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1、 Refer to important disclosures at the end of this report.Chart of the Week:Reciprocal tariffs The method behind the flurry of tariff measures announced by the US on April 2 is simplethe more a nation is reliant on US markets,the more tariffs they face.From there it should follow that the only way a

2、 country can see tariff relief in the future is by buying more from or selling less to the US.But since the reliability of the US to uphold any agreement is all but gone for now,such gestures may still fall short of providing meaningful relief.The playbook for most Asian economies ought to be to com

3、bine remaining open to the US while pushing for greater integration with the rest of the world.HK SARSingaporeIndonesiaMalaysiaChinaPhilippinesIndiaThailandS KoreaJapanTaiwanVietnam0%5%10%15%20%25%30%35%0%10%20%30%40%50%Share of exports to the USReciprocal ratesTariffs and vulerabilitiesSource:CEIC,

4、DBS.China faces other tariffs as well.April 7,2025 Economics&Strategy Research Macro Insights Weekly Asias playbook for Trumps tariff storm Economics/Strategy/Rates/FX/Credit Global markets and economies are still struggling to absorb the seismic tariff shock of last week.Risk is now between stagfla

5、tion and outright recession in the US and the associated spillovers.For the US,we see 1%upside to inflation and 1%downside risk from baseline forecast.These estimates could turn worse if trade war intensifies further.There could be secondary tariffs-penalty for buying goods from countries under US s

6、anction.China/EU could retaliate by imposing tariffs on US services exporters.We examine the impact on Asian economies and their possible policy responses.Key data release and events this week:The RBI and BSP are expected to lower rates this week Taiwan exports are expected to stay resilient in 2Q M

7、alaysia production likely expanded Taimur Baig Radhika Rao Chief Economist Senior Economist Please direct distribution queries to Violet Lee+65 68785281 Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 2 Commentary:Asias playbook for Trumps tariff storm Global markets a

8、nd economies are still struggling to absorb the seismic tariff shock unleashed last week.There seems to be no end of risk aversion and market selloff.The key reason for that is that despite the spate of announcements,there is still substantial fear that more measures are to come.Perhaps more critica

9、l is the notion that nations trying to do a deal with the US will not be able rest easy upon signing agreements,as no deal with US seems to be reliable any longer.Before examining what Asia can and would do to deal with the tariffs,we first take stock of our US forecasts.If tariffs stay the way are

10、for the rest of the year,core PCE inflation could readily exceed 3.5%,while household income and consumption will be dented,especially for those at the low end of the income spectrum.Real GDP growth could face 50-100bps downside.We will keep aside the impact on fiscal as whatever tariff revenues are

11、 raised will be more than offset by forthcoming tax cuts.There is another,more adversarial,scenario.If trade war intensifies with additional tariffs and retaliations,and financial market correction worsens,US recession risks will rise considerably.This will especially be the case if the US ratchets

12、up secondary tariffs(penalty on nations for buying goods from countries under US sanctions)and China/EU take aim at the US services exports.The Fed will face pressure to cut interest rates even if inflation remains well over its target.Global financial stability could also be at stake.We would assig

13、n a probability of 45%to a scenario of below-trend growth and above-trend inflation,and a 35%probability to a US recession scenario,which in turn will drag down the outlook of Asias exports-dependent economies.In the following sections,we present DBS economists analysis on the impact of tariffs on k

14、ey economies and likely policy response.Taimur Baig China We estimate that the direct impact of US tariffs imposed so far this would subtract 1.15%from Chinas GDP.The actual impact could however end up being less severe as the US is raising tariffs on other countries,which could dilute the specific

15、effect on China.Downside from tariff shockReal GDP growth,yoy 2025 forecastRisk to forecastChina5.00%-0.50%to-1.0%Hong Kong SAR2.50%-0.50%to-1.0%India6.50%-0.50%Indonesia5.00%-0.50%Malaysia4.80%-1.00%Philippines5.80%-0.50%Singapore2.80%-0.50%to-0.75%South Korea1.70%-0.75%to-1.0%Taiwan3.00%-1.5%to-2.

16、0%Thailand2.60%-1.5%to-2.0%Vietnam6.80%-2.0%to-2.5%Eurozone1.00%-0.50%Japan0.90%-0.30%United States2.00%-0.50%to-1.0%Source:CEIC,DBS.Downside estimates include(i)impact of terms of trade shock calculation and(ii)assumptions on domestic fiscal and monetary policy response.Macro Insights Weekly:Asias

17、playbook for Trumps tariff storm April 7,2025 Page 3 China is also better positioned to withstand the protectionist climate compared to the past.Burgeoning demand from emerging markets may help cushion the potential loss of trade income from the US.China has seen significant growth in exports to ASE

18、AN,which accounted for 16.4%of its total shipments in 2024.Meanwhile,the loss of trade income from the US may be partly offset by fiscal stimulus.Beijing will likely accelerate the issuance of the RMB4.4 trillion local government special bonds and RMB1.8 trillion special sovereign bonds to support t

19、he economy.The PBOC may return to easing to support the economy.We expect another 30 basis points of 1-year LPR and 100 basis points of RRR cut this year,in tandem with the resumption of the government bond buying program.Mo Ji,Nathan Chow,Samuel Tse,Byron Lam Hong Kong While not explicitly targeted

20、,Hong Kongs 2020 loss of preferential trade status subjects it to equal treatment with mainland China under US trade regulations.The direct impact on domestic exports is minimalthese account for just 1.3%of total exports in 2024,with only a small share destined for the USbut re-export activity may e

21、xperience some drag.Still,the US now comprises only 56%of Hong Kongs total trade,a sharp decline from a decade ago,which helps contain the overall impact.Resilience will depend on deepening economic integration with mainland China and expanding ties with ASEAN and the Middle East.A stabilizing Chine

22、se economyunderpinned by fiscal stimulus and monetary easingshould support Hong Kongs re-export flows.The city is also expected to accelerate efforts to strengthen supply chains,broaden trade financing,and diversify market exposure.In real estate,a weaker re-export and investment outlook could dampe

23、n office demand from multinationals,though increased interest from mainland firms may offer some offset.Residential demand may soften if sentiment weakens,but continued mainland wealth inflows and enhanced cross-border connectivity should provide support.Further relaxation of property measures is li

24、kely if market conditions deteriorate.Overall,we estimate a 0.51%ppt downside risk to our 2025 GDP growth forecast of 2.5%.Mo Ji,Nathan Chow,Samuel Tse,Byron Lam Singapore With the balance of risks to Singapores growth and inflation outlook skewed to the downside,we expect the Monetary Authority of

25、Singapore(MAS)to ease its monetary policy during its upcoming policy review in April 2025.This would mark a back-to-back easing,following MASs slight reduction of its SGD NEER policy band in January 2025.Policymakers are already sounding caution,with Deputy Prime Minister and Minister for Trade and

26、Industry Gan Kim Yong mentioning that the situation has“turned out to be worse”than expected,following the US tariff announcement.Singapore will have to reassess its 1-3%economic growth forecast for 2025,Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 4 considering the

27、 potential for fresh US tariffs to escalate into a tit-for-tat global trade war.Singapores deep integration in the global supply chain makes it vulnerable to a broader global trade and manufacturing slowdown induced by sweeping US tariffs,posing considerable downside risks to our 2025 economic growt

28、h outlook.Nonetheless,we see a silver lining compared to other hard hit Southeast Asian economies,as it faces the baseline 10%US tariff rate,the lowest amongst ASEAN-6 peers.We estimate lower direct negative growth impact of 0.50-0.75 percentage points(ppt)to our Singapore 2025 GDP growth forecast o

29、f 2.8%,with the negative impact mitigated by the exemption of additional reciprocal rates on pharmaceutical and semiconductor products.We still foresee pipeline risk of US tariffs on these goods,which would pose a bigger direct drag to Singapores economy.Chua Han Teng India The US announced a 26%rec

30、iprocal tax on India,which is more than two and a half times of the existing average tariff gap.With the effective reciprocal taxes likely to be implemented on April 9,we will wait to see if India manages to receive some reprieve.The authorities have engaged in negotiations with the US in the past f

31、ew months,including openness to cut or scrap tariffs on part of US imports,and lower tariffs on selected US agriculture imports but exclude key segments,amidst negotiations on the Bilateral Trade Agreement(BTA),with the initial contours to be released by fall of 2025.As it stands,the rate imposed on

32、 India is less than most Asean-6 peers,with sectoral carve outs/exemptions providing temporary relief.However,exemptions add to a little more than a tenth of the total exports to the US,with other sectors still exposed to higher tariffs.India retains comparative advantage in specific sectors like el

33、ectronics manufacturing for now as key competitor countries face higher tariffs.Our growth impact framework,which marries export elasticities and bilateral trade/sector flows,signals about 0.5%of GDP downside risk for India.Authorities have steered clear from retaliatory action,instead counting on a

34、 successful conclusion of the ongoing bilateral trade agreement with the US next quarter to lower the effective tariff rate.The RBI is expected to lower rates by 50-75bp more this year,in addition to February 2025s move.Radhika Rao Indonesia A significant increase in reciprocal tariff on Indonesia c

35、ame as a surprise.The US announced a 32%tariff on Indonesia,likely influenced by the trade balance gap rather than purely the difference in the bilateral tariff rates.The latest USTR National Trade estimate Report highlights Indonesias average MFN applied tariff rate at around 8%in 2023,whilst expre

36、ssing concern on progressive increase in import tariffs,a cumbersome domestic tax assessment process,and increase in the withholding tax rates on selected imports,apart from zooming in on the non-trade barriers including import licensing mechanism including on agricultural products,quantitative rest

37、rictions/import limits,limited access in the pharma industry and state trading,amongst Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 5 others.Local content requirements on certain information and communication technologies to sell products was also cited as a constra

38、int,likely referring to negotiations with Apple in recent months.Chinas dominance in Indonesias trade and investment landscape was expected to be a potential flashpoint.Key exports to the US include textiles,seafood,footwear,palm oil,electronics etc.The government has signalled scope for negotiation

39、s to reach some compromise and receive relief on these rates.Our impact analysis points to 0.5%of GDP knock-on repercussion on growth,with second order effects from slower global growth.In a fractious global economy,we expect domestic policymakers to step up on boosting demand engines.BI is expected

40、 to lower rates by 50bp more,with an eye on rupiah volatility.Domestic considerations had dented sentiments in the onshore markets,weighing on the currency and bond markets.Radhika Rao ASEAN-6 ASEAN-6 is amongst the hardest hit by US reciprocal tariffs,even as the region was not explicitly mentioned

41、 in the“Fair and Reciprocal Plan.”The region faces a potential average 27.5%increase in their US tariff rates,with Vietnam,Thailand,Indonesia,and Malaysia facing the highest increases(ranging from 46%on Vietnam to 24%on Malaysia),as they were amongst the USs top 15 trade deficit partners in 2024.To

42、assess the direct impact on ASEANs growth,we considered the US reciprocal tariff rates,alongside US exports exposure and elasticities,as well as exemption of additional reciprocal rates for few key sectors such as semiconductors,pharmaceuticals,and autos exports to the US.We estimate a significant h

43、it to the region,with greater negative impact on the GDP of Malaysia,Thailand,and Vietnam ranging from 1.0-2.5 percentage points(ppt).Vietnam,which faces amongst the highest reciprocal rates,is also the most exposed to the US.US accounts for almost 30%of the total Vietnam goods exports,with key segm

44、ents comprising of electronics items,such as mobile phones,and textiles,garment,and footwear.Regional governments are likely to initiate bilateral discussions and seek concessions with the US administration as the scale and scope of reciprocal action become clearer.A broad range of conciliatory opti

45、ons include diplomatic and other economic steps-bilateral trade agreement/critical minerals agreement(applicable for Indonesia for instance)with the US.The region might seek to step up purchases from the US,for instance agricultural inputs,machinery,aircrafts,energy and defence,to balance the trade

46、gaps.A unilateral reduction in tariffs to accommodate US demands(without an FTA)might be challenging given the need to level the playing field with all the countries under the MFN terms.Concurrently,there might be cascading tariffs in the region as any instance of dumping activity from China or othe

47、r trading partners might attract countervailing duties.National governments and policymakers are likely to double down on efforts to bolster domestic demand to compensate for weaker Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 6 trade performance including fiscal sp

48、ending and monetary policy easing.Chua Han Teng and Radhika Rao Japan Japan faces a 24%reciprocal tariff rate,which is relatively low compared to the average of 29%across the 60 countries in the reciprocal tariff list.However,Japan also faces a 25%increase in automobile tariffs,the largest product c

49、ategory it exports to the US.Assuming a price elasticity of 0.5,Japans GDP growth is likely to be reduced by approximately 0.3 ppt.The Bank of Japan is likely to delay its next rate hike,despite recent strong wage and inflation data.The positive wage-inflation dynamics could be at risk if global eco

50、nomic conditions deteriorate sharply.Additionally,the strong appreciation of the yendriven by a surge in safe-haven demandwill make the BOJ cautious about implementing domestic rate hikes.Ma Tieying South Korea South Korea is subject to a 25%reciprocal tariff rate,which is relatively low compared to

51、 the 29%average tariff across 60 countries on the list.Additionally,South Korea faces a 25%tariff hike on its automobile exports to the US,the largest category of products it exports to the country.With an assumed price elasticity of 0.5,the 25%tariff hike is expected to reduce South Koreas GDP grow

52、th by approximately 0.7ppt.Growth risks are likely to prompt further monetary easing by the Bank of Korea.The BOK is expected to cut the benchmark rate by another 25 bps to 2.50%during the April 17 policy meeting.Substantial government policy support is anticipated following the upcoming presidentia

53、l election.On April 4,the Constitutional Court upheld the impeachment of President Yoon,leading to a new election within 60 days,which is expected to occur by early June.The new government is likely to engage with the Trump administration to find a solution,which may include increasing imports from

54、the US and boosting manufacturing investment in the US.If the opposition Democratic Party wins the election,the chances of fiscal stimulus through a supplementary budget would increase.Ma Tieying Taiwan Taiwans reciprocal tariff rate is unexpectedly high at 32%.In 2024,Taiwans exports to the US acco

55、unted for 23%of total exports and 14%of nominal GDP.Its total exports accounted for 63%of GDP.Assuming an elasticity of 0.5,a 32%reciprocal tariff could reduce Taiwans exports to the US by 16%,lowering GDP growth by approximately 2 ppt.Regarding second-order impacts,if global economic growth decreas

56、es by 1 ppt,it could reduce Taiwans GDP growth by nearly 1 ppt.Semiconductors are not subject to reciprocal tariffs,so the direct impact on Taiwan-made chips remains minimal for now.However,the second-order effects of a potential US/global recession,which could dampen Macro Insights Weekly:Asias pla

57、ybook for Trumps tariff storm April 7,2025 Page 7 semiconductor demand,would still be considerable.A strong policy response is necessary to mitigate the impacts of reciprocal tariffs.With government debt at around 30%of GDP,it also has significant room for fiscal policy expansion.Monetary policy eas

58、ing seems unlikely in the near term,as the central banks policy rate is already low at 2.00%,and the inflation-adjusted real policy rate is near zero.Ma Tieying Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 8 Tactical trade ideas Key forecasts for the week Forthcomin

59、g data releases India:The RBI monetary policy committee will announce its rate decision on Wednesday.Dr Poonam Gupta,current head of NCAER has been named as the new RBI Deputy Governor and will join the upcoming rate review.Domestic data has aligned to make way for the Monetary Policy Committee(MPC)

60、to lower rates further,characterised by easing inflation and growth whilst depreciation pressure on the rupee has eased significantly.We look for a 25bp rate cut with a change in stance to accommodative.January-February inflation combined with our early estimate for March,point to a 40-50bp undersho

61、ot in the actual vs RBIs quarterly forecast.Growth,meanwhile,is seen around 6.4-6.5%in FY25 and FY26,down from the 8%run rate in the previous two years.The rupee was the regional outperformer,rallying 2.3%in March,as seasonality and dollar weakness coincided.Bond yields slipped further after the RBI

62、 surprised by announcing another INR800bn OMO for April,signaling a strong preference for surplus liquidity to aid transmission.While confident on domestic developments,the MPC is likely to be guarded on the uncertain global backdrop as trade distortions pose stagflationary risks to the US and raise

63、 the risk of slower global trade.Taiwan:March trade and inflation data are due this week.Export growth is expected to slow to 11.8%YoY,down from 17.9%in Jan-Feb,while CPI inflation is projected to remain stable at 2.1%.The March S&P manufacturing PMI dropped to 49.8,dipping below 50 for the first ti

64、me in a year,whereas the CIER manufacturing PMI remained robust at 54.2.Trade front-loading is anticipated to continue supporting export shipments in March.However,downside risks are elevated following the USs announcement of EventDBSPreviousApr 8(Tue)Indonesia:CPI(Mar)1.2%y/y-0.1%y/yTaiwan:CPI(Mar)

65、2.1%y/y1.6%y/yApr 9(Wed)India:RBI repurchase rate6.00%6.25%China:M2(Mar)(9 to 15 Apr)7.1%y/y7.0%y/y -aggregate financingCNY 14251bnCNY 9292.1bn -new yuan loansCNY 9510bnCNY 6138.7bnApr 10(Thu)China:CPI(Mar)0.3%y/y-0.7%y/yPhilippines:BSP o/n rate5.50%5.75%Taiwan:exports(Mar)11.8%y/y31.5%y/y -imports1

66、5.3%y/y47.8%y/y -trade balance$8.53bn$6.55bnUS:CPI(Mar)2.8%y/yApr 11(Fri)India:industrial production(Feb)3.1%y/y5.0%y/yMalaysia:industrial production(Feb)1.5%y/y2.1%y/y TradeEntryExitRationaleReturnsRunningFXShort AUD/SGDEntry 0.8530(Feb 17),TP:0.82,SL:0.8630AUD is more volatile than SGD from Trumps

67、 tariffs.+4.0%Short EUR/USDEntry 1.0760(Mar 27),TP:1.0550,SL:1.0930)Trumps tariffs tempering EUs growth optimism from“ReArm Europe”Plan-1.6%RatesLong 10Y CGBEntry:1.79%(Feb 24),TP:1.50%,SL:2.05%A sustained recovery will require further easing.+11.3bpsRec 2Y SORA-SOFR basisEntry:-5bps(Feb 25),TP:-17b

68、ps,SL:2bpsToppy as carry positions get stretched.+3.8bpsNote:Performance for Rates ideas are expressed in running basis points and percentage terms.Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 9 reciprocal tariffs in April,including a 32%tariff on Taiwan.As US impor

69、ters face challenges finding alternatives,and with trade being relatively inelastic,Taiwans export performance is expected to remain resilient in 2Q.Downside risks are likely to materialize in 2H,as alternatives become available and elasticity increases.Additionally,the second-order impact on Taiwan

70、s exports from a potential global slowdown or recession is expected to become more pronounced from 2H onwards.Malaysia:Malaysias industrial production(IP)likely grew for the 14th consecutive month in February 2025,but at a slower pace of 1.5%YoY,compared to 2.1%YoY in January 2025.While resilient ne

71、ar-term external demand likely supported this continued expansion,waning IP growth momentum suggests downside risks for Malaysias trade dependent economy.Malaysias export-oriented industrial sector faces considerable downside risks from escalating US-led trade tensions,particularly from 24%US tariff

72、s on Malaysian imports that were announced on Liberation Day.Philippines:The BSP is expected to lower rates by 25bp this week to backstop domestic growth,amidst a challenging global outlook.Inflation in March was well within the target range.The Philippine government meanwhile downplayed risks to ex

73、ports citing the comparatively lower 17%reciprocal tariff on Philippines,vs most regional peers.Electronic exports that form bulk of the shipments are likely to be impacted,apart from apparel,footwear and textile products.The country aims to push for higher farm exports to the US,seeking to displace

74、 countries in the region which have higher rates.China:Consumer prices are expected to rise from-0.7%YoY in February to 0.3%in March,largely due to the fading seasonal impact of the early Lunar New Year.Core CPI growth is projected to turn positive after a 0.1%YoY contraction,supported by improving

75、consumption sentiment.On the monetary front,money supply growth remains in expansion territory as ongoing stimulus measures take effect.We expect a pickup in aggregate financing and yuan loans after the Lunar New Year holiday,reaching approximately RMB4,950 billion and RMB3,370 billion,respectively,

76、in March.As a result,M2 growth is projected to accelerate from 7.0%YoY in February to 7.1%in March.The gap between M2 and M1 is expected to narrow further going forward.Economics Team Recent publications Webinar:Trump Tariffs:Economic and market implications Crypto Digest:Corporate participation in

77、Bitcoin markets Taiwan:Initial assessment of reciprocal tariff impacts Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 10 FX:Navigating an evolving and complex landscape amid global trade shifts The DXY Index reached a low of 101.27 on April 3,before rebounding to 103

78、last week.First,US President Donald Trumps announcement of larger-than-expected tariffs triggered global recession fears,hammered global equities,and revived the USDs haven status.The commodity-linked and emerging Asian currencies were particularly vulnerable,while traditional safe-haven currencies

79、like the JPY and CHF saw increased demand.EUR/USD should fluctuate around 1.10,with GBP/USD consolidating within a 1.28-1.30 range.Second,Fed Chair Jerome Powell indicated no immediate urgency to adjust interest rates following the 228k increase in US nonfarm payrolls in March,which surpassed the 14

80、0k consensus.Powell cautioned that the inflationary effects of the tariffs could become persistent if they elevate long-term inflation expectations.While Thursdays US CPI inflation is expected to slow to 2.6%YoY in March from 2.8%in February,inflation expectations are seen rising again in Fridays Un

81、iversity of Michigans April survey.The US Treasury 10Y yield ended last Friday at nearly 4%despite an initial decline to 3.856%.This did not prevent the futures market from pricing four Fed rate cuts in June-October.The greenback is expected to remain volatile.Investors are hopeful that the“Hands Of

82、f”protests across America and a legislative initiative by a bipartisan group of lawmakers to curb the presidential tariff authority might compel the Trump administration to roll back the tariffs.However,the administration is resolutely asserting that tariffs were necessary to renegotiate global trad

83、e terms,dismissing allegations of instigating a trade war.Worries persist that countries with significant trade relationships with the US may follow Chinas lead in implementing retaliatory tariffs.AUD/USD is weak after its 4.6%plunge to 0.6056 last Friday,marking its worst single day fall since 2008

84、.Although Australia was subjected to a baseline 10%tariff on its exports to the US,the US tariffs imposed across Asia(Australias top export region)were significantly higher.The AUD,often viewed as a barometer of global risk appetite,also declined alongside commodities and equities worldwide.Brent cr

85、ude oil prices fell by 12.4%over two days,reaching USD65.58/barrel last Friday.The futures market indicated a 90%probability of the Reserve Bank of Australia lowering rates by 25 bps to 3.60%on May 20,following the general elections scheduled for May 3.A sustainable breach of the 0.60 psychological

86、level could send AUD/USD descending further to 0.57 The escalation of global trade tensions continues to pressure currencies in Asia ex-Japan.Some countries have responded with measures to maintain orderly exchange rates and financial markets.Recession risks have widened credit default swaps across

87、several countries,not helped by Fitchs downgrade of Chinas sovereign debt rating to A from A+.While the Trump administration is engaging with foreign governments to address trade imbalances and negotiate agreements,it placed greater priority on companies to reshore manufacturing operations to the US

88、,aligning with the“Make America Great Again”agenda.Philip Wee Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 11 USD Rates:Watching for short-term capitulation Stress levels have hit acute levels as markets adjust to the reciprocal tariffs announced by the US and the s

89、ubsequent retaliation from China.In the rates space,10Y yields dipped as are down by some 80bps since the high registered in mid-January and the market is now anticipating four Fed cuts this year(compared to less than two cuts just a few weeks ago).At current levels,these are consistent with recessi

90、on pricing.Note that all these are sentiment driven and we have seen these kinds of moves over the past few years as the market participants gyrated between pessimism and optimism.80-100bps swings in 10Y yields even as the real economy chugs along is fair game.Even as sentiment remains extremely wea

91、k,we wonder if yields may be trying to find a short-term bottom.Fundamentally,there is nothing wrong with the US economy.Labour market data released on Friday showed a strong uptick in NFP(228k vs consensus of 140k).The surge in private payroll is impressive(209k vs consensus of 135k).There was an u

92、ptick in unemployment rate to 4.2%but this appears to be driven by a higher participation rate.The upshot is that the labour market has thus far been resilient.As much as it is convenient to wave these to be backward looking,we should note that the US economy is on relatively firm footing ahead of L

93、iberation Day.From a technical angle,there are some early signs that extreme levels have been hit.For example,the VIX has shot to 45,levels not seen since 2020,suggesting that there may be some capitulation soon.From a rates perspective,on an intraday basis last Friday,10Y UST yields made a round tr

94、ip,pushing as low as 3.86%before closing at 3.99%.2Y yields also briefly broke below 3.50%before rebounding strongly.Post Chinas tariff retaliation(we reckon only Europe might announce tariffs on the US),there was a lot of bad news reflected in depressed yields.Between a firm labour market and cauti

95、ous comments from Fed Chair Powell(indicating that perhaps only one cut is needed this year and pulling back somewhat from a view of transitory tariff-led inflation),considerable amount of pessimism has been baked in within just a few trading days.More positive signs from negotiation breakthroughs a

96、head of the reciprocal tariff headlines on 9 April would help to stabilize sentiment.Eugene Leow 050100150200250300Jan-22Jan-23Jan-24Jan-252014 start=100Extreme Fear Has HitSource:Bloomberg,DBS VIXFX volRates vol Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 12 Credi

97、t:From exuberance to risk aversion Global credit markets are firmly reversing from exuberance towards more a risk-averse tone.The announcement of sweeping tariffs across countries and product categories by Trump last week raises risks of a global slowdown,if not an outright recession.There is almost

98、 no wiggle room for negotiations given that the unilateral 10%tariffs has already started on 5 April,while higher US levies on goods will start on April 9.China has already retaliated with a 34%tariff on all US goods,deviating from its previous strategy of targeting tariffs on goods from Trumps supp

99、ort base.Given our estimates for growth to slip by 0.5%-2%across Asia ex-Japan,our Asian DACS credit spread index has scope to widen further even with a 10bps jump last week to 1.43%.Chinese and Korean financials credit could be more vulnerable as spreads are still tight compared to historical norms

100、,while domestic loans may see rising stresses given the hit to exporters from high tariffs,and a brewing US-China trade war.Chang Wei Liang 0.000.501.001.502.002.50Apr 23Oct 23Apr 24Oct 24Apr 25%annCNKRIDHKINSource:DBSAsian USD Credit:Country DACS Indices Macro Insights Weekly:Asias playbook for Tru

101、mps tariff storm April 7,2025 Page 13 Growth,Inflation,Policy Rates&FX forecasts GDP growth,%YoYCPI inflation,%YoY,ave20212022202320242025f 2026f20212022202320242025f 2026fChina8.13.05.25.05.04.50.92.20.20.61.01.5Hong Kong SAR6.3-3.53.32.52.52.51.61.92.01.51.51.5India10.37.28.86.76.56.55.16.75.74.94

102、.14.0India(FY basis)*9.77.69.26.56.46.45.56.75.44.74.24.0Indonesia3.75.35.15.05.05.01.64.23.72.32.02.0Malaysia3.38.93.65.14.84.62.53.42.51.82.82.3Philippines5.77.65.65.65.85.63.95.86.03.22.62.4Singapore9.84.11.84.42.82.52.36.14.82.41.31.7South Korea4.62.71.42.01.72.22.55.13.62.32.02.0Taiwan6.72.71.1

103、4.63.02.42.02.92.52.21.91.7Thailand1.62.62.02.52.62.41.26.11.20.41.21.5Vietnam2.68.05.07.16.86.61.83.23.33.63.53.3Eurozone5.33.50.50.71.01.22.68.45.52.32.22.0Japan2.70.91.50.10.90.6-0.32.53.32.72.71.8United States6.12.52.92.82.02.04.78.04.13.02.92.5*2020 represents Fiscal 21;ending Mar 211Q252Q253Q2

104、54Q251Q262Q263Q264Q26China*3.102.952.802.802.802.552.552.55India6.255.755.755.755.755.755.755.75Indonesia5.755.755.255.255.255.255.255.25Malaysia3.003.003.003.003.003.003.003.00Philippines5.755.755.255.255.255.255.255.25Singapore*2.882.882.732.632.632.632.632.63South Korea2.752.502.502.502.502.502.5

105、02.50Taiwan2.002.002.002.002.002.001.8751.875Thailand2.002.001.751.751.751.501.501.50Vietnam*4.504.504.504.504.504.504.504.50Eurozone2.502.002.002.002.002.002.002.00Japan0.500.500.750.750.751.001.001.00United States4.504.504.254.004.004.004.004.00*1-yr Loan Prime Rate;*3M SORA OIS;*refinancing rate;

106、deposit facility ratePolicy interest rates,eopCcy pair4Q241Q252Q253Q254Q251Q262Q263Q264Q26USD/CNY7.267.267.347.327.297.277.257.227.20USD/HKD7.787.777.807.797.797.797.787.787.77USD/INR84.087.588.388.388.288.288.188.188.0USD/IDR159101645016500164301637016300162301617016100USD/MYR4.484.454.524.494.474.

107、444.414.394.36USD/PHP59.157.659.058.958.858.758.558.458.3USD/SGD1.351.341.371.361.361.351.341.341.33USD/KRW140514601480147514701460145514501445USD/THB34.734.135.034.834.534.334.133.833.6USD/VND254602552025650256202560025570255402551025480AUD/USD0.650.620.600.610.610.620.620.620.63EUR/USD1.041.081.04

108、1.051.061.071.081.091.10USD/JPY155148151149148146144143141GBP/USD1.251.281.231.241.251.261.281.291.30Exchange rates,eop Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 14 Interest rate forecasts 20252026Q1Q2Q3Q4Q1Q2Q3Q4US3M SOFR OIS4.384.384.133.883.883.883.883.882Y4.2

109、54.204.153.903.904.004.104.1010Y4.304.204.204.504.604.704.754.8010Y-2Y5056070706570Japan3M TIBOR0.650.650.900.901.001.151.151.152Y0.700.800.900.951.001.101.101.1010Y1.151.251.351.501.601.601.701.7010Y-2Y4545455560506060Eurozone3M EURIBOR2.702.202.202.202.202.202.202.202Y2.202.152.152.152.152.202.302

110、.4010Y2.702.802.903.003.103.203.253.2510Y-2Y50657585951009585Indonesia3M JIBOR6.356.106.106.106.106.106.106.102Y6.356.156.206.206.206.256.256.2510Y6.556.456.456.456.456.556.556.5510Y-2Y2030252525303030Malaysia3M KLIBOR3.503.503.503.503.503.503.503.503Y3.453.403.403.403.453.453.453.4510Y3.853.803.853

111、.903.954.004.004.0010Y-3Y4040455050555555Philippines3M NDF implied yield5.255.005.005.005.005.005.005.002Y5.755.505.505.555.605.605.605.6010Y6.005.805.805.855.905.905.905.9010Y-2Y2530303030303030Singapore3M SORA OIS2.882.882.732.632.632.632.632.632Y2.952.902.852.702.702.802.902.9010Y2.902.802.803.10

112、3.103.203.253.2510Y-2Y-5-10-54040403535Thailand3M BIBOR2.152.151.901.901.901.651.651.652Y1.851.651.551.551.351.251.251.2510Y2.101.951.901.901.751.701.701.7010Y-2Y2530353540454545China1Y LPR3.102.952.802.802.802.552.552.552Y1.351.251.101.101.051.001.001.0010Y1.701.651.501.501.451.401.401.4010Y-2Y3540

113、404040404040Hong Kong,SAR3M HIBOR3.803.803.603.403.403.403.403.402Y*3.753.753.753.553.503.603.703.7010Y*3.603.553.603.954.004.104.154.2010Y-2Y-15-20-154050504550Korea3M CD2.852.602.602.602.602.602.602.603Y2.502.402.402.502.552.602.602.6010Y2.802.702.702.852.902.952.953.0010Y-3Y3030303535353540India3

114、M MIBOR7.006.656.656.656.656.656.656.652Y6.356.006.006.006.056.106.106.1010Y6.556.456.506.556.606.656.656.6510Y-2Y2045505555555555%,eop,govt bond yield for 2Y and 10Y,spread bps,*HKD swaps Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 15 Wei Liang CHANGTracy Li Jun L

115、IMAmanda SEAHFX&Credit StrategistCredit AnalystCredit AnalystGlobalUSD CreditSGD CNathan CHOWEugene LEOWDaisy SHARMASenior EconomistSenior Rates StrategistAnalystChina/HK SARG3&AsiaData AHan Teng CHUA,CFATeng Chong LIMJoel SIEW,CFASenior Economist Credit AnalystCredit AnalystAseanSGD CreditSGD CMo J

116、I,Ph.D.Tieying MA,CFAMervyn TEOChief EconomistSenior EconomistCredit StrategistChina/HK SAR Japan,South Korea,TaiwanUSD CByron LAMRadhika RAOSamuel TSEEconomistSenior EconomistSenior EconomistChina/HK SAREurozone,India,Indonesia China/HK SARViolet LEEPhilip WEEAssociateSenior FX StrategistPublicatio

117、nsGGroup ResearchEconomics&StrategyTaimur BAIG,Ph.D.Chief EGlobal Macro Insights Weekly:Asias playbook for Trumps tariff storm April 7,2025 Page 16 Sources:Data for all charts and tables are from CEIC,Bloomberg and DBS Group Research(forecasts and transformations)GENERAL DISCLOSURE/DISCLAIMER(For Ma

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