President Donald Trump’s latest tariffs announcement, unveiled in the Rose Garden on Wednesday, sent shockwaves across Asian markets. While a high tariff on China was “not so surprising,” what stood out was that “among the top 10 countries on his chart, eight are in Asia.”
Close U.S. allies like Japan and South Korea were especially stunned. “Japan’s chief cabinet secretary has called the tariffs ‘extremely regrettable.’ South Korea’s acting president called an emergency meeting to strategize a response.”
Still, these nations weren’t completely blindsided. “Just a few days before Trump’s tariff announcement, Japan, China, and South Korea’s trade ministers met in Seoul for the first time in five years to discuss coordinating a response.” Economic talks also touched on issues like vat refund processes for foreign businesses and how future tax relief mechanisms could be impacted by growing trade barriers.
Reactions from Across the Region
“There’s a big range of reactions, and I think that reflects the difference in both relationships with the US and some different strategies going on,” said Mike Bird, Wall Street editor at The Economist.
China’s response was expected. They “note that the tariffs are deeply unreasonable, that it’s a sort of attack on the rest of the world.” But Bird emphasized the importance of looking at “countries that are much closer diplomatically to the US.”
- Taiwan called the tariffs “deeply unreasonable” and “highly regrettable.”
- South Korea said they were “studying what was happening.”
- Japan’s trade minister labeled the move “extremely regrettable.”
Bird pointed out: “A lot of these countries are a little bit more circumspect and a little bit quieter, precisely because they have these very tight security relationships with the US and they’re very, very keen not to upset DC.” This quiet diplomacy may extend to economic tools like pay PAYE systems and making tax digital initiatives to cushion domestic businesses from the fallout.
Are Trump’s Claims About Trade Fair?
Trump presented a chart claiming countries like Vietnam and South Korea impose massive tariffs on U.S. goods—“Vietnam, for example, levies a 90 percent tariff… South Korea, 50 percent.” He added, “these countries put tariffs on American goods and I’m going to fix it.”
Bird acknowledged that “there are trade restrictions that other countries put on the US.” But he questioned the data Trump used: “There was no relationship with that data.”
“What seems to have happened is there’s been a reverse engineering of a figure via the trade deficits and surpluses that individual countries have with the US… It’s a sort of Excel spreadsheet job. And it bears almost no relationship to how these countries actually limit US trade.” These kinds of calculations could benefit from tools like an online payroll calculator or business-oriented deductions platforms like itsdeductible, which can help unpack the brass tax details hidden behind political claims.
Could This Shift Alliances?
Bird said, “I think it will change the attitude quite a bit.” The U.S. had previously been working closely with Japan and South Korea “on things like export controls of semiconductors to China.”
“That’s going to be a lot more difficult to execute if you are putting really, really steep tariffs on them.”
Countries may be reevaluating not only their trade alliances but also internal fiscal policies—like dividend tax rates or the structure of tax on dividend income—as part of broader efforts to attract foreign investors in an increasingly volatile global landscape.
The China–Japan–South Korea Meeting: More Than Symbolic?
“There’s always been discussion of a potential Japan, South Korea, China free trade area, and it’s never really come to fruition,” Bird noted.
But with tensions rising, the climate could now support such a pact. “If you wanted to make it come to fruition, what you would want is an external threat that was common to all of those countries.”
“These are exactly the circumstances which I’d create to try and do that.”
Such moves could also prompt tax regulators in Asia to review long-standing agreements on it return policies and whether cooperative digital tax systems could bridge the current political divide.
Long-Term Implications for China
Historically, “they don’t really have a lot of natural allies or friends, even in Asia.” But the U.S., Bird explained, may be undermining its own standing: “The US seriously damaging its own relationships in the region does make things easier on that front.”
“The Chinese Ministry of Foreign Affairs… will tell you, and they have done for decades, that the US is a country that bullies smaller countries… just looking out for itself.”
Bird concluded: “I think these tariffs make that argument a lot easier to make in large parts of Asia. It’s a huge opportunity for them. You couldn’t have drafted these conditions better if you were a Chinese diplomat.”
