Hello everyone, welcome to “News Talk”. I’m Fu Yao. Today is April 7th, Monday.
Our guests for this episode are Professor Yu Weixiong from the Anderson Economic Forecasting Center at the University of California, Los Angeles; current affairs commentator and senior political and economic analyst Qin Peng. In addition, Dr. Ye YaoYuan, an international relations expert and professor of international studies at the University of St. Thomas in the United States, was also interviewed earlier.
On April 2nd, in the afternoon of the U.S. Eastern Time, Trump announced the implementation of “reciprocal tariffs”.
By the morning of the 5th, U.S. customs officials had already started imposing a 10% baseline tariff since Saturday, targeting all goods imported into the U.S., regardless of their origin. Additionally, the U.S. is set to impose extra tariffs on 60 countries deemed as having “unfair trade barriers” on the 9th.
As expected, this move immediately sparked global market panic, with stock markets generally on a downward trend without showing signs of significant easing.
Since the tariffs were initiated, the U.S. stock market has witnessed a $5.4 trillion evaporation in market value. On Monday local time, the Asian markets had a difficult start, with Wall Street futures plummeting. The market is betting on an increasing risk of “U.S. economic recession,” with expectations of a possible interest rate cut as early as May.
Over the past weekend, massive protests erupted in various parts of the U.S. Some people protested against Musk’s government expenditure cuts, and of course, there were also protests against Trump’s “reciprocal tariff” policy. Some citizens are concerned about soaring prices, fearing they will bear the brunt of the impact.
In fact, even before the start of his second term, Trump proposed this action as part of his economic plan, bundling tariffs, tax cuts, and boosting domestic manufacturing. By doing so, Trump has attracted significant support from voters.
In a campaign speech in October 2024, Trump mentioned, “If a country imposes a 50% tariff on our goods while we only impose 5% on theirs, then we should also impose 50% on them. This is reciprocity, it’s simple.”
Regarding tariffs, Trump, on Sunday onboard Air Force One, told reporters that the U.S. would become the dominant economic power.
However, while voters support Trump for considering the long-term interests of the U.S., on the other hand, people are concerned about current prices and their wallets. Thus, is this “tariff game” ultimately a lengthy invisible war or, after a short-term “prisoner’s dilemma,” will it bring a future for the U.S. with “high-quality and low-price” trade with multiple countries under “zero tariffs”?
Recently, Israel, Vietnam, and Taiwan have all begun preparing for negotiations on “zero tariffs”.
Currently, Israeli Prime Minister Netanyahu has arrived in the U.S. with a delegation, received by U.S. Commerce Secretary Lutnick who introduced U.S. trade negotiation representative Jamie Gril. Netanyahu is scheduled to meet with U.S. President Trump today (7th).
According to a statement released by the Israeli Prime Minister’s Office, Netanyahu will discuss tariff issues with Trump, along with other issues such as “detained hostages”. This is Netanyahu’s second visit to the U.S. within less than a hundred days of Trump’s return to the White House and since the first foreign leader visit to the White House on February 4th.
President Trump plans to start imposing a high 46% tariff on Vietnam starting on the 9th (this Wednesday), placing Vietnam at the forefront of Trump’s “reciprocal tariff” list, leading to a buzz in the Vietnamese business community.
Immediately after, Vietnamese Communist Party Secretary To Lam had a call with U.S. President Trump, stating a reduction in import tax rates to 0% for U.S. imports and suggesting America also treats Vietnam “reciprocally”.
Trump recently stated he had received Lam’s commitment and agreed to discuss a “tariff cancellation” agreement, expressing on his social platform “Truth Social” that the discussion was “very effective”.
Vietnam’s Deputy Prime Minister visited the U.S. on April 6th to further discuss the possibility of “reducing tariffs” with U.S. officials.
Observers believe Vietnam’s move could set a precedent. The U.S. may engage in one-on-one “bilateral negotiations” with multiple countries, breaking the global trade landscape of “globalization”.
The senior officials of the Trump administration have clearly stated the real purpose of the “tariff action,” to realign the U.S. in the global trade order, emphasizing that potential economic disruptions will only have short-term impacts.
Kevin Hassett, Chairman of the White House National Economic Council, mentioned on Sunday that over 50 countries have contacted President Trump regarding tariff issues to initiate trade negotiations. He also explained Trump’s “reciprocal tariff” policy.
1. Qin: Peter Navarro, a senior trade advisor at the White House, urged investors “not to panic” in a recent segment on “Sunday Morning Futures” on Fox News. He stated: “The first rule, especially for small investors: unless you sell, you won’t lose money. The wise strategy now is not to panic, just stay put.”
Regarding this wave of tariffs, although officials are working to alleviate market tensions, the stock market has been continuously declining since President Trump announced the “reciprocal tariff” plan. In your observation, what are the main panic triggers behind this sustained decline?
There is concern that Trump’s tariff policy could lead to a “prisoner’s dilemma” in trade negotiations with multiple countries, where participants, aiming to maximize their self-interest, may end up with suboptimal outcomes due to a lack of cooperation. Can you provide a detailed analysis on this?
2. Prof. Yu: Let’s talk about Vietnam. Over the past two years, after swiftly adjusting its supply chain, Vietnam has become a major manufacturing base in Southeast Asia for many Western companies. Last year, Vietnam’s trade surplus with its largest export market, the U.S., exceeded $123 billion. Now facing high tariffs, the Vietnamese business community is struggling, and after uniting government and business, they urgently communicated with the U.S. and sent a delegation to negotiate in Washington. Is this what Trump wanted?
Do you think Vietnam will reach a “zero tariff” trade agreement with the U.S.? If Trump disagrees, does this signal difficulty in negotiation?
3. Qin: If a “zero tariff” trade is achieved between Vietnam and the U.S., what about the concern that it may lead to increased production and exports from Vietnam, meaning manufacturing won’t return to the U.S. as intended?
Once Vietnam achieves “zero tariffs” trade with the U.S., what impacts will it have on China, the former “world’s factory”?
Among the countries facing high tariffs, Taiwan surprisingly finds itself on the list. The U.S. is imposing a 32% tariff on Taiwan. This news has left many with mixed feelings.
“Happy” because seeing “Taiwan” in the tariff list seems like the U.S. is recognizing the Republic of China as an independent country. However, this stirred up the Chinese ambassador’s statement on platform X, saying “Taiwan is China’s Taiwan. We will continue to strive for peaceful reunification with the utmost sincerity and effort, but we will never allow any form of ‘Taiwan independence’ forces to exist.”
Some say, Xie Feng has not made such a statement even on the significant issue of “U.S. imposing high tariffs on China”, indicating his greater concern and attitude towards “Taiwan” surpasses his care for his own country’s economic difficulties.
However, what worries many is on the economic front; a 32% tariff is indeed high, leaving many Taiwanese slightly disappointed and feeling that the U.S. might be too harsh on Taiwan.
On Saturday evening local time, President of the Republic of China, Lai Ching-te, delivered a speech on his YouTube channel, reassuring everyone that the government has no plans for tariff retaliation and urging people not to panic.
He mentioned that in the past two days, Taiwan’s political and business sectors have been cooperating closely. President Lai proposed actively integrating a “Taiwan Investment in the U.S. Team” and hoped the U.S. would have an equivalent “U.S. Investment in Taiwan Team”, aiming to enhance cooperation between Taiwan and the U.S., jointly creating a future economic golden age and elevating Taiwan’s position in the global supply chain.
In addition to this strategy, President Lai has a total of five major strategies.
In President Lai’s speech, Strategy Four is called “Taiwan+1”, indicating a new layout between Taiwan and the U.S. He hopes to follow the “USMCA +1 free trade agreement”, starting with “zero tariffs”, as part of the response strategy of “Taiwan+1”.
Facing discussions starting from “zero tariffs,” many Taiwanese financial scholars support this approach.
Jeremy Chih-Cheng Chang, CEO of the Technology, Democracy and Society Studies Center (DSET), posted on Facebook, stating that the U.S. needs “reindustrialization”, a belief that MAGA is determined to achieve even at the expense of breaking the global “free trade order.” The U.S. reclaiming industrialization needs a catalyst, and Taiwan’s Silicon Shield is what ignites the “Silicon Catalyst” for the U.S. reindustrialization.
Chang believes that the so-called “USMCA+1” seeks Taiwan to become a flyover for the U.S. reindustrialized U.S.-Mexico-Canada economic sphere in the Western Pacific.
As Taiwan is not only the world center of semiconductor manufacturing but also the only country outside the mainland with complete technology manufacturing and supply chain integration capabilities. Taiwan is thus most qualified to seek entry into the U.S.-Mexico-Canada tariff zone.
Is this cooperation likely to succeed? For such questions, we interviewed earlier Dr. Ye YaoYuan, an international relations expert and professor of international studies at the University of St. Thomas in the United States. Let’s hear Dr. Ye’s viewpoint.
We know Taiwan’s unique strategic position; President Lai is now spearheading increased economic cooperation with the U.S. If a version of “USMCA +1” is achieved, how will this benefit Taiwan’s economy?
Further, how does Dr. Ye view Taiwan’s proactive negotiation with the U.S. to lower the risk of a “tariff war”?
Prof. Yu: Do you think President Lai’s five major strategies can effectively help Taiwan cope with this “tariff war”?
Besides canceling trade tariffs, what more does Trump want from Taiwan? Are President Lai’s responses in line with Trump’s expectations?
Qin: President Lai mentioned in his speech, “Over the past half-century, Taiwan has experienced two energy crises, the Asian financial storm, global financial crisis, and impacts of epidemics, facing brutal tests time and again. Not only has Taiwan overcome difficulties but also turned crises into opportunities, allowing Taiwan’s economy to transcend, becoming more resilient and reaching new heights.”
This is evident, why do you think Taiwan can navigate the storms of change and what is Taiwan’s wisdom for survival?
On the contrary, China continues to face recriminations following the U.S.’s halving of tariffs. China then rolled out so-called “equal countermeasures” against the U.S., receiving criticism from Chinese financial scholars.
Fu Peng, chief economist at Northeast Securities and a renowned financial scholar on the mainland, believes that Trump’s tariff policy falls under “common procurement strategies between buyers and suppliers”, akin to common strategies in bidding, such as China’s pharmaceutical group procurement operation, where the tariff cap is like the minimum bid of the various tendering companies.
Fu Peng holds that if a supplier chooses to “upset the table” and not participate in the negotiation, to some extent, this is equivalent to forgoing the bidding opportunity. By implementing tariffs according to the highest rate standard, they will be excluded from that supply chain.
Economic observers view China’s move as a group of suppliers rallying against the U.S., their sole buyer, forcefully compelling the buyer to spend money on their goods. It’s one of the most comical things in the world. If these suppliers concoct new trade rules, forcing the buyer to comply, it becomes even more absurd and funny.
Qin: You have been closely monitoring mainland China’s economic scholars’ observations. How do you view China’s measures, choosing to stand lonely and petulant on one side, while numerous countries negotiate earnestly with the U.S.?
Prof. Yu: How long do you expect this “tariff war” to last?