Archive

Trade Avoidance Easing Shocks

• China’s crashing exports to the US partly reflect avoidance measures, including rerouting through other countries and marking down import prices to subsidiaries.
• Exports to the EU and UK are only trending slightly higher, making little difference to disinflation. ASEAN countries, and especially Vietnam, are seeing trade surge again.
• The US may clamp down on avoidance measures that have eased the shock so far. It could make a painful example of one to encourage concessions from all trade partners.

By Philip Rush

US Tariff Impact Estimates

• New US tariffs ignored any notion of reciprocity, reaching shockingly substantial sizes. However, the UK was relatively fortunate in landing on the 10% minimum rate.
• Repeating 2024’s imports would raise $577bn in tariff revenue, which is worth ~3% of consumption. 70% pass-through to prices would add 2% to the level over 1-2 years.
• Negotiations need to conclude rapidly to avoid these front-loaded price rises. The EU’s likely retaliations would magnify its pain, but the US is the biggest stagflationary loser.

By Philip Rush

Trump-ism And East Asia

• Donald Trump’s abandonment of the US-led international order and efforts to reshape global trade and finance do not bode well for East Asian economies that may find themselves forced by Washington into a Chinese sphere of influence as part of a grand bargain with Beijing.

By Alastair Newton

Vietnam CPI Inflation 4.34% y-o-y in Jun-24

- Vietnam's headline CPI inflation decelerated slightly to 4.34% in June 2024, the lowest rate since March 2024, but remained above the one-year average.
- Core CPI inflation stood at 2.61% year-over-year, indicating that non-core components like food and energy prices drive the excess headline inflation, leaving persistent but moderating inflationary pressures.