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Asia is reeling but is anyone winning?

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Osmond Chia

Business reporter, BBC News

Getty Images US President Donald Trump during a dinner with Benjamin Netanyahu, Israel's prime minister, not pictured, in the Blue Room of the White House in Washington, DC, US, on Monday, 7 July, 2025.Getty Images

President Trump has extended the deadline for tariff negotiations – again

“Deeply regrettable” is how Japanese Prime Minister Shigeru Ishiba has described US President Donald Trump’s latest tariff threat – a 25% levy on Japanese goods.

Tokyo, a long-time US ally, has been trying hard to avoid exactly this. It has been seeking concessions for its beleaguered car makers, while resisting pressure to open its markets to American rice.

There have been many rounds of negotiations. Japan’s trade minister has visited Washington DC at least seven times since April, when Trump announced sweeping tariffs against friends and foes.

And yet, those trips seem to have borne little fruit. Trump’s label for Tokyo moved from “tough” to “spoiled” as talks dragged on.

And then this week, Japan joined a list of 22 nations that were sent tariff letters – 14 of those are in Asia. From South Korea to Sri Lanka, many are export-driven manufacturing hubs.

They have until 1 August to strike a deal with the US. But they are likely wondering about their chances given that Japan, a staunch ally that has been openly pursuing a deal, is still facing a steep levy.

Trump has reset the tariffs clock – again. So who is winning, and who is losing?

Winner: Negotiators who want more time

In one sense, almost all of the countries targeted by Trump earlier this year benefit from the deadline extension – they now have more than three weeks more to strike deals.

“The optimistic case is that there is pressure now to engage in further negotiations before the 1 August deadline,” said Suan Teck Kin, head of research at United Overseas Bank.

Growing economies like Thailand and Malaysia, which received tariff letters this week, will be especially eager to seek a solution. They are also caught in the middle of US-China tensions as Washington targets Chinese exports rerouted through third countries, what are known as transhipped goods.

Economists have told the BBC that further extensions are likely, given the complexity of trade agreements.

Countries will need time to implement Trump’s demands, which, going by the letters, are not entirely clear, said business lecturer Alex Capri from the National University of Singapore.

For instance, transhipped goods have been specifically levied as part of Vietnam’s trade deal with the US. But it is unclear whether that applies to finished goods, or to all imported components.

Either way, it will involve far more sophisticated technology to keep track of supply chains, Mr Capri said.

“It’s going to be a slow, long-term and evolving process involving many third parties, tech companies and logistic partners.”

Loser: Asian manufacturers

It seems clear that tariffs are here to stay, which makes global trade the loser.

Companies from the US, Europe and China with global businesses remain at risk, Mr Capri said. This hurts not just exporters, but also US importers and consumers.

And it is a blow for the economic ambitions of large parts of Asia, whose rise has been fuelled by manufacturing, from electronics to textiles.

Getty Images Garment workers, men and women, walk out in a large group from their factory during their lunch break in Phnom Penh on July 8, 2025.Getty Images

Cambodia’s garment workers rely on an export-driven industry for their livelihood

It is unwise to make zero-sum observations on which countries are winning and losing, Mr Capri added, because international trade, especially between US and China is so deeply inter-linked.

Some countries, however, could lose more than others.

Vietnam was the first in Asia to strike a deal, but it has little leverage against Washington, and is now facing levies up to 40%. The same goes for Cambodia. A poor country heavily reliant on exports, it has been negotiating a deal as Trump threatens 35% tariffs.

South Korea and Japan, on the other hand, may be able to hold out longer, because they are richer and have stronger geo-political levers.

India, which too has leverage of its own, has not been issued a letter yet. A deal has seemed imminent but appears to be delayed by key sticking points, including access to the Indian agricultural market and the country’s import rules.

Loser: US-Japan alliance

“Despite its close economic and military relationship with the US, Japan is being treated the same as other Asian trade partners,” said economist Jesper Koll.

And that could transform the relationship, especially as Tokyo, with its large financial reserves, appears to be ready for the long game.

“Japan has proven to be a tough negotiator and I think that has annoyed Trump,” Mr Koll said.

Despite a rice shortage that has sent prices soaring, PM Ishiba has refused to buy US rice, choosing instead to protect domestic farmers. His government has also refused to give in to US demands to increase its military spending.

Getty Images This photo taken on April 8, 2025 shows a man in a cap walking past the logo of Samsung Electronics on a billboard in Vietnam's Bac Ninh province.Getty Images

Global businesses like Samsung are in limbo because of Trump’s tariffs

“They are well prepared,” Mr Koll argued. He said the day after Trump announced tariffs in April, Tokyo declared an economic emergency and set up hundreds of consultation centres to assist affected companies.

“Japan will be seeking a deal that is credible,” he said, because what’s the guarantee Trump won’t change his mind again?

With Japan’s upper-house election due this month, it would be surprising if a deal is agreed by August, Mr Koll said.

“No-one is happy. But is this something that is going to force a recession in Japan? No.”

Winner: US or China?

Asia has long been seen as a key battleground between Washington and Beijing, and analysts say, because of tariffs, Trump may be ceding ground.

For one, given how complex these deals can be, Trump may be overplaying his hand by extending the deadline again, according to some observers.

“The bargaining position of the US has actually been diminished as they have revealed that their hand isn’t actually as strong as they would like,” said NUS economics professor David Jacks.

And the deals that are made could come at the cost of reshaping trade and ties built over decades.

Trump’s choice of posting the letters online, rather than through traditional diplomatic channels, could backfire, said Mr Capri, who described it as “political theatre”.

The confusion caused is a “great gift” to China, which is trying to portray itself as a stable alternative to Trump’s unpredictability, he added.

But the US market is not easy to replace – and Beijing has its fair share of tensions with countries in this part of the world, from Vietnam to Japan.

China is in the middle of its own trade negotiations the US, although it has longer to strike a full agreement – until 13 August.

So who will win more friends in this trade war is hard to say, but the race is still on.

“Both parties see the need for a divorce,” Prof Jacks said, “but getting there will be tough and involve proceedings which will span years, if not decades.”



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No imminent change to tax-free allowance

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There will be no immediate changes to cash Individual Savings Accounts (Isas), the BBC understands.

Chancellor Rachel Reeves was widely expected to announce plans to reduce the £20,000 tax-free allowance.

The move was aimed at encouraging more investment in stocks and shares, which the goverment says it will still focus on.

“Our ambition is to ensure people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy,” a Treasury spokesperson said.

The Treasury is expected to continue to talk to banks, building societies and investment firms about options for reform.

An Isa is a savings or investment product that is treated differently for tax purposes.

Any returns you make from an Isa are tax-free, but there is a limit to how much money you can put in each year.

The current £20,000 annual allowance can be used in one account or spread across multiple Isa products as you wish.



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UK economy shrank unexpectedly in May

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The economy shrank by 0.1%, the second month in a row it has contracted.



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Trump threatens 35% tariffs on Canadian goods

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US President Donald Trump has said he will slap a 35% tariff on Canadian goods starting 1 August, even as the two countries are days away from a self-imposed deadline to reach a new deal on trade.

The missive came as Trump also threatened blanket tariffs of 15% or 20% on most trade partners, and said he would soon notify the European Union of a new tariff rate on its goods.

Trump announced the latest levies on Canada on Thursday in a letter posted to social media and addressed to Prime Minister Mark Carney.

The US has already imposed a blanket 25% tariff on some Canadian goods, and the country is feeling the pain of the Trump administration’s global steel, aluminium and auto tariffs.

The letter is among more than 20 that Trump had posted this week to US trade partners, including Japan, South Korea and Sri Lanka.

Like Canada’s letter, Trump has vowed to implement those tariffs on trade partners by 1 August.

The US has imposed a 25% tariff on all Canadian imports, though there is a current exemption in place for goods that comply with a North American free trade agreement.

It is unclear if the latest tariffs threat would apply to goods covered by the Canada-United States-Mexico Agreement (CUSMA).

Trump has also imposed a global 50% tariff on aluminium and steel imports, and a 25% tariff on all cars and trucks not build in the US.

He also recently announced a 50% tariff on copper imports, scheduled to take effect next month.

Canada sells about three-quarters of its goods to the US, and is an auto manufacturing hub and a major supplier of metals, making the US tariffs especially damaging to those sectors.

Trump’s letter said the 35% tariffs are separate to those sector-specific levies.

“As you are aware, there will be no tariff if Canada, or companies within your country, decide to build or manufacture products within the United States,” Trump stated.

He also tied the tariffs to what he called “Canada’s failure” to stop the flow of fentanyl into the US, as well as Canada’s existing levies on US dairy farmers and the trade deficit between the two countries.

“If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter. These Tariffs may be modified, upward or downward, depending on our relationship with Your Country,” Trump said.

President Trump has accused Canada – alongside Mexico – of allowing “vast numbers of people to come in and fentanyl to come in” to the US.

According to data from the US Customs and Border Patrol, only about 0.2% of all seizures of fentanyl entering the US are made at the Canadian border, almost all the rest is confiscated at the US border with Mexico.

In response to Trump’s complaints, Canada announced more funding towards border security and had appointed a fentanyl czar earlier this year.

Canada has been engaged in intense talk with the US in recent months to reach a new trade and security deal.

At the G7 Summit in June, Prime Minister Carney and Trump said they were committed to reaching a new deal on within 30 days, setting a deadline of 21 July.

Trump threatened in the letter to increase levies on Canada if it retaliated. Canada has already imposed counter-tariffs on the US, and has vowed more if they failed to reach a deal by the deadline.

In late June, Carney removed a tax on big US technology firms after Trump labelled it a “blatant attack” and threatened to call off trade talks.

Carney said the tax was dropped as “part of a bigger negotiation” on trade between the two countries.

The Prime Minister’s office told the BBC they did not have immediate comment on Trump’s letter.



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