Experts say foreign investments could shift from Vietnam, Laos and Cambodia to countries with lower tariffs, like the Philippines, Singapore, Malaysia and Indonesia.
Businesses may also look for new customers – with the European Union, the Middle East and Latin America emerging as alternative markets.
The chip industry is “no longer doing globalisation but more of a regionalisation,” said Mr Tan of GlobalFoundries. “Find a place that we feel safe. We feel that the supply will be continued. And people will have to get used to the fact that it is not as cheap as it used to be.”
Just as Asia’s trade alliances shift, the US has emerged as an increasingly unreliable partner.
“This has actually created a massive opportunity for China to become, sort of, guardian of the world trading order,” Prof Dutt says.
The US-Vietnam deal is only the third announced so far, after agreements with the UK and China. Until more happen, businesses and economies in Asia may have to forge a new path.
“As the US and others embrace increased protectionism, Asia is moving in the opposite direction, as pro-business governments are increasing trade openness,” Ms Bharadwaj says.
“Tariffs are accelerating two macro trends: slowing of trade between China and the West, and accelerating trade between China… and emerging Asian countries.”
Trump’s policies have created trade turmoil that could transform the global economic order, and the US may not necessarily come out as the winner.
Prof Dutt sums up what is happening in the words of an old proverb: “Bow to the ruler, and then go your own way.”
