2025 JULY ISSUE
MARKET REPORT
SHORT READ
| PART 1
Contents:
Wind Power
Trump’s Chaotic New Tariff Rates
Canadian’s Lumber Industry
The Challenge of UNESCO
Latest on the Tariffs as of August 1, 2025
Supply Chain Challenges as Brought Up by Maersk
De Minimis Package After the Announcement
Manufacturing is Going Out of Style in Indonesia
Vietnam’s Sneaker Production
Seven Strategic Business Actions Are Deployed to Cope with the Tariff
China’s Electric Vehicle Dilemma
Written by Andrew Sia
Share this article !
From the Desk of the Publisher
The report is still surrounded by the tariff war call upon by Trump administration. It is toppling the world’s financial order because of his inconsistence with his policies among many others. But because of the confusion, China is sneaking in the back and have built up its soft power in a very subtle manner. Eventually it will be a harder situation for the going forward of the western nations to balance the powers
Our writeup of the UNESCO have explained the situation and we ought to fill up those vacant seats there to express our voices.
Wind Power
For those known clean energies, we have wind, solar, hydropower, biomass, geothermal, marine and tidal energy, green hydrogen, and nuclear.
On September 23, Donald Trump spoke at the United Nations General Assembly and one of the things that he attacked was the wind energy. He repeatedly called it the windmills rather than addressed it more properly as wind turbines. Perhaps he can’t tell the differences.
It was way back in 2011, when the Scottish government announced plan to build an 11-turbine wind farm about a mile out to the sea where the Trump’s luxury Aberdeenshire golf course is located, he criticized the “big, ugly structures” that ruin the view for the golfers. He lost his legal battle against the project, and the blades are barely visible from his course, and yet he still complained that the noise cause cancer to the people and drives the whales crazy. And without evidence that the blades kill all the birds. We noticed that Trump’s obsession is his biggest enemy and the “windmill” is just one of the many.
A study found that the collisions with turbines do kill about 200,000 birds a year in the U.S. But this is far less than the 599 million that die in collisions with buildings and the 2.4 million killed by cats.
By the way, wind turbine provides about 10% of all U.S. power.
The US Interior Department already stopped those work orders with Revolution Wind. It is a project of $4 billion for a 65-turbine wind farm planned to provide power for 350,000 families in Rhode Island and Connecticut in 2026. So that we know the construction is 80% completed, but the White House is using the excuse of national security to eliminate all the green energy sources it can.
At the same time, the administration asked for a court order to cancel the 2024 approval of a wind farm off Maryland and also reconsidering the approval of farms in Massachusetts and Rhode Island, with the three projects combined, they would power nearly 2.5 million homes.
Meanwhile, the White House has launched a legislative and multi-agency campaign that can sabotage the development of many future projects that have to do with the clean energy.
It was on his first day in the White House, Trump revoked 67 executive orders by his predecessor, President Biden, who in a total signed 162 executive orders during his term. Many of those were related to renewable and clean energy.
This is going to affect the Americans as the grid circuit needs new power sources to satisfy the surging demand from the AI data centers, as well as new homes and industries. Electricity prices for our households jumped more than twice as fast as the overall cost of livings last year. And American workers who were put in these projects would be affected as more than 17,000 jobs are connected to offshore wind projects that have already been cancelled or put on hold, or even shutdown.
Trump is steering the renewable and clean energy towards coal and gas plants that would cause more carbon emissions. Perhaps he may not understand or care about it and it is a pity.
Trump’s Chaotic New Tariff Rates
Trump’s latest tariffs sent shock waves throughout Asia. In fact, this has started already on April 2, 2025, when he announced the International Emergency Economic Powers Act (IEEPA), and since then the companies entered into turmoil they haven’t seen before.
As the source of goods imported into the U.S. Asia has borne the brunt of Trump’s campaign to rewrite the rules of global trade. Trade officers across the region have scrambled to strike deals with his administration to prevent the punitive tariffs from crippling their domestic industries.
On September 25, Trump announced another round of tariffs which would go in effect on October 1, applying tariffs ranging from 25% to 100% on pharmaceuticals, heavy trucks, kitchen cabinets, bathroom vanities, and upholstered furniture. These manufacturers are concentrated in China and Southeast Asia. And we found out that 60% of Malaysia’s furniture exports go to the U.S., and already in the first 6 months of the year, Malaysia exported $750 million worth of furniture to the U.S. market.
Trump is known for his impulsive changes, and imports of automobiles, key materials like copper, steel, and aluminum are hitting the hardest. There are still many new tariffs, despite many unresolved issues relating to Trump’s so-called reciprocal tariffs, are still being negotiating with countries in Asia.
So far, the U.S. has failed to strike a trade deal with Asia’s two biggest economies: China and India. Although it has secured with the commitments of Japan and South Korea during this time, and yet both countries are scratching their heads how to execute the key component of the deal, that is a combined $900 billion investment in the United States.
In Southeast Asia, many countries are waiting for the U.S. guidance on a key part of its transshipment. What constitutes a transshipped product, or goods indirectly shipped to the U.S. market via other countries. Under its agreement with Vietnam, transshipment will be subjected to a 40% additional import tariff.
It is meant for closing the loopholes that allow Chinese goods to pass through another country with lower import duties.
It is known that China has relocated its manufacturing in Southeast Asian countries in order to reduce their cost and to maintain their competitiveness. Vietnam has most of the setup for Chinese manufacturers. This time, China is using these relocated factories outside China to reduce their tariff exposure to the U.S. It is not the first time for the U.S. to distinguish what are goods made in China and made by China and to apply the correct tariffs. It is already known for quite some time that “China Plus One” has been the norm to avoid the dependency and too much reliance on China for the source of supply.
On top of all these, the next target is the product-specific tariffs and semiconductors comes into this. Trump is threatening to put 100% tariffs on semiconductors, and this would have significant consequences for Asian manufacturers. It is still unclear how the U.S. would proceed with tariffs on this industry, knowing that it is a complex and highly global supply chain as many of the chips are manufactured in Taiwan and South Korea. Malaysia is used for testing and processing.
Earlier on, South Korea agreed to a $350 billion investment package in exchange for the U.S. for lowering its tariffs to 15% on the country’s export to the U.S. This is becoming a headache now. Furthermore, South Korean officials insisted that the investment should comprise primarily loans and loan guarantees while the U.S. insisted South Korea to take equity in American companies. South Korea raised concerns that such a large sum can lead to a currency crisis if the foreign exchange can’t be safeguarded without the U.S. full consent.
But Japan signed a memorandum of understanding with the U.S. lately allowing Trump to select how the $550 billion would be invested. And if the Japanese have objections, then he will have the right to increase the tariffs. This is becoming a sentiment increasing pervasive across Asia. In a way that it is bullying and is totally chaotic.
Coming back into the International Emergency Economic Powers Act (IEEPA), which is a law from 1977 which gives the president power, during a declared emergency, to control economic dealings with other countries, like the freezing assets, blocking trades, or restricting financial trade financial transactions.
In 2025, Trump used IEEPA to put tariffs on goods from many countries. He used IEEPA to bypass normal trade rules and impose those tariffs directly. But IEEPA doesn’t apply for taxes on trade as it is the power given to the Congress. The federal appealed to court rule was pushed back in August and the case may go now to Supreme Court. The consequence is if the courts can agree with Trump, then future presidents can declare almost anything as an “emergency,” but if the rule is against him then his power will be limited, and it will reaffirm the role of the Congress.
We have to say to ourselves now whether this internation trade is really the foreign threat to the U.S. as what Trump claimed?
Canadian’s Lumber Industry
Terrace is a small town in the foothills of the mountains of British Colombia and it was boomed in the 1920s as the “pole capital of the world.” It was shipping Canadian cedar for poles for telephone lines and power cables across the world. Today this forestry industry is threatened by Trump’s tariffs for 35.19% on Canadian softwood lumber. This forestry industry is also a $63 billion business to the country which is already affected by the decreasing demand from the housebuilding sector.
Canadian forest products industry is one of the country’s largest employees, operating in hundreds of communities and providing 200,000 direct employments. Last year about two-thirds of the country’s softwood production was exported, and 90% of the export went to the U.S.
When Trump entered the office in January, he kept on mentioning that the U.S. has its own forestry and went further to investigate into alleged dumping of Canadian lumber into the U.S. causing National security threat. He even went further to promote the expansion of American timber production to reduce reliance on import. As the result, the lumber prices becoming very volatile.
Many of the associations, including the U.S. National Association of Home Builder argued that the protectionist policies and the increase of the lumber tariffs is damaging the demand of housing affordability.
On the other hand, the lumber warehouses have been stocking up their lumber trying to beat duties and tariffs from the U.S. and ended up flooding the market with depressing prices. This also caused a massive supply-side shock to the system that has coupled with weaker demand.
This is not new as dated back to the 1980s when there was a long-running dispute over the wood supply between the U.S. and Canada.
In August, the Canadian Prime Minister Mark Carney announced an investment of $960 million investment in Canada’s forest sector, including a $560 million loan guarantees to address the immediate crisis facing the soft wood timber sector. We can see that the forestry industry is so important to Canada.
The Challenge of UNESCO
United Nations Educational, Scientific and Cultural Organization (UNESCO) is a specialized agency of the United Nations that works to promote international collaboration in education, science, culture, and communication to foster peace and security. Its mission is to contribute to the building of peace, poverty eradication, sustainable development and intercultural dialogue through education, the sciences, culture, communication and information. It develops norms, standards, and tools for international cooperation in education, science, culture, and communication. It aims to build a more peaceful and secure world. This includes initiatives like promoting literacy, providing technical training, advance science research, protecting press freedom, and preserving cultural heritage sites. The last part has been the best-known part of their work.
The principal architect of UNESCO was the United States and the first signatory of the 1972 UNESCO Convention raising concerns for the protection of the world culture and natural heritage.
Some of the best-known UNESCO World Heritage Sites include the Great Wall of China, Machu Picchu, the Taj Mahal, and Angkor Wat. Other notable sites include the Great Barrier Reef, the Pyramids of Giza, and the Acropolis of Athens. These sites are known for their outstanding cultural and historical significance that attracting millions of visitors each year.
The U.S. President Trump made the decision to withdraw from UNESCO, and it offered an opening for China to advance its soft power. The same that Trump announced the departure from the World Health Organization (WHO) and curtailed the United States Agency for International Development (USAID). The USAID is an independent federal agency that administers civilian foreign aid and development assistance. Meanwhile, the White House review of U.N. agencies is due in early August, it is expected that Trump would defund it.
Today there is a Chinese official who acts as UNESCO’s deputy director, and this is often in exchange for political or monetary favors. China is using this in their Belt & Road Initiative as part of the global infrastructure program to boost for their World Heritage designations. It is using it to surpass Italy as the country who is with the most culturally significant sites. It is trying to include its regions like Tibet and Xinjiang where many of their residents, who are the indigenous inhabitants, view them as attempts to appropriate and control their culture and history.
The void left by the U.S. is often filled up by other major powers like China who understands the immerse soft power opportunity that exists in this kind of global organization, although its Congress authorized a funding waiver, and the U.S. should rejoin the UNESCO. The waiver explicitly mentioned concerns about Chinese influence. But with the Trump administration, it favors economic and military and downplays foreign aid and cultural programs.
As recent as in 2023, China President Xi Jinping initiated the Global Civilization Initiative (GCI) as a diplomatic initiative of China to hold each region’s value and not to be pressured from other countries with different values. Critics said that it is an attempt to undermine human rights and democracy. It is showing that Xi Jinping is not coming to the negotiation table to become a fair player and will continue to suppress the Tibetan’s Dalai Lamas, and the indigenous Uyghur in Xinjiang for their language.
We can also take it as part of the China Standard 2035 that China is increasing its global influence and strengthening its soft power.
Latest on the Tariffs as of August 1, 2025
This time we have observed that under the Trump’s administration, his policy, both internal and external, is reactionary. You may say that it is without policy as most of the things are ad hoc, not well thought or thoroughly planned. This is destroying the credibility and perceptions of the competence once the United States was known for.
On the other hand, the world is in the status quo mode. It is obvious for the world’s second largest power, China, and the European Union who have more in common for the first time. Knowing the economic and security challenges and the changes will have to mapped out in a more consistent manner. It is unlike what Trump is trying to do by increasing tariffs without the consent from the Congress which lead to the legality of this chaotic action. Its unfriendly behavior towards its next-door neighbors—Canada and Mexico—makes us wonder the strategic behind that could have benefitted anyone. The tariffs between the U.S. and Canada are as the following:
- The U.S. has implemented a 25% on most Canadian imports, excluding energy and potash products, which will face a 10% tariff.
- Steel and aluminum tariffs are subject to 50% into the U.S., while Canada has imposed retaliatory tariffs of 25%.
- Automobile and auto parts are subject to 25% into the U.S., and this included those from Canada.
Although goods from Canada that comply with the United States-Mexico-Canada Agreement (USMCA) are generally exempt from the tariffs as mentioned above.
For Mexico, Trump extended the deadline for tariffs by another 90 days. Or goods imported from Mexico that do not qualify as originating under the USMCA are now subject to 25% tariffs. Those fall under the original requirements are still duty-free.
With the recent US-EU trade negotiations, we have seen that it has been lowered from the previous threatened 30% to a 15% tariff on majority of its goods exported to the U.S. This applies to products like cars, car parts, pharmaceuticals, and semiconductors. However, certain sectors like steel aluminum, and copper will continue to face a 50% tariff. Although some strategic goods like aircraft, aircraft parts, certain chemicals, semiconductor equipment, some agricultural products and critical raw materials are expected to be exempt from tariffs from both sides.
Supply Chain Challenges as Brought Up by Maersk
Maersk is a bellwether for global trade, transporting one in five containers across the sea. For its first quarter revenue increased by 8% and operating profit jumped more than sevenfold to $1.2 billion. Maersk is expecting an underlying operating profit of zero to $3 billion this year.
Its trade volumes between the U.S. and China had dropped 30-40% in April as the result of Trump’s swinging tariffs, but Maersk’s other routes, between Asia and other emerging markets had remained strong. In fact, Maersk moved 20% of their capacity on China-US to other routes, especially to where we pointed out earlier.
We have to understand that the supply chain today has been built over decades. To change means new factories to be built, workers to be trained, and skills to be picked up by experience. This can take years to develop. It is unrealistic to bring production to the U.S. as there is the lack of labor. Actually, there is nothing that the U.S. can produce all by itself as also the materials and accessories are required to be imported.
De Minimis Package After the Announcement
On August 29, Trump announced the implementation of tariffs on small packages from all over the world for goods worth less than $800 to enter the U.S. duty-free. Knowing that the volume of business between 2015 and 2024, entering the U.S. increased annually from 134 million packages to 1.36 billion packages. It has been found that the de minimis exemption had been illegally used by smugglers for sending fentanyl into the U.S. It was found immediately that it had fallen from 4 million packages a day to 1 million packages.
This suspension has to be implemented globally in order to avoid any transshipment of small packages through other countries to disguise their origin.
This has prompted global postal services to announce they will stop sending parcels to the U.S. They are waiting for instruction how the duties will be collected.
By eliminating the duty-free treatment for small parcels with value lass then $800 has hit directly the online Chinese retailers such as Shein and Temu from shipping directly to the U.S. consumers.
Since Trump announced the plan to cancel de minimis in April, Temu had suspended the service already in May. It has resumed the direct shipments now as the result of calling the truce for the trade war between the U.S. and China. It was in May when the U.S. agreed to cut the tariffs from China to 30% for 90 days. The U.S. also announced the rate of the small package from China to 54%. The truce was extended again in August for another 90 days.
Temu’s rationale is that the tariff is across-the-board and even regular brands and retailers will have to increase their price substantially. Also, it is found cheaper and more cost effective than to maintain warehouses and inventory in the U.S. soil. But on the other hand, Shein has a subsidiary handling cross-border logistics including custom clearing, was able to increase revenue and remain profitable with their operations in the U.S.
Manufacturing is Going Out of Style in Indonesia – FT, August 21, 2025
Indonesia is an archipelago with 283.5 million population. It is the fourth most populous country in the world. It is a resourceful country, and it is the world’s top exporter of nickel products. From 2020 the country banned the export of nickel ore and try to create a domestic processing industry to feed the burgeoning global demand for electric vehicle batteries. Investment poured in but oversupply has sent the nickel prices to a five-year low, and several smelting facilities shutdown as the result. We have to know that big resource projects don’t create the kind of employment the populous countries are looking for.
Going back in history, Indonesia was once the destination for manufacturing industry where millions of jobs were created and made in one of the world’s top producers of apparel, footwear, and furniture. Its success came late despite the neighboring Southeast countries all began much earlier.
It was during the 1960s when the country’s dictator, Suharto, brought in industrial policies and the sector grew by an annual average of 10.7% in the three decades starting from 1967. It ended in 1997 when Indonesia and several Asian countries suffered during the Asian Financial crisis. Suharto was toppled in 1968.
Growth plummeted between 2000 and 2024 and the manufacturing sector average 4.2%, less than half from previous decades. Indonesia continued to look less appealing than other countries with the red tape, corruption, logistics, and ever-changing governmental policies.
Official data showing more than 42,385 jobs lost in manufacturing between January and June of this year. It is a 32% rise from last year. But a coalition of labor unions estimated that the layoffs in the first four months were at 70,000 already. And most of the investments went into capital-intensive natural resources which are not creating jobs as desired. The deindustrialization is having a far-reaching consequence. The fewer jobs created are eroding the purchase power. Manufacturing GDP which was once peaked at 32% in 2002 is now at 19% according to last year’s figure.
The country’s core problem is its focus on developing its cyclical and capital-intensive commodities sector over labor-incentive manufacturing which can create more employment and higher wages. With its 280 million+ population, the country has also a significant purchasing power if more jobs could have been created. It can also boost its service industry at home to serve this big consumer market. Instead, those manufacturing job creations have gone to Thailand, Malaysia and Vietnam.
The Indonesian Employers’ Association (APINDO) said that a decade ago every trillion Indonesian rupiah ($61 million) investment would bring 4,000 jobs, but it is only 1,000 jobs today.
The tariff between the U.S. and Indonesia has now been set at 19% but it doesn’t help Indonesia’s export business. Unemployment and underemployment are hurting the economy. Its once thriving middle class has contracted by a fifth over the past six years.
The social problem is going to become the threat of its political stability. Already advisors have been suggesting that Indonesia has to improve its investment climate and attract more manufacturing job to create higher paid for boosting local consumption.
Central Java has been known for being the country’s biggest industrial hub with a population of 38 million. Will its government be able to turn the situation around and try to revive its manufacturing activities while keeping its mining following the today’s need?
Vietnam’s Sneaker Production – New York Times, September 23, 2025
Vietnam has overtaken China as the No. 1 source of sneakers, while China is still holding to toys, apparel, and computers among the others.
If we look at sneakers, it is a much more localized supply chain than other industries. The factories can produce foam soles, squishy insoles, cotton laces, and mesh fabric, almost self-independent from China. Today Vietnam is the number one supplier to big brands like Nike, Adidas, Saucony, and Brooks Sports.
Earlier on, Trump threatened Vietnam the 46% tariff and the stock of Nike and Adidas came crashing down. And now it has been adjusted to 20% as the latest which already shock companies like Nike, who is worried that it would add $1 billion in extra costs for this year. It went further to scale down production from China.
Nike started as a newcomer in the 1970s and at the time it went to factories in Taiwan and South Korea to ramp up its sneaker culture.
In 1980s, China opened its door to foreign companies and started to offer cheaper cost. As the result, factories in South Korea and Taiwan moved there for the sourcing of their production.
Vietnam opened its industry to the world in the 2000s and we have to know that Vietnam is also the communist-controlled economy. China production continued but it was getting more expensive, and the China local markets have also opened and for sneakers they are easy to copy and imitate, many products that can be found in the market were infringed with copyrights. Very often it was found that before the new designs hit the store in the foreign market, the copied ones were already available in China. Global brands are beginning to take precautions to protect themselves and relied more on other countries.
The localized supply chain, and the speed to market are the advantages for the sporting goods. It makes shoe production in Vietnam less reliance to China.
The last we heard that U.S. has maintained a 20% reciprocal tariff on most Vietnamese goods as part of a new trade framework agreement. For transshipped goods, a separate 40% tariff applies to goods that are identified as being transshipped, meaning they are rerouted through Vietnam to avoid higher tariffs.
Seven Strategic Business Actions Are Deployed to Cope with Tariffs – New York Times, May 5, 2025
Move out of China – It is not something that everyone can do and do it quickly. But it is important to reduce the dependence on China which is something everyone is looking for.
Take the hit – In this case, a lot of negotiations and compromises would need to be taken. Looking for discounts along the supply chain and make price reduction to save the business.
Cut costs and expenses – Have a smaller space by first the better use of the space. Scale back on overheads. Cut back advertisements.
Sell fewer items – Take out those products that are not performing well. Stick to better quality and let customers know that the products are more for values and functions in order to become justified.
Increase price – This is the route to take but will need to carry it out carefully. Customers would understand under today’s environment. In some cases, you can say that they are expecting.
Understanding – Through communication along the chain and eventually to convince the customers that it is inevitable and out of anyone’s control.
Reroute, delay and process under special arrangement – Last and not the least, it is worth to study what is known as for a product with procedures mostly made in China but finish in the third country that can result a lower tariff than imported directly from China. Then there is a delay for paying the tariffs until the goods are sold. Also to find the special trade zones within the United States to import parts for final assembly to avoid any import duty. There may be some grey areas where the legal advisers should be engaged.
China’s Electric Vehicle Dilemma – New York Times – September 4, 2025
It’s no exaggeration to say that China is conquering the world in electric vehicles. In fact, its automakers produce far more that any other country and outpace them in innovation. In China battery-powered and plug-in hybrid vehicles made up more than half of all cars sold.
At one time China has about 50 automakers in the market cutting prices to seize customers and the manufacturers are facing tremendous losses that endangered the industry. This is the result when the Chinese government started to promote new products in the arena, and it is part of the clean energy technology.
It is becoming common for them not to pay for their parts from their suppliers but continue to borrow from banks to support their overcapacity situation. This excessive competition also caused something now to us as “involution.” Those completely state-owned automakers have to set up system to prompt payment.
To discourage investment in automaking has been difficult as the investment was still up 21.7% in the first seven months of the year.
Last year there were 139 brands in China selling cars mainly running on electricity and it is said that only 15 of them would still stay in business in 2030.
BYD, the world’s largest electric vehicle maker is having a hard time competing with the Geely Group and its many brands like Zeekr and Polestar. Xiaomi who branched into electric cars last year, with its first model, SU7, has outsold all but five other models in China.
The four state-owned automaker—FAW Group, Dongfeng Motor, Changan Automobile, and the GAC Group—are still producing internal combustion engines but weak in electric vehicles.
Beijing is trying to contain the industry’s overall capacity, but these state-owned companies refuse to reduce their capacity and laying off their workers which is politically difficult especially in the high-profile industry like automobiles. And the banks are under mandatory mandates to lend to the clean energy technology.
The car dealers are forced to keep on buying cars and to promote them below cost.
We have to know that EV is only a new area for China automobile industry. It even didn’t exist prior to the COVID-19 pandemic. Now it is exporting to the international market and overtaking Tesla who introduced China into this technology. Its university graduates in mechanical engineering are ten times as many as the U.S., and they are struggling to find job now. BYD employs 120,000 engineers, roughly the size of Tesla’s entire labor force.
Tesla is facing a fierce competition with aging models, and it is cutting prices to stay competitive. And on the other hand, China with self-groomed mechanical engineers, the state-backed loans, and the ferocious competition, is a remarkable Chinese competition for innovation. At the end we have to ask ourselves who is the winner.