Asia trip provides solid returns on trade front for Trump administration

Highlights: President Trump’s latest Asia trip, centred on the 2025 APEC Economic Leaders’ Meeting in Busan, produced three headline agreements with China, Japan, and South Korea aimed at easing trade tensions and strengthening regional partnerships. All the three announced trade deals around the APEC summit underscore a coordinated US effort to stabilise supply chains and deepen alliances. Collectively, these agreements could reduce near-term trade uncertainty, support global growth, and signal a tactical de-escalation in US–Asia economic relations. The breakthrough with China is especially notable and reinforces our mild overweight view on the US, mainland China and Hong Kong.

• The US–China deal established a one-year tariff truce, cutting the average effective tariff rate from 57 per cent to 47 per cent and halving “fentanyl-related” tariffs from 20 per cent to 10 per cent, while China paused rare-earth export curbs and resumed large-scale US agricultural purchases
• The Japan agreement created a new critical-minerals and rare-earths framework, expanded trade in autos and agriculture, and reaffirmed bilateral defence cooperation and investment ties
• The South Korea deal outlined USD350 billion in new US investments, a tariff cut on autos from 25 per cent to 15 per cent, expanded US Liquefied Natural Gas (LNG) purchases, and potential co-development of nuclear-powered submarines
• Most of the negotiated tariff deals have been far less draconian than the announcements on Liberation Day, 2 April 2025. For financial markets, any trade announcement or tariff deal should be viewed as a net positive, offering boost to risk sentiment and market momentum. These developments should be accretive to corporate profits and could result in further upward revisions to earnings in the next few quarters
• For equity markets, the tariff deals that have been announced, have focused heavily on trade in goods—a sector that has been slow in the post-COVID world. In addition, further clarity around the uncertainty surrounding tariffs should be positive for equity markets
• For fixed income investors, any clarity on tariff negotiations, especially with the larger trading partners, should help remove uncertainty in the corporate credit markets