Following Asia market close, trading desks are reporting that the greatest impact from the US tariffs is expected to be seen upon market open in the US today.
“Asia is fine, [the] US are shooting themselves in the foot, so the larger risk off moves will be there,” noted one senior trader. “Asia feels like a safe haven with low beta at the moment. Today’s moves are not big at all. [There has been] modest / restrained risk off.”
Another observed there had been huge volatility in the morning within Asia Pacific, after the US tariffs were announced overnight, however this subsided somewhat.
“Credit default swaps (CDS) and sovereigns retraced a bit, the initial reaction was significantly wider,” they said. “Asian sovereigns were very active, especially between Indonesia and Philippines. A few select names in high yield (HY) were traded actively. There has been broad-based widening, across HY and investment grade (IG) with high beta IG feeling the pressure mostly, whereas low beta IG is 5-8 basis points to start.”
Trump’s ‘Liberation Day’ tariffs have been set at a baseline 10%, effective on all imports to the US effective 5 April.
A number of countries are set at the baseline of 10%, including the UK, Brazil, Singapore, Chile, Australia, Turkey, Colombia, the United Arab Emirates (UAE) and Saudi Arabia.
Others hit more aggressively included Saint Pierre and Miquelon (50%), Cambodia (49%), Laos (48%), Sri Lanka (47%) and Vietnam (46%). Syria (41%), Iraq (39%), Myanmar (44) and Israel (17%) were also notable features.
The Falkland Islands received 41%) tariffs and Norfolk Island 29%. The latter, with a population of 2,000, is an external territory of Australia which exported US$655,000 in goods to the US in 2023. It has received three times the tariffs of the mainland.
From 3 April, all non-US automobiles will receive a 25% tariff.
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