As the U.S. and China agree to reduce tariffs, questions emerge arise whether this 90-day pause signals a turning point or just another phase in their ongoing standoff, Kamles Kumar, the Associate Director of Asia Group advisors provides his insights.
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00:00As the world's two largest economies agree to a dramatic scaling back of tariffs,
00:06questions arise over whether this 90-day pause marks a real turning point
00:10or just another chapter in a long-running standoff.
00:14Now, joining us to unpack the implications of this US-China Trust
00:18is Kamles Kumar, Associate Director of Asia Group Advisors.
00:22Now, Kamles, how significant is this US-China tariff rollback
00:25in the context of ongoing global economic uncertainties?
00:30The rollback is a clear signal of de-escalation, but it's not a breakthrough.
00:35It is a fragile truce.
00:37Cutting tariffs for 90 days eases short-term market anxiety
00:40and gives supply chains some breathing room,
00:43especially for sectors tied to electronics and manufacturing.
00:46Specifically, the US will lower tariffs on Chinese imports,
00:49while China will reduce its tariffs on US goods from 125% to 10%.
00:53This move has impacted global markets with the US stock surging
00:57and the dollar has also experienced a rise today.
01:00But structurally, nothing has changed.
01:02While markets react positively to de-escalation,
01:05broader structural issues such as forced technology transfers,
01:08discriminatory industry policies and state subsidies roll remains unsolved.
01:13It is a tactical pause, not a reset.
01:16There is no clarity whether the US will reinstate the Liberation Day tariffs after August.
01:20Yeah, so Kamles, you mentioned that this is a tactical pause.
01:25So do you see this 90-day pause as just a temporary political maneuver
01:29or the start of a longer-term tour in US-China relations?
01:35I think it's a strategic pause designed for more optics than outcomes.
01:39This 90-day pause appears to be a strategic move by both nations
01:43to alleviate immediate economic pressures and demonstrate a willingness to engage in dialogue.
01:48Establishing a bilateral mechanism for ongoing discussion suggests
01:51a commitment to addressing trade issues more structurally.
01:56Trump gets to show he's tough but pragmatic,
01:58while China buys time to stabilize investor sentiments.
02:01Both sides win politically, but the real test will come after 90 days.
02:05But this time is a little different with the announcement
02:08of the bilateral economic dialogue mechanism,
02:11which both sides say will focus on reforms, market openness, and dispute resolution.
02:16That's a step in the right direction,
02:18but we'll see if this actually delivers outcomes.
02:21Then we might see an early signs of a thought.
02:24But if not, this could just be a prelude to another escalation in the near future.
02:28So what kind of ripple effects can Malaysia and other ASEAN countries expect
02:32from the easing of these tensions?
02:34I think there are mainly three big ripple effects across ASEAN and Malaysia.
02:41I think firstly, the supply chains will reroute through the region again,
02:45benefiting the manufacturers here.
02:47The easing of tariffs could accelerate the ongoing realignment of supply chains away.
02:52And Malaysia's role as a regional hub for electrical electronics manufacturing,
02:56especially in Penang and Johor,
02:58could be strengthened as companies reassess risk exposure.
03:01Malaysian exporters in like rubber, palm oil, and consumer electronics
03:05could also see a modest uptick in orders.
03:08Secondly, the investor confidence will take upwards
03:10and reduced uncertainty drives capital towards emerging markets.
03:14The government should capitalize on this by promoting Malaysia
03:17as a stable, neutral platform for companies
03:19seeking access to both Chinese and Western markets.
03:22Thirdly, ASEAN might find this a greater leverage in trade talks,
03:26particularly in the light of recent U.S. tariffs that also affects ASEAN exports.
03:31Countries like Malaysia can use this to engage with U.S. on equal terms.
03:36This includes promoting regional initiatives as we are the ASEAN chair this year,
03:40including the ASEAN digital economy framework
03:43and bilateral priorities like the Malaysian semiconductor industry.
03:46However, these benefits are contingent upon the durability of the current truce.
03:52A relapse into trade hostilities could disrupt both positive trends
03:55and also reintroduce uncertainties in a regional economic landscape.
03:59Malaysia should treat this as a breather,
04:01but a call to recalibrate fast.
04:04Let's see what it is.
04:05Let's watch.
04:05And that's what we'll do with international support.
04:06Let's watch.
04:07Let's watch.
04:07It sounds like a depertination of such benefits,
04:09one of the top up in science.
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