Analysis

Beyond the Numbers: Will China and India Capitalize on the US Tariff Twist?

Published

5 months ago

February 27, 2026

The Supreme Court’s landmark ruling on Trump’s “Liberation Day” tariffs has reshuffled the deck in Washington’s trade relationships with Beijing and New Delhi — but neither side is playing its hand just yet.

On the morning of February 20, 2026, President Donald Trump was in a closed-door White House meeting with state governors when a trade adviser slipped him a handwritten note. “So it’s a loss, then?” Trump reportedly said aloud. Within hours, the Supreme Court’s 6-3 ruling in Learning Resources, Inc. v. Trump had detonated across global trading floors from Mumbai to Shanghai — and the reverberations have yet to subside.

The court’s verdict, delivered by Chief Justice John Roberts and joined by an unusual coalition of conservative and liberal justices, was unambiguous: the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs. Gone, at a stroke, were the sweeping “Liberation Day” levies — duties that had ranged as high as 145% on Chinese goods and 26% on Indian exports in their peak form. As reported by the Tax Foundation, more than $160 billion in duties had been collected under the now-illegal framework, and the tariffs had been projected to generate $1.4 trillion over the next decade.

Trump moved fast, signing an executive order hours later imposing a temporary 10% global tariff under Section 122 of the Trade Act of 1974 — a rarely invoked provision that limits duties to 150 days without congressional approval. By Saturday, he had ratcheted the announced rate up to 15%. The whiplash, as one Citigroup economist noted, implied “little change in the effective tariff rate or inflation forecasts in the near term.” But the strategic calculus for Asia’s two largest economies shifted dramatically nonetheless.

The Tariff Landscape Before and After: What Actually Changed

To understand the opportunity — and the risk — for China and India, it helps to map the actual numerical terrain.

Country	Peak IEEPA Tariff Rate	Current Effective Rate (Post-Ruling)	Net Change
China	~35–50% (combined)	~20–25% (Section 301 + 10% baseline)	-6.9 pp*
India	~26%	~15–18% (new baseline + deal terms)	-8 to -11 pp
Vietnam	~46%	~19% (deal rate preserved)	-27 pp
EU	~20%	~15%	-5 pp

*Per Maybank IBG Research analysis

Bloomberg Economics calculated that Trump’s proposed 15% global rate would produce an average effective tariff of around 12% — the lowest since “Liberation Day” tariffs were released in April 2025. China, India, and Brazil emerged, in the words of the analysis, as “the biggest winners from the Supreme Court’s decision.”

Yet winning in absolute tariff terms is not the same as winning strategically. The picture is considerably more complicated.

China: A Tactical Windfall, Not a Strategic Reprieve

For Beijing, the ruling arrives at a diplomatically sensitive moment. Trump is scheduled to visit China from March 31 to April 2, 2026, for what will be the highest-stakes trade summit since his first term. The Supreme Court decision has altered the pre-meeting power dynamics in ways that Chinese negotiators will carefully — and quietly — exploit.

As the Council on Foreign Relations noted, the ruling “narrows unilateral presidential trade powers, constrains improvisational coercion, and shifts the terrain of U.S.-China competition away from executive brinkmanship to institutional process.” Trump enters Beijing with one fewer unilateral lever — and Chinese negotiators know it.

China’s public response has been characteristically calibrated. Beijing’s Commerce Ministry declared it was conducting a “comprehensive assessment” of the ruling’s impact, calling on Washington to “cancel its unilateral tariff measures on its trading partners” and warning that “there are no winners in a trade war.” That language — restrained, multilateralist, positioning China as the aggrieved rule-follower — is deliberate. Beijing is framing the ruling as validation of its long-standing critique that US trade policy violates both international norms and, as it turns out, US domestic law.

The arithmetic backs the posture. Crucially, the 10% flat tariff is meaningfully lower than the pre-ruling rate for Chinese goods. Analysts at one major bank noted that “the effective tariff rate will fall this year and that the world post-SCOTUS will see lower tariffs than the pre-SCOTUS world.” For Chinese exporters who had been dealing with cumulative duties far exceeding 30%, a 10–20% effective rate — before Section 301 levies on specific goods — represents real relief.

But the relief is partial and fragile. As The Associated Press reported, Section 301 of the 1974 Trade Act remains fully intact, and US Trade Representative Jamieson Greer announced Friday that the administration was “launching a series of 301 investigations” following its Supreme Court loss. Those “sticky tariffs,” as one trade lawyer put it, have been in place for eight years across two administrations, targeting Chinese technology, electric vehicles, and advanced manufacturing. The ruling did not touch them.

China’s countermeasures strategy is also evolving. With the reciprocal and fentanyl-related IEEPA tariffs on China suspended — they had reached a combined 24% — Beijing indicated a willingness to adjust its own retaliatory posture, signaling readiness for “candid consultations” before Trump’s arrival. That is diplomatic language for: we are willing to negotiate, but we hold more cards than we did last week.

India: Strategic Pause, or Strategic Hesitation?

India’s response has been more visibly disruptive. New Delhi became the first country to take a concrete step in response to the ruling, postponing its trade delegation’s planned trip to Washington to “finalise the legal text” of an interim trade deal that Trump had announced earlier in February. No new date has been set.

The deferral is understandable. India had negotiated a framework that pegged its tariff rate at 18% — a meaningful reduction from the previous 26% under IEEPA, and a result secured after considerable diplomatic effort by Prime Minister Narendra Modi’s government. Then, in a matter of days, the baseline for every country dropped to 10–15%, effectively eroding the competitive advantage India had worked to secure.

The situation is further complicated by the Trump administration’s decision, just four days after the Supreme Court ruling, to impose a 125.87% preliminary countervailing duty on solar cell imports from India under a separate trade investigation. As India Briefing reported, the targeted measure underscores how the ruling addresses emergency tariff authority, but leaves sectoral tools fully operative. For New Delhi, the tariff environment remains as volatile as ever.

Moody’s noted that “the Supreme Court’s intervention restricts Washington’s ability to deploy country-specific tariffs as a negotiation tool,” a constraint that “could reduce US leverage in bilateral trade talks.” That cuts both ways for India. Washington has less coercive power; but India also has less urgency to sign deals quickly.

India is also, quietly, revisiting its stance on Chinese investment. Reports indicate New Delhi is reviewing “Press Note 3,” the 2020 policy that placed strict scrutiny on foreign direct investment from countries sharing land borders — principally China. A tiered approval framework may emerge, reflecting India’s pragmatic recognition that it needs capital and technology inflows even as it manages strategic competition with Beijing.

The Geopolitical Chessboard: What Numbers Cannot Capture

Headline tariff rates are, as experienced trade negotiators know, only one variable in a far more complex equation. Energy security, technology supply chains, domestic political constituencies, and investment commitments all shape negotiations in ways that percentage points cannot fully represent.

For China, the structural competition with the US in semiconductors, artificial intelligence, and green technology remains fundamentally unchanged. The CFR’s Zongyuan Zoe Liu observed that “the structural factors driving U.S.-China strategic rivalry — technological competition, industrial policy clashes, and security tensions — remain unchanged.” What the ruling provides China is a modest tactical advantage: the moral authority of having been vindicated by America’s own highest court, and a negotiating room in which Trump arrives slightly disarmed.

For India, the geopolitical calculus is particularly delicate. New Delhi has spent years cultivating a “strategic autonomy” posture — deepening ties with Washington through initiatives like the Quad while maintaining its historical equidistance from great-power blocs. The tariff reshuffle tests that balance. A rushed deal with the US that locks India into trade commitments could constrain its flexibility with other partners. A prolonged delay, meanwhile, risks inviting retaliatory Section 301 investigations.

Fortune reported that Trump has warned countries they could face something “far worse” if they attempt to renegotiate existing deals — a reminder that the Section 122 tariff authority, though temporary (it expires in approximately 150 days, around mid-July), could be supplemented by Sections 232 and 301, which carry no such time limit.

The uncertainty, as Moody’s chief economist Mark Zandi told CNBC, has already begun to affect business behavior. “Businesses don’t know what’s going to happen next. They’re going to invest less, they’re going to hire less, they’re going to be less aggressive in their expansions.” That chilling effect applies equally to supply chain decisions across Asia.

The Road Ahead: Three Scenarios

Scenario 1 — Managed De-escalation. Trump’s China visit in late March produces a framework agreement. China adjusts its countermeasures, the US agrees to hold Section 301 rates steady (rather than expanding them), and a 90-day diplomatic truce takes hold. India finalizes its interim deal at a rate near or below 15%. Both countries gain breathing room. Probability: Moderate, contingent on domestic political conditions in Washington.

Scenario 2 — Procedural Escalation. The US uses Section 301 investigations to reconstruct country-specific pressure on China, and Section 232 national security reviews to target Indian steel, pharmaceuticals, and solar exports. The “new 10%” baseline becomes a floor, not a ceiling. India’s interim deal collapses. China digs in ahead of a midterm-election-minded Trump. Probability: Elevated, given the USTR’s stated intention to launch new investigations.

Scenario 3 — Legislative Reset. Congress, under pressure from businesses seeking tariff refunds and legal certainty, passes framework legislation granting the president conditional tariff authority with statutory guardrails. Both China and India face a more institutionally anchored — and therefore more predictable, if not necessarily lower — tariff regime. Timeline: 12–18 months at minimum.

Conclusion: The Numbers Are Not the Story

The Supreme Court’s February 20 ruling is less the end of America’s tariff wars than the end of their most arbitrary phase. As AP reported, the ruling means Trump “can’t conjure up new import taxes on a whim anymore” — but it does not mean tariff confrontation is over.

For Beijing, the ruling is a tactical gift deployed at a strategically opportune moment. For New Delhi, it is an unwelcome complication to a negotiation already dense with sectoral trade-offs and domestic sensitivities. Neither capital is rushing to the table. Both are recalculating.

What is clear is that the era of IEEPA-powered shock tariffs — unilateral, unlimited, and legally contested — has ended. What replaces it will be slower, more institutionally embedded, and therefore harder for trading partners to navigate through simple concession. That is a subtler kind of pressure, but it is pressure nonetheless.

Researchers and policymakers tracking the US-China-India trade triangle should watch three indicators closely over the coming weeks: the outcome of the Trump-Xi summit, whether India’s rescheduled trade delegation reaches Washington before Section 122 authority expires in mid-July, and the pace of new Section 301 investigation filings. The numbers on a tariff schedule are, in the end, just the opening bid. The real negotiation has barely begun.

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Analysis

Malaysia GDP Growth vs Stock Market: The 2026 Disconnect

Published

2 hours ago

July 29, 2026

Abdul Rahman

Malaysia posted its biggest trade surplus on record and second-quarter GDP growth of 5.8% in 2026, yet its stock market has stubbornly refused to rally — a disconnect that is puzzling investors even as the country climbs global competitiveness rankings and hosts record investor turnout at its largest retail investing event.

Record Growth Meets a Muted Market

Malaysia’s economy expanded 5.8% year-on-year in the second quarter of 2026, underpinning what former senior investment banker Ian Yoong Kah Yin describes as one of the most competitive economies globally, buoyed by the country’s largest-ever trade surplus, according to reporting in The Star. Yet with the exception of the semiconductor and plantation sectors, Yoong notes that many shares on Bursa Malaysia remain undervalued relative to that underlying strength — a gap he summarised memorably: “It’s like we held a party and no one came.”

The disconnect comes even as Hong Leong Investment Bank upgraded Malaysia’s full-year 2026 growth forecast to 4.7% from 4.5%, citing stronger-than-expected performance in the electrical and electronics sector alongside resilient domestic demand, according to BusinessToday. Household loans grew 5.2% year-on-year and credit card spending rose 10.2%, signalling that consumer demand remains a genuine pillar of growth rather than a statistical artefact of export strength alone.

A Competitiveness Ranking Jump — and a Retail Investing Boom

Malaysia’s underlying reform story has been validated externally. The country climbed eight places to rank 15th among 70 economies in the 2026 IMD World Competitiveness Ranking, its best showing in recent years, following an 11-place jump the year before, according to The Star. Economists attribute the climb to policy reforms improving government and business efficiency, streamlined investment approvals, accelerated digitalisation, and stronger fiscal management.

Retail investor enthusiasm, meanwhile, appears robust even if institutional capital has been slower to follow. INVEST Fair 2026, Malaysia’s largest retail investment event, drew an expected 20,000 visitors across more than 70 hours of programming at Kuala Lumpur’s Mid Valley Exhibition Centre in July, according to event coverage on TradingView. Separately, a survey of more than 3,500 active users by digital wealth platform Versa found that 70% of respondents would prioritise investing over debt repayment or emergency savings if they received a sudden windfall, according to The Star — evidence of a pronounced retail “investment reflex” even amid broader questions about household financial resilience.

Fixed Income Is Where the Real Money Is Flowing

While equities lag, Malaysia’s fixed income market tells a different story. Employees Provident Fund chief investment officer Mohamad Hafiz Kassim told the Sasana Symposium 2026 that Malaysia is “punching above its weight” on global fixed income indexes, drawing outsized capital allocation given interest rate and yield differentials between Malaysian Government Securities and US Treasuries — a dynamic occurring even as the ringgit has remained notably stable, according to The Star. Speakers at the same event pointed to the broader global shift toward passive investing as a structural tailwind Malaysia is well-positioned to capture with continued policy follow-through.

What Explains the Equity Gap

Analysts point to several possible explanations for the growth-market disconnect: persistent foreign investor caution tied to regional and Middle East-driven geopolitical risk, a valuation overhang from prior years, and sector concentration that leaves broad indices under-exposed to the semiconductor and technology names actually capturing AI-linked investment flows. Whatever the cause, the gap represents either an opportunity for value-focused investors or a warning sign that Malaysia’s headline growth figures are not yet translating into corporate earnings momentum broad enough to move the market.

What to Watch

The second half of 2026 will test whether Malaysia’s fixed income strength and competitiveness gains eventually pull equity valuations upward, or whether the stock market’s caution proves to be the more accurate signal about underlying corporate health. Continued data centre and semiconductor investment, alongside any further IMD-style competitiveness validation, will be key catalysts to track.

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Analysis

Singapore MAS Tightens Policy as GDP Growth Hits 5.7%

Published

2 hours ago

July 29, 2026

Abdul Rahman

The Monetary Authority of Singapore nudged its exchange-rate-based policy stance slightly tighter in its July review, a modest but notable shift after the city-state’s economy grew a stronger-than-expected 5.7% year-on-year in the second quarter, powered by an AI-driven manufacturing boom that is increasingly reshaping the country’s growth mix.

Growth Beats Expectations Again

Singapore’s economy expanded 5.7% year-on-year in the second quarter of 2026, according to advance estimates from the Ministry of Trade and Industry released 14 July, moderating only slightly from an upwardly revised 6.3% in the first quarter, according to MAS’s own July policy statement. On a quarter-on-quarter seasonally adjusted basis, GDP rose 1.1%, continuing an unbroken run of above-trend expansion. Manufacturing has been the standout performer, posting 12.2% year-on-year growth in the second quarter — up from 8.0% in the first — driven by the electronics and precision engineering clusters riding the global AI capital expenditure wave, according to data reported by Indiplomacy.

The strength has prompted a wave of forecast upgrades. UOB Global Economics and Markets Research lifted its 2026 GDP growth forecast to 4.8% from 4%, while S&P Global Market Intelligence matched that upgrade, and Nomura flagged upside risk to its own 4.6% forecast, according to Xinhua — all comfortably above the Ministry of Trade and Industry’s official 2.0–4.0% guidance range.

MAS Leans Against Rising Core Inflation

The growth surprise has not been without cost. MAS Core Inflation, which excludes accommodation and private transport costs, rose to 1.5% year-on-year in the second quarter, up from 1.2% in the January–February period before the Middle East conflict began, according to the central bank’s own policy statement. Fuel-price surges have pushed up point-to-point transport and non-cooked food inflation, while retail goods prices have climbed on higher import costs and a tobacco tax increase.

In response, MAS increased the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band slightly in its July review — a modest tightening move that builds on an April 2026 tightening step, according to the bank’s Macroeconomic Review. Singapore uses its exchange rate, rather than interest rates, as its primary monetary policy tool, managing the currency’s path within an undisclosed band against a basket of trading partner currencies.

The Positive Output Gap Is Widening

Perhaps the most telling technical signal in MAS’s July statement is its acknowledgment that Singapore’s positive output gap — the extent to which the economy is running above its estimated potential — is now forecast to widen further in 2026, rather than narrow as previously expected. That reflects both the stronger-than-anticipated first-half growth data and MAS’s expectation that GDP will be sustained at elevated levels near-term, powered by continued AI-related capital expenditure, a robust construction pipeline, and steady credit-driven expansion in the financial sector.

Singapore’s central bank, MAS, slightly tightened its S$NEER exchange-rate policy band in July 2026 after GDP grew 5.7% year-on-year in Q2, driven by AI-linked manufacturing growth of 12.2%. Core inflation rose to 1.5%, prompting the modest policy shift even as growth forecasts were upgraded to as high as 4.8%.

Why This Matters Beyond Singapore

As a bellwether for Asian trade and technology cycles, Singapore’s data offers one of the clearest real-time signals of how durable the global AI infrastructure buildout has become, even as broader Asian growth forecasts have been trimmed elsewhere in the region due to Middle East-driven energy costs. For global investors, the combination of resilient growth and rising core inflation puts MAS in a position other regional central banks may soon face: managing an AI-driven boom that is proving inflationary in ways that are only loosely connected to traditional demand-side overheating.

What to Watch

MAS’s next scheduled policy review will be closely watched for whether the central bank continues its gradual tightening path or judges that easing global energy costs — following the partial reopening of the Strait of Hormuz — have done enough of the disinflationary work on their own. Singapore’s full second-quarter economic survey, due after the advance estimate, will offer a fuller sectoral breakdown of where the AI-driven strength is concentrated.

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Analysis

Indonesia Financial Hub 2026: Can It Rival Singapore, Dubai?

Published

3 hours ago

July 29, 2026

Abdul Rahman

Indonesia has taken its first concrete legislative step toward building a financial centre intended to compete with Singapore, Hong Kong, and Dubai, as President Prabowo Subianto pushes an ambitious plan to draw foreign capital into Southeast Asia’s largest economy and lift growth toward 8% by the end of his term in 2029.

Parliament Passes Enabling Legislation

Indonesia’s parliament passed the enabling legislation for the new financial hub, laying its legal foundation, according to reporting by the South China Morning Post. The milestone marks the most tangible progress yet on a project analysts say is projected to attract billions of dollars in investment — though they caution that crucial details on tax incentives, investor eligibility requirements, and regulatory safeguards still need to be finalised before the centre can credibly compete with established regional players.

The ambition is unmistakable: a financial centre capable of pulling capital away from Singapore’s deep, established markets, Hong Kong’s China-gateway status, and Dubai’s fast-growing wealth-management ecosystem is a tall order, and observers note that persuading global institutional investors to relocate meaningful operations to a new jurisdiction is a multi-year undertaking that has only just begun in earnest.

Indonesia’s parliament passed enabling legislation in July 2026 for a new financial hub designed to rival Singapore, Hong Kong, and Dubai, as President Prabowo Subianto targets 8% GDP growth by 2029. Singapore remains Indonesia’s top foreign investor at $8.8 billion in H1 2026, ahead of Hong Kong and China.

A Broader Investment Story Already Taking Shape

The financial-hub push arrives alongside signs that Indonesia is already deepening its role as a regional investment destination. Singapore remained Indonesia’s largest foreign investor in the first half of 2026, contributing $8.8 billion, followed by Hong Kong at $7.8 billion, China at $3.9 billion, Japan at $1.9 billion, and the United States at $1.7 billion, according to investment data reported by the New Straits Times. Malaysia ranked fifth, contributing $700 million in the second quarter alone, as Indonesia’s total realised investment reached Rp511.8 trillion.

Indonesian Investment Minister Rosan Roeslani has pointed to regulatory reform — including Government Regulation No. 28, introduced last October, which he said has provided greater licensing certainty — as a key driver of investor interest, while explicitly acknowledging that neighbouring economies are reforming in parallel, requiring Indonesia to keep pace.

Growth Outlook Holds Steady Amid Regional Headwinds

The financial-hub push comes as Indonesia’s broader macroeconomic backdrop remains comparatively resilient. The Asian Development Bank’s July 2026 outlook kept Indonesia’s growth forecast unchanged at 5.2% for both 2026 and 2027, even as the bank lowered its overall developing Asia and Pacific growth projection to 4.9% amid Middle East-driven energy cost pressures. That stability stands in contrast to Malaysia, whose 2026 growth forecast was revised only marginally higher to 2%, according to the same ADB report — even as Maybank Investment Banking Group separately upgraded its own Malaysia forecast more aggressively, to 4.9%, citing strong regional investor interest at July’s Invest ASEAN conference in Singapore, which drew 200 institutional investors managing a combined $23 trillion in assets.

Rice Diplomacy as a Parallel Economic Thread

Indonesia’s regional economic engagement extends beyond high finance. State logistics agency Bulog is continuing negotiations with Malaysia and Singapore over proposed rice export deals, with pricing and commercial terms still under discussion as of mid-July, according to The Star. The talks illustrate the breadth of Indonesia’s economic diplomacy push across ASEAN even as its flagship financial-hub ambitions dominate headlines.

What It Means for Global Investors

For asset managers and multinationals weighing where to locate Southeast Asian operations, Indonesia’s financial-hub legislation is a signal of intent rather than an immediate call to relocate. The real test will come as tax-incentive structures, licensing rules, and investor-protection frameworks are finalised over the coming months — details that will determine whether Jakarta can credibly compete with Singapore’s decades-long regulatory head start, or whether the hub instead becomes a complementary gateway focused on domestic Indonesian capital markets and Belt-and-Road-adjacent regional flows.