Asian Economies Remain Under Pressure of Donald Trump's 'America First' Protectionist Policy

Forex News

Manufacturing activity in Asia remains under pressure of the US tariffs and protectionist policy of Donald Trump. The United States has threatened to impose duties on up to $450 billion of Chinese imports, with the first $34 billion portion set to go into effect on July 6. Beijing plans to retaliate. Shipments from China and Japan, major manufacturing hubs, contracted in June, while businesses across Asia also took on higher input costs as the price of oil and other commodities rose, according to monthly manufacturing surveys.

China's Caixin/Markit Manufacturing Purchasing Managers' index (PMI) fell to 51.0 in June from 51.1 in May, with a subindex showing new export orders contracting for the third straight month and the most in two years.

Japanese manufacturing activity grew at a slightly faster pace in June. Meanwhile, export orders fell more than initially reported in a worrying sign of the potential impact of a heated trade dispute between the United States and major economies. The final Markit/Nikkei survey for Japan showed the manufacturing Purchasing Managers Index (PMI) was a seasonally adjusted 53.0, lower than the flash reading of 53.1 but still above a final 52.8 in May.

Most Asian currencies also remain under pressure of increased trade tension. The Indian rupee hit a record low against the US dollar and the Indonesian rupiah and the Philippine peso have both hit multi-year lows, despite central banks raising rates.