The Trump administration is intensifying efforts to undercut China’s exports by targeting transshipment networks, raising tariffs and tightening supply-chain rules on goods routed through third countries, according to Bloomberg analysts. This strategy risks choking off 70% of China’s exports to the US — equivalent to over 2.1% of China’s GDP.

Since Trump’s first trade war during his first term, China has increasingly leaned on countries like Vietnam, Mexico, and parts of the EU for finishing goods or components bound for the US, in a bid to cushion the blow of US tariffs. China’s share of value-added manufacturing via third countries rose 22% in 2023, up from 14% in 2017, according to Bloomberg Economics.

Away from China or else: Trump’s administration is threatening to slap 25-40% tariffs on goods from Cambodia, Indonesia, Laos, Malaysia, and Thailand to enforce his terms — including curbing China’s exports — in trade negotiations ahead of his 1 August deadline. Vietnam was the first Asian country to yield, accepting an agreement that puts a flat 20% tariff and a 40% levy on transshipped goods, and drawing Beijing’s criticism.

The war extends beyond Asia: The US reached an agreement with the UK in May that included security requirements for steel and pharmaceuticals, terms which were seen as an attempt to push Chinese products out of British supply chains. “Co-operation between states should not be conducted against or to the detriment of the interests of third parties,” China’s foreign ministry told the Financial Times at the time.

Business backpedal: Economists warn that enhanced tariffs or new supply‑chain mandates could significantly disrupt China’s export activity and dent long-term growth. There’s also concern that tighter rules could make international firms more hesitant to rely on Chinese components or production, harming business confidence and investment.

Yet enforcement faces its own challenges. The US definitions of “localized goods” remain vague, and verification protocols for origin remain underdeveloped, Bloomberg analysts said. The success of the policy will hinge on enforcement capabilities and compliance of third-country partners.

ALSO FROM PLANET FINANCE-

  • JP Morgan may soon let clients borrow using cryptocurrencies, a sharp shift from CEO Jamie Dimon’s earlier crypto criticism. While JP Morgan won’t hold crypto directly, it could partner with firms like Coinbase to manage crypto assets. The bank already lends against crypto-linked ETFs, and is expanding to actual tokens in a bid to outpace rivals like Goldman Sachs. (Financial Times)

MARKETS THIS MORNING-

Asian markets are in the green, led by Japan’s Nikkei which jumped 2.8% in early trading on news of a trade agreement with the US. Meanwhile, Wall Street futures are showing softer gains after another record closing for the S&P 500.

ADX

10,179

-0.6% (YTD: +8.1%)

DFM

6,025

-0.3% (YTD: +16.8%)

Nasdaq Dubai UAE20

4,986

-0.5% (YTD: +19.7%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.2% o/n

4.2% 1 yr

TASI

10,843

-1.3% (YTD: -9.9%)

EGX30

33,803

-1.0% (YTD: +13.7%)

S&P 500

6,310

+0.1% (YTD: +7.3%)

FTSE 100

9,024

+0.1% (YTD: +10.4%)

Euro Stoxx 50

5,290

-1.0% (YTD: +8.1%)

Brent crude

USD 68.74

-0.7%

Natural gas (Nymex)

USD 3.26

-1.9%

Gold

USD 3,443

+1.1%

BTC

USD 119,639

+2.1% (YTD: +27.9%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.6

-0.3% (YTD: +1%)

S&P MENA Bond & Sukuk

146.28

+0.4% (YTD: +4.5%)

VIX (Volatility Index)

16.50

-0.9% (YTD: -4.9%)

THE CLOSING BELL-

The DFM fell 0.3% yesterday on turnover of AED 602.3 mn. The index is up 16.8% YTD.

In the green: United Foods Company (+14.8%), National General Ins. (+7.3%), and Aramex (+4.1%).

In the red: Emirates Investment Bank (-3.9%), Dubai Taxi (-3.6%), and Air Arabia (-3.1%).

Over on the ADX, the index fell 0.6% on turnover of AED 1.3 bn. Meanwhile, Nasdaq Dubai was down 0.3%.

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