The US and India accelerate trade negotiations, the Asian markets react to the dollar's depreciation, the Chinese funds adjust their asset allocations.

Taiwan • Business • 04/22 22:31
The US and India accelerate trade negotiations, the Asian markets react to the dollar's depreciation, the Chinese funds adjust their asset allocations.

In April 2025, U.S. Vice President Vance visited India, and after meeting with Prime Minister Modi, the two sides made significant progress in trade negotiations, aiming to finalize a preliminary agreement before the fall to prevent India from facing a 26% tariff. The U.S. dollar index has depreciated by more than 9% since the start of the year, while the Korean won and Indonesian rupiah have also weakened, raising concerns in the market about capital outflows and potential U.S. retaliation. Chinese public mutual funds have decreased their holdings in U.S. stocks while increasing their investments in A-shares and Hong Kong stocks as part of a risk management strategy in response to uncertainties in U.S. policies.

Key Updates

04/23 21:29

Federal Reserve's Report: U.S. Businesses Shifting Costs to Consumers Under the New Tariff Policy

The Beige Book, released by the Federal Reserve Board on April 23, 2025, indicates that U.S. businesses are experiencing cost pressures due to a new round of tariff measures and have started passing these costs onto consumers. Manufacturers and retailers are responding by increasing prices and imposing additional fees. While the ability to pass on costs varies depending on company size and industry, the overall trend shows that tariff policies are impacting consumer price structures.

04/23 15:02

Due to U.S. tariff policies, Kerry Photonics is expanding into Mexico and Canada, transforming the automotive supply chain.

Taiwanese automotive electronics giant Kerry Optoelectronics Co., Ltd., in response to the U.S. imposing a 25% tariff on imported cars and components, announced it will establish bases in Mexico and Canada over the next three to four years to strengthen partnerships with car manufacturers in Europe, the U.S., and Japan. This move is intended to circumvent high tariffs and directly supply to local car manufacturers, increasing the chances of becoming a Tier 1 supplier, marking a pivotal moment in its global expansion strategy.

04/23 07:06

Taiwan-U.S. trade talks focus on taxes on alcohol and goods: The U.S. is calling for transparency and fair competition in the system

After President Trump of the United States announced a 32% reciprocal tariff rate on Taiwan, trade negotiations between Taiwan and the U.S. have heated up, with alcohol taxes emerging as a central issue. The U.S. questions the differing tax standards for imported and local alcoholic beverages in Taiwan, calling for transparency and fair competition. Taiwan's Ministry of Finance provided import data to support the negotiations. Local netizens are skeptical about whether tax reductions will be reflected in consumer prices and are worried about potential monopolies by middlemen.

04/23 05:59

The American automotive industry opposes the 25% tariff on auto parts, highlighting the appeal of Chinese manufacturing as consumers shift to buying from China.

In April 2025, six major organizations in the U.S. automotive industry, including the Alliance for Automotive Innovation, jointly sent a letter to the Trump administration, requesting the repeal of the 25% tariff on auto parts that went into effect on May 3, warning that this move would severely damage the supply chain. Due to rising car prices, American consumers have initiated a "reverse purchasing" trend, traveling to China to purchase goods, highlighting the price and quality competitiveness of Chinese manufacturing. This situation reflects shifts in the global supply chain and consumer market.

04/23 01:59

Trump's Tariff Policy on China Causes Market Turmoil: Meta's Ad Revenue Expected to Decrease, Tesla's Stock Price Rises, IBM's Financial Report Draws Attention

On April 23, 2025, U.S. President Donald Trump imposed a 145% tariff on Chinese goods, leading to global market fluctuations. Meta is projecting a $7 billion decrease in revenue due to reduced advertising spending by Chinese retailers. Tesla CEO Elon Musk announced a reduction in his involvement with government efficiency matters, resulting in a 4% increase in Tesla's after-hours stock price. The White House received tariff agreement proposals from 18 countries and is in talks with 34 countries. IBM released its financial report, with market attention on the impacts of its AI initiatives and tariffs. Dow futures rose by 500 points on expectations of easing trade tensions, indicating a stabilization in investor sentiment.

04/22 22:31

The US and India accelerate trade negotiations, the Asian markets react to the dollar's depreciation, the Chinese funds adjust their asset allocations.

In April 2025, U.S. Vice President Vance visited India, and after meeting with Prime Minister Modi, the two sides made significant progress in trade negotiations, aiming to finalize a preliminary agreement before the fall to prevent India from facing a 26% tariff. The U.S. dollar index has depreciated by more than 9% since the start of the year, while the Korean won and Indonesian rupiah have also weakened, raising concerns in the market about capital outflows and potential U.S. retaliation. Chinese public mutual funds have decreased their holdings in U.S. stocks while increasing their investments in A-shares and Hong Kong stocks as part of a risk management strategy in response to uncertainties in U.S. policies.

04/22 20:59

American CEOs Addressing 2025's High Tariffs: Using Policy Loopholes to Cut Costs

In 2025, after the Trump administration returned to office, it reimposed high tariffs on imported goods. CEOs of American companies adopted various strategies to cope, including lobbying the government for exemptions and taking advantage of loopholes in foreign trade zones and gray market activities. These actions highlighted the ambiguities in policy implementation and demonstrated the companies' adaptability in response to the restructuring of global supply chains. Companies also influenced policy through political donations and considered nearshoring production and establishing factories directly in the U.S. to reduce the impact of tariffs.

04/22 19:02

Donald Trump's recent tariff policy raises investor worries: Startups face major challenges

Former U.S. President Trump, during his second term in office, pushed for a new round of tariff policies, imposing tariffs as high as 145% on Chinese goods and closing the duty-free loophole for small packages, putting pressure on the venture capital industry and startups. These policies disrupted the global supply chain, impacting fundraising, product pricing, and market expansion, undermining investment confidence, delaying plans for IPOs, and potentially causing some startups to close. Venture capital firms have adjusted their strategies by extending investment cycles and shifting to secondary market transactions, while some industries, such as AI and nearshore manufacturing, remain attractive.

04/22 18:32

*The Wall Street Journal* has criticized Trump's tariffs policy as the largest economic blunder in decades, shaking global market confidence.

In April 2025, The Wall Street Journal criticized former President Trump's tariff policy as the biggest economic blunder in decades, arguing that its instability has undermined global market confidence. Trump's attempts to meddle with the Federal Reserve and his trade war strategy have sparked a crisis of confidence in capital markets, jeopardizing U.S. financial stability. Japanese investors have engaged in a massive sell-off of U.S. bonds, indicating a significant loss of confidence among foreign investors. Experts warn that the tariffs could lead to stagflation in the U.S. economy and advise Trump to end the tariff offensive to stabilize the market.

04/22 17:29

Rising US-China Trade Tensions: Retail Experts Urge Consumers to Buy Smartphones Before Tariffs Increase

In April of 2025, the United States imposed tariffs as high as 145% on Chinese goods, while smartphones were temporarily exempted. Retail expert Louis Ramirez advised consumers to act quickly if they need to buy a phone before prices change. Due to supply chain pressures, Apple has increased its inventory, leading to a record high in iPhone shipments. If the exemption is removed, iPhone prices could increase by 17% to 18%, affecting market demand. Worried about price increases, consumers have begun purchasing early.

Rapid Progress in US-India Trade Talks, India Seeks Relief from High Tariffs

Vice President JD Vance of the United States visited India from April 21 to 24 and, after meeting with Prime Minister Narendra Modi, both parties announced "significant progress" on a bilateral trade agreement and finalized the scope of negotiations. Vance stated that this is an important step towards realizing the vision shared by President Trump and Prime Minister Modi, covering areas such as technology, energy, and defense cooperation.

According to a statement from the United States Trade Representative (USTR), the US will seek to expand market access for American goods in India and reduce India's tariff and non-tariff barriers. Indian Finance Minister Nirmala Sitharaman expressed that India hopes to complete the first part of the agreement by this fall to avoid facing US tariffs as high as 26% after the 90-day reciprocal tariff suspension period ends.

Experts note that the pace of negotiations between India and the US is faster than with other Asian countries. Parlet, an economist at the National University of Singapore, believes India is likely to complete a preliminary agreement by fall, thus avoiding higher tariff pressures. Nomura Holdings economist Vima pointed out that India, as a strategic ally of the US, has a negotiating advantage, but a complete agreement will require more extended discussions.

Complex Reactions to Dollar Depreciation in Emerging Asian Markets, Pressure on Korean Won and Indonesian Rupiah

The US dollar index has dropped more than 9% since the beginning of 2025, triggering a chain reaction in global currency markets. For many emerging markets, a weaker dollar helps alleviate the burden of dollar-denominated debt and lowers import prices, giving central banks the opportunity to lower interest rates. However, reactions among emerging Asian economies vary, with some currencies like the Korean won and Indonesian rupiah recently depreciating.

According to exchange rate data from the Bank of Taiwan on April 22, 2025, the spot buying price for the Korean won was 0.02107, and for the Indonesian rupiah, it was 0.00158, indicating both are at relatively low levels. Analysts point out that this is related to the uncertainty of US tariff policies, leading to increased market vigilance over capital outflow risks.

Alex Muscatelli, head of Fitch Ratings, stated that although dollar depreciation theoretically benefits emerging markets, excessive depreciation of local currencies could trigger capital flight and be perceived by the US as a trade manipulation tactic, prompting retaliatory measures. He expects the Indonesian central bank to avoid significant rate cuts, while South Korea and India may have more policy leeway.

Nick Rees, head of macro research at Monex Europe, noted that currency depreciation might become a more actively considered option for emerging Asian markets, but it must be handled cautiously to avoid market turbulence.

Chinese Public Funds Adjust Asset Allocations, Reduce US Stocks, Increase Mainland and Hong Kong Stocks

In response to US reciprocal tariff policies and global capital market fluctuations, Chinese public funds are adjusting their global asset allocations. According to the latest disclosed QDII fund reports for the first quarter of 2025, most funds have significantly reduced their US stock holdings and increased their holdings in A-shares and Hong Kong stocks.

For example, the Rongtong Core Value Mixed (QDII) Fund's US stock holdings accounted for 24.22% in the first quarter, a sharp decrease of nearly 30 percentage points from the previous quarter, while its Hong Kong stock holdings increased to 54.94%. The GF Global Technology Fund also reduced its US stock holdings from 52.93% to 46.4%, while increasing its allocation to A-shares and Hong Kong stocks to 35.95%.

Fund managers pointed out that Hong Kong tech stocks offer better valuation cost-effectiveness compared to US tech stocks, and China's technological breakthroughs in fields such as artificial intelligence and semiconductors make mainland and Hong Kong stocks attractive. The manager of the Penghua Dow Jones Industrial Average ETF Fund stated that the US stock market's performance in the second quarter will be affected by US tariff policies, prompting the fund to adopt a more cautious allocation strategy.

Additionally, according to Goldman Sachs data, as of March 2025, the proportion of global active funds allocated to the Chinese market has increased from 5% in September 2024 to 6.5%, indicating a recovery in international capital confidence in the Chinese market. The Chinese government is also guiding policies, mandating that insurance companies invest at least 30% of new premiums in the stock market, to further stabilize market sentiment.

References

People Also Ask...

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How have the US-India trade negotiations progressed so quickly, and what strategies does India have to avoid the pressure of high tariffs?

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How does the depreciation of the US dollar affect Taiwan? Could it influence our economic policy?

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Does the rapid progress in US-India trade negotiations have an impact on human rights and environmental issues?