Companies worry less about punitive tariffs and more about China being labeled a currency manipulator by the US, as it would bring more uncertainty and prolong the trade dispute between the two countries, JPMorgan Asset Management Taiwan said on Thursday.
Washington is likely to impose a 25 percent tariff on all imports from China next year, Tai Hui (許長泰), Hong Kong-based chief market strategist at JPMorgan Funds (Asia) Ltd, said at a news conference in Taipei.
The US and China have imposed punitive tariffs on billions of dollars of each other’s goods, with US President Donald Trump threatening to levy more, Hui said.
Hui said he does not expect the US-China trade war to end in the near term.
Whether or not the Republicans win in the US midterm elections next month, “Trump is going to maintain his policy against China, or even strengthen his stance if the Republicans win,” Hui said.
Trade-reliant Taiwanese companies would be affected by this development, he said.
“However, this is not the worst scenario next year,” as most companies are psychologically prepared and are planning to absorb the tariffs as additional costs or pass them on to consumers, Hui said.
Instead, companies are more worried about the US labeling China a currency manipulator, a move that is not expected to lead to trade sanctions, but would definitely lead to more uncertainty and escalate trade tensions, he said.
As of Thursday, the yuan had declined 6.08 percent against the US dollar, slower than the South Korean won’s 6.46 percent fall.
That also compares with a 4.04 percent drop in the New Taiwan dollar and a 3.44 percent decline in the euro.
Accusing China of manipulating the yuan to boost its exports, Trump had promised to label China a currency manipulator during his presidential election campaign two years ago.
The US Department of the Treasury has thus far not yet named China a manipulator, but has placed it on a monitoring list in its currency reports, Hui said.
The US is to release its latest currency report next week.
US laws set specific criteria that a nation must meet to be labeled a currency manipulator. These are: a minimum trade surplus of US$20 billion with the US, a current-account surplus in excess of 3 percent of GDP and repeated interventions in the currency market.
China only meets one of the criteria, with its surplus with US reaching US$375 billion last year, JPMorgan said.
Additionally, companies are concerned that China’s high-tech exports to the US might encounter problems shipping to the US, which could disrupt their production, Hui said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts