Trinh Profile picture
Aug 26, 2019 β€’ 12 tweets β€’ 4 min read β€’ Read on X
Good morning 🌧️πŸŒͺ️. A typhoon passed through πŸ‡­πŸ‡°& it's gloomy outside, just like the mood of markets after:
a) JPO said hedgy words "act as approprioate"
b) Carney speech on the dollar & digital $
c) China raising tariffs to 30% from 25% on 75bn
d) Trump raised 300bn tariffs to 15%
Facts of tariffs so far:
a) China imports from the US roughly 120bn & tariffed 110bn so got 10bn left & so to ESCALATE it needs to raise the level as volume limited
b) That happened w/ 75bn raising by 5% so items like US crude went from 25% to 30%
c) US imported ~550bn & so far
Events leading to today:
June '18: πŸ‡ΊπŸ‡Έ25% tariffs on 34b; πŸ‡¨πŸ‡³ retaliates w/ 25% on 34
Aug '18: πŸ‡ΊπŸ‡Έ25% on 16b; πŸ‡¨πŸ‡³ same
Sept '18: πŸ‡ΊπŸ‡Έ10% on 200b that'll be raised to 25% (1 Jan)
πŸ‡¨πŸ‡³ retaliates w/ 5% on 60b
Truce
May '19: πŸ‡ΊπŸ‡Έ raises 10% to 25% on 200b
June '19: πŸ‡¨πŸ‡³ raises 5-25% on 60bn
Not yet tariffed by both sides but WILL starting 1 September 2019, yes this Sunday:
a) πŸ‡ΊπŸ‡Έ tariffs on the remaining (see chart πŸ‘‡πŸ») 300bn by 10% that later exempt 156bn (mostly consumer goods till 15 December)
b) China retaliates w/ raising 5% on existing tariffs of 75bn so +5% πŸ‘‡πŸ»
πŸ‘‡πŸ»:
c) πŸ‡ΊπŸ‡Έ Raising 5% on existing to 250bn to 30% on 1 October 2019.

By 1 October 2019: China tariffs on the US ranging from 10-30% of 110bn of goods & the US got 30% on 250bn of goods & 15% on 300bn of goods (w/ 156bn delayed til 15 Dec)

Basically all of trade b/n US&China πŸ‘‡πŸ»πŸ‘‡πŸ»
d) By 15 December, unless there are efforts to delay tariffs, there will massive front-loading for fear of this happening & guess what?

WE WILL HAVE TARIFFS ON ALMOST ALL OF US CHINA TRADE.

But that never ends there. Watch investment.
70th anniversary of the People's Republic of China led by the CCP is on, wait for it:

1 October 2019, which is the same date that the 25% of 250bn goes to 30% & obvs a month before on 1 September 15% on 144bn (156bn to be applied on 15 December 19.

About that September talk😬..
As a recap: Notice that the "bark" much stronger than "bites" to manage expectations & actions always surprise u w/ lower magnitude but trend is escalation.

Meaning, worst case scenario now new normal & u rejoice when it escalates but less than "bark"πŸ‘ˆπŸ»

As in the 10% to 15% of 144bn of goods on 1 September 19 (15% on 156bn of consumer goods 15 December) & 25% to 30% for 250bn of mostly intermediate goods on 1 October may not be realized, which u'll rejoice but only b/c ur expectations are managed. Don't forget that norms change
Trump: Non-committal in China tariff delay. Told you. He just puts it out there so you price the WORST & then takes a bit away & then when it happens you will think it is GOOD NEWS.

True story. This is what happened since late Jan 2018. SPX futures up 1% vs -1% this morning.
Do you know what happens after every escalation so far for trade-war? Deescalation by both China & the USA (yep, true story), albeit short-term reprieve until it escalates again, kind of like a dance to get to know each other's limit...

Same script still plays to buy timeπŸ‘ˆπŸ»
#Breaking Mofcom's Gao (de-escalating): Trade escalation not good for πŸ‡¨πŸ‡³, πŸ‡ΊπŸ‡Έ; πŸ‡ΊπŸ‡Έ & πŸ‡¨πŸ‡³ in effective contact; πŸ‡¨πŸ‡³won't discriminate against foreign firms; Won't crack down on foreign firms; discussing πŸ‡ΊπŸ‡Έ visits in Sept; πŸ‡¨πŸ‡³ has ample tools to respond but thinks should discuss removal

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More from @Trinhnomics

Jul 16
Reading this article with great amusement with tons of comments that are so emotional & not backed by why. And they all seem so surprised on outcome. I have been saying this all along - the pass-through of tariffs are not as you think it will be. Why? Because you need to understand how they work & who has the negotiating power.

First, this statement here: "China’s retaliatory tariffs on American imports, the most sustained and significant of any country, have not had the same effect, with overall income from custom duties only 1.9 per cent higher in May 2025 than the year before."

ft.com/content/82e32f…
I mean, it seems to admire China's retaliation, as in it, that is the great thing to do.

Why didn't China collect more import duties even though it retaliated?

Well, because China is not GROWING its imports. It's exporting its deflation.

So its retaliation doesn't have as much "meat" so to speak. They need to sell more than they need to buy.
"But despite US tariffs hitting levels not seen since the 1930s, the timidity of the global response to Trump has forestalled a retaliatory spiral of the kind that decimated global trade between the first and second world wars."

They are so upset at the world for not retaliating. You can sense that in the usage. But remember, the US is a lot of countries' number 1 export market.

So you are not going to PISS off your #1 customer. It's just that simple. Why? Because a lot of countries just don't want to be powering their GROWTH via GROWING IMPORTS.

So what? Well, you then be captive to your "customer". You can always sell somewhere else.

Remember that India got like TONS OF TARIFFS. No one says much. They just say, well, they just tariff Indians & make it expensive for them to buy. Do they retaliate with the same tariff? No. They can, but why would you match someone's policies.

These are Trump's policies on US IMPORTS. You can also TAX your own imports. Btw, MANY COUNTRIES DO.
Read 5 tweets
Jul 9
Let's talk about India today. I'll be on @CNBCi at 11am HKT to discuss this particular issue.

First, we all know that India is amongst the least trade exposed and least exposed to the US amongst the big traders.

That being said, the US is the MOST lucrative export market and one it MUST grow if it wants to GROW OUTWARD AND UPWARD through trade.

Why? Look at China PPI today - it's is -3.6%YoY. Look at the Chinese yuan. It is not appreciating like crazy versus the USD. So what? China manufacturing is TOO competitive and will COMPETE with India so exporting to China is not a HIGH MARGIN BUSINESS.

That is the same for everyone who is a big trader. China is a competitor. So fierce that even the Chinese government is struggling w/ this onshore deflated PPI situation so you can see why foreign competitors are pissed off.
First, let's zoom in - India's export as a share of GDP is roughly 2.5% of GDP in 2024. As mentioned, 0.8% is exempted now (pharma, electronics etc). But EXEMPTIONS ARE TEMPORARY. Today, we got threats of 200% tariffs on pharma for example.

Anyway, 1.3% of GDP faces 10% tariff now that will go up to 26% by 1 August if not successfully negotiated down.

India is not too exposed by Trump auto and steel but still somewhat.Image
Let's look at top 15 exports to the US.

#1 PHARMA, currently exempted but faces sectoral tariffs of a lot.

Look at what India exports to China - ZERO. Zero pharma. 3bn to the EU and 9bn to the US.

So here, you can see that INDIA NEEDS A DEAL.

You can go through all the sectors. Note something. In phones, the EU is a bigger market than the US. Yes 8bn vs US 7bn.

But the EU is not a country but made up of 27 countries. So the US is the LARGEST market by a long shot.

Look at all the ZEROS for China for top items. Not a good market for India.Image
Read 9 tweets
Jul 8
Good morning,

As promised, here is a thread on Trump trade war and what Asian countries are going to do or shall I say who has more room to give Trump a deal than others.

@Trinhnomics interview at 17 mins. Image
First, let's start with one certainty: Trump tariffs are higher, and they are on sectors (50% steel, 25% alum, 25% auto & more under study), countries (China 20% fentanyl, Canada & Mexico 25% fentanyl w/ USMCA qualified products 0%, and of course 10% reciprocal tariffs on everyone w/ extension ending 1 August for everyone & China 9 August.

Okay, so what?Image
Okay, let me first discuss the below chart that summarizes the impact on Asia and why different economies will have different negotiating priorities with the Trump administration.

First, big picture. Exports to the US as a share of output (GDP) of respective countries.

Vietnam is the most exposed by a long shot to the US. And that explains why Vietnam was most motivated to climb down from that 46% level to 20% now (40% for transshipment - we discuss later).

Exports to the US was 30% of GDP in 2024. Yep, that high. Good news? more than 10% of GDP was already exempted as Vietnam's largest export was electronics, namely phones, and thus that was exempted.

The rest enjoy 10% until 1 August and then 20% tariff. On a sectoral level, Vietnam faces 50% on steel and 25% on auto but as a share of total, not a big deal, even if not good for those sectors.Image
Read 15 tweets
Jun 27
Good afternoon,

Yes, it has been a while. I have been running around the world & Asia. It was nice seeing so many people and places to share views, but my inner nerdling self fundamentally enjoy sitting at desk listening to music to read and analyze. For those that I got a chance to meet, thank you! People make the world go around - we all yearn to understand our reality & seek to be understood.

Anyway, shall we review first half? And perhaps think about second half 2025, which starts Tuesday next week.
First, we live in a Trump world. By that, we can't escape his decisions, pushing, wanting.

What does he want? That is a question I get a lot. And most people tend to response with this, "He probably doesn't know it himself."

I don't agree. He does. He's clear about it. It's how he gets there and the people that he surrounds himself with to execute it is a big if but not what he wants.

I'll put three things that Trump wants and basically got so far despite everyone calling him TACO (Trump always chickens out).
Three things Trump wants:
a) Tariffs - he likes tariffs. He sees it as a tool to get what he wants, which is to grow US industrial prowess & rebalance US trade. We can disagree on whether this is the right tool or subsidies or industrial policies are better. But tariffs he wants and he gets.

People think TACO is the trade. But tariff is the trade. It's higher. You accept this new normal fine.

I'll give you an example. We got 50% on steel. 25% on aluminum. 25% on auto. +25% fentanyl on Mexico and Canada excluding USMCA products. +20% on China.

And +10% on rest of the world. For China, expires August. For rest of the world, 9th July. Probably gonna get extended.
Read 9 tweets
Jun 20
Good morning,

Happy to be back in Hong Kong! The world is on fire, this time, the threat of war widening beyond just Israel and Iran but to the US and that means the gulf.

Meanwhile, Japan sees core inflation rising to 3.7%YoY and this forces the BOJ to hike (it really doesn't want to for many reasons) as it struggles with policy response - note that inflation has been higher than 2% for so long while policy rate is only 0.5%.

So who is most affected by this whole conflict? Well, we all in different ways but the most obvious outcome is oil. Let's take a look.

We Asians IMPORT 69% of oil going through the Straight of Hormuz and the Saudis export the most.
First, let's go through what's happening. Iran has been attacked by Israel and has shown that it is weak. Now that it is weak, it will have to fight back strongly or risk being seen weak.

So it's a question of how it will surrender not whether and when. Will it do that to the US or Israel? It will fight first. Second is the US, will they take this opportunity to wipe out the threat of Iran nuclear power?

If the US is involved, there is a chance of this widening out as US assets in the region will be targets.

Hence the question of the Straight of Hormuz.Image
20% of global oil consumption flows through the Strait of Hormuz. It is a narrow channel so if that gets choked up, we're looking at a big oil supply shock.

Who's affected? Producers - the gulfs like Saudi, Kawait, UAE.

Who are the importers? Asians, namely China, India, Japan, South Korea. They make up 69% of total imports.

eia.gov/todayinenergy/…Image
Read 5 tweets
Jun 9
Good morning Hong Kong,

Happy to be back in Asia. Paris was great for many reasons - but mostly because the vibe in Europe is much better as people feel more empowered by change that allows people to zoom out from usual distress over political stalemate, even if challenging.

What do I tell clients? Well, the same as I usually do. When you look at data, don't get fixated on a point in a series. Non-farm payroll/jobs data is an example. Markets get so fixated on what the expectations are & whether results are a beat or not. But what we should look at is a trend over time. Revisions happen. Downward revisions or upward. Seasonality happens (strikes/weather/etc). But what does the trend tell you & what does that mean for policy reaction function?
Well, if you zoom out, then what we see is that job gains are SLOWING in the US. And labor market data is lagging.

The ISM, both manufacturing and services, both point to slowing activity.

Meanwhile, we have CPI coming out in May - markets expect 2.5%YoY from 2.3% in April.

So what? What will le Fed do?
Inflation is an interesting figure. Why? Because it mirrors what Trump's doing on tariffs and also the dollar going lower, which means imports cost more now.

Both tell you that US goods inflation should rise over time. But what does that mean for US CPI? Well, most weights for US CPI is housing/services, which are non-tradeable in nature.

So while US CPI is rising, the Fed will want to see if core PCE is rising. Anyway, if employment is softer over time, and inflation is rising, doesn't that constraint the Fed from seeing through the fog and know what to do?
Read 15 tweets

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