US-China trade war is reshaping the global economy: agricultural and technology stocks are taking a hit, South America is on the rise, and US stocks have risen for nine consecutive days.

Taiwan • Business • 05/05 02:00
US-China trade war is reshaping the global economy: agricultural and technology stocks are taking a hit, South America is on the rise, and US stocks have risen for nine consecutive days.

In early May 2025, the US-China tariff war heated up, severely hitting American agricultural and technology industries, with South American countries like Brazil filling the gap in the Asian market. Nevertheless, the US stock market rose for nine straight days as investors focused on the Federal Reserve's interest rate decisions and trade negotiations. OPEC+ ramped up production, causing oil prices to fall, and the weakening dollar boosted the value of Asian currencies, shifting capital flows and exchange rate dynamics.

Key Updates

05/05 15:03

The United States has temporarily suspended a 46% tariff on Vietnam, with the first round of negotiations on May 7 focusing on trade fairness.

The United States originally planned to impose a 46% tariff on Vietnamese goods starting April 9, but after various negotiations, the measure has been delayed by 90 days. Vietnamese Prime Minister Pham Minh Chinh confirmed on May 5 that the two sides will hold the first round of tariff talks on May 7, with a focus on safeguarding Vietnam's interests and advancing fair trade. Vietnam has sent a technical team to the U.S. and developed strategies to mitigate the tariff impact, supporting businesses and workers.

05/05 14:01

Temu's Response to Changes in U.S. Tariff Policies: Halts Direct Shipping from China, Shifts Focus to U.S. Warehouses and Local Sellers

Faced with the U.S. terminating the "small package tax exemption" policy and increasing import tariffs on Chinese goods, Chinese e-commerce platform Temu has stopped direct shipments from China to the U.S., instead choosing to supply from local U.S. warehouses and recruiting local U.S. sellers. This move is a response to the pressure of tariffs as high as 145%, signifying Temu's shift from a low-cost strategy to a local fulfillment model.

05/05 11:30

Trump Postpones Tariffs for 90 Days: Analysis of Divergent Trends in Taiwan Panel Market Across Three Key Product Lines

In early April, President Trump of the United States announced a "reciprocal tariff" policy on 75 countries, which was postponed for 90 days due to pressure, impacting the global electronics supply chain. Taiwan's panel industry felt the impact, as TV panel demand weakened and prices stayed stable; monitor panel prices slightly increased due to the demand for pre-stocking; while laptop panel demand remained stable, with prices unchanged. Taiwanese panel manufacturers, such as AU Optronics and Innolux, have responded to market changes by implementing production cuts and holding emergency meetings.

05/05 09:02

Shanghai May Day Holiday Export Goods Mega Sale: High-Quality Export Products at Discounts Up to 80% Off Sparks a Buying Frenzy

During the May Day Golden Week in 2025, many regions in mainland China, especially Shanghai, experienced a consumer boom of "export-to-domestic-demand." High-quality products originally exported to Europe and the United States were sold locally at prices as low as 20% of their original price, attracting a large number of consumers. Products included thermos cups that won the German Red Dot Award and woven shoes made for European and American brands. This phenomenon occurred because the U.S. increased tariffs, prompting companies to pivot to the domestic market and sell through exhibitions and pop-up stores, reflecting the trend of foreign trade companies actively tapping into the domestic market.

05/05 07:06

Indonesia and the United States have begun tariff negotiations, while Chinese e-commerce and car companies adjust strategies to address tariff pressures from the US and Europe.

Indonesia and the United States have begun negotiations on mutual tariff policies, focusing on energy and critical mineral cooperation, with Indonesia committing to increase imports of American products. The Chinese e-commerce platform Temu has stopped selling Chinese goods due to the new U.S. tariff policy, sparking a surge in the resale market. Chinese car manufacturers like BYD and Chery are promoting plug-in hybrid electric vehicle (PHEV) models in the EU in an effort to circumvent high tariffs. The South Korean stock market has resumed trading, and the government continues to negotiate tariff policies with the U.S. to prepare for the transition to the new administration.

05/05 02:00

US-China trade war is reshaping the global economy: agricultural and technology stocks are taking a hit, South America is on the rise, and US stocks have risen for nine consecutive days.

In early May 2025, the US-China tariff war heated up, severely hitting American agricultural and technology industries, with South American countries like Brazil filling the gap in the Asian market. Nevertheless, the US stock market rose for nine straight days as investors focused on the Federal Reserve's interest rate decisions and trade negotiations. OPEC+ ramped up production, causing oil prices to fall, and the weakening dollar boosted the value of Asian currencies, shifting capital flows and exchange rate dynamics.

05/04 19:02

The U.S. semiconductor tariff investigation is approaching its deadline, causing concern in the industry and leading to the emergence of hedging strategies in the bond market.

The U.S. Department of Commerce's investigation into the national security implications of imported semiconductors will conclude on May 7, with little public feedback, causing industry concerns over potential tariff policies. The Trump administration's tariff policies have already led to market fluctuations, especially impacting the semiconductor supply chain. Experts advise investors to shift to investment-grade corporate bonds for hedging, as the safe-haven status of U.S. Treasury bonds is under scrutiny.

05/04 15:30

The United States imposes a 25% tariff on imported automotive and motorcycle parts, leading to increased costs for Harley-Davidson. Japanese Prime Minister Shigeru Ishiba expresses strong disappointment.

On May 4, 2025, the United States imposed a 25% tariff on imported auto and motorcycle parts, affecting the global automotive industry. Harley-Davidson motorcycles, which rely on imported parts, are under pressure from rising costs and potential price hikes. Japanese Prime Minister Shigeru Ishiba expressed disappointment that the U.S. did not grant special treatment for Japan and called for the withdrawal of the tariff measures. This policy is likely to impact consumer prices in the coming months, especially affecting manufacturers whose vehicles are not assembled in the United States.

05/04 14:00

Barron's Survey: Investors are more pessimistic about the stock market than they have been in 30 years, with only 20% supporting Trump's tariff policies, with bonds and gold being favored.

The spring 2025 survey by Barron's Financial Magazine shows that only 26% of fund managers are optimistic about the stock market for the coming year, setting the lowest record since 1997. Trump's high tariff policies have only 20% support, as the market is concerned about a potential economic recession. Bonds and gold are seen as safe-haven assets, favored by 70% and 58% of respondents, respectively, indicating a shift in asset allocation to defensive strategies.

05/04 13:29

U.S. retailers offer pre-tariff hike sales, encouraging consumers to shop early to dodge price hikes

Facing upcoming tariff hikes, American retailers are rolling out promotions to boost spending. From Walmart to Bare Necessities, brands are using early promotions and witty marketing to urge consumers to buy before prices go up. This reflects the pressure on supply chains and heightened consumer price sensitivity. Smaller brands are under more pressure to survive and must depend on promotions to keep their revenue steady. Consumers are buying holiday gifts early and turning to discount retailers to deal with rising prices.

US-China Tariff Escalation Severely Impacts Agricultural Exports

In early 2025, US President Trump imposed tariffs of up to 145% on Chinese goods, to which China responded with retaliatory tariffs of 125%, leading to a sharp contraction in US-China agricultural trade. According to a report by Investigate Midwest, US soybean exports to China nearly came to a halt, with the $12.8 billion export value in 2024 at risk. In January 2025, US agricultural exports to China decreased by 54% compared to the same period last year.

Since the first round of the trade war in 2018, China has actively diversified its import sources. In 2024, China's total agricultural imports from the US fell to $29.25 billion, a decrease of over 30% from 2022. Meanwhile, Brazil's market share of food exports to China rose from 17.2% in 2016 to 25.2% in 2023, replacing the US as China's largest grain supplier.

Asian Markets Shift to South America, Supply Pressure Emerges

Asian buyers are also gradually reducing their reliance on US agricultural products. Due to high port fees imposed by the US on Chinese vessels, which increased shipping costs, Asian markets are turning to South America and the Black Sea region for procurement. Although Japan and South Korea still rely on US wheat, they have shifted to alternative suppliers for corn for feed and soybeans.

However, the South American supply chain is also under pressure. If China and Europe simultaneously increase their purchases of Brazilian grain, it could lead to supply-demand tensions and price increases, further driving up global food costs.

Tech Stocks Hit by Tariffs and Supply Chain Restructuring

High tariff policies have had a significant impact on the tech industry. Companies like Apple and Amazon, which rely on Chinese manufacturing, face rising costs and supply chain restructuring pressures. Apple estimates that tariffs will increase costs by about $900 million in the second quarter of 2025 and plans to shift some production to India. Amazon, with most of its products sourced from China, faces high difficulty in shifting capacity, leading to a downward revision of its financial outlook.

Meanwhile, companies like Microsoft, Meta, and Google, which focus on software and AI, are relatively less affected by tariffs, with strong financial performance boosting overall tech stock confidence. In the S&P 500 index, about two-thirds of companies reported earnings above expectations, with average earnings per share exceeding expectations by 7%.

US Stocks Rise for Nine Consecutive Days, Market Focuses on Fed and Trade Talks

Despite the escalation of the trade war, US stocks have risen for nine consecutive trading days. As of May 2, the Dow Jones Industrial Average rose by 564 points, while the S&P 500 and Nasdaq indices increased by 1.47% and 1.51%, respectively, marking the longest consecutive rise since 2004. The Philadelphia Semiconductor Index surged by 3.52%, and TSMC ADR rose by 3.8%.

Market sentiment has improved partly due to better-than-expected US non-farm employment data in April, with 177,000 jobs created, alleviating recession concerns. Additionally, China's official statement on evaluating the possibility of resuming trade talks with the US has further boosted the market.

Investors are currently focused on the upcoming Fed interest rate decision meeting. According to LSEG data, the market expects the Fed to maintain interest rates between 4.25% and 4.5%, but there may be three rate cuts by the end of the year. Trump continues to pressure the Fed for rapid rate cuts and has hinted that he will not replace Chairman Powell.

OPEC+ Production Increase Leads to Sharp Drop in Oil Prices

OPEC+ announced in early May that it would increase production by 411,000 barrels per day starting in June, marking the second consecutive month of production increases. This move aims to penalize countries like Kazakhstan and Iraq for quota violations. Following the announcement, international oil prices fell sharply. Brent crude briefly fell below $58 per barrel, and West Texas Intermediate (WTI) hit a low of $55.39, the lowest since April.

Saudi Arabia stated that if member countries continue to overproduce, it will consider further production increases. This move has raised concerns about oversupply and put financial pressure on US shale oil producers and Middle Eastern oil-producing countries.

Weakening Dollar Boosts Asian Currencies

The recent weakness of the dollar has led to the appreciation of Asian currencies. The Taiwan dollar appreciated by 3% in a single day, marking the largest increase since 1988. The offshore renminbi rose to its highest level since November last year, and the Hong Kong dollar approached the upper limit of its peg, prompting intervention by the Hong Kong Monetary Authority.

Goldman Sachs' analysis indicates that as the dollar comes under pressure and the risk of a US economic slowdown increases, the risk-reward structure for Asian exporters holding dollars is changing. Currencies such as the yuan, Taiwan dollar, and ringgit are expected to continue appreciating.

References

People Also Ask...

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How has the US stock market managed to rise for nine straight days despite the escalating trade war?

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U.S. stocks have been up for nine days straight. How is this related to the Federal Reserve's interest rate decisions?