Indonesia Shifts Shrimp Export Focus to China Amid U.S. Tariff Fallout

Economic

Summary:

Facing a 19% U.S. tariff on shrimp exports, Indonesian producers are redirecting their market strategy toward China and other regions. The shift aims to stabilize an industry heavily reliant on U.S. demand, now under threat from trade tensions...

U.S. Tariffs Disrupt Indonesia’s Shrimp Industry

Indonesia’s shrimp sector, a vital part of the country’s aquaculture industry, has been shaken by the implementation of a 19% U.S. tariff, announced in July 2025. While lower than the initially proposed 32%, the tariff still represents a significant blow to exporters, who relied heavily on U.S. demand. In 2024, the U.S. accounted for 60% of Indonesia’s $1.68 billion shrimp exports.

At Ujung Kulon Sukses Makmur Abadi, a major shrimp farm on the southwestern tip of Java island, expansion plans have come to a halt. Owner Denny Leonardo, who had intended to build 100 new ponds, was forced to scale back. "Everyone is eagerly looking for new opportunities to reduce dependence on the U.S.," he said.

Export Outlook Weakens, Jobs at Risk

According to Andi Tamsil, head of Indonesia’s shrimp farmers’ association, the 19% tariff could result in a 30% drop in total shrimp exports in 2025 compared to last year. This contraction places an estimated one million jobs at risk, from pond operators to seafood processors.

While Ecuador — the world's top farmed shrimp producer — faces only a 15% U.S. tariff, Indonesia’s new rate puts its exporters at a competitive disadvantage. U.S. buyers are still hesitant to place orders despite July's revised deal, deepening uncertainty.

Strategic Pivot to China and Other Markets

In response, Indonesia is aggressively courting new buyers in China, which remains the world’s largest shrimp importer. Historically, China only imported 2% of Indonesia’s shrimp exports, but that is now expected to grow.

Delegations led by industry figures like Tamsil have begun visiting major Chinese cities like Guangzhou, meeting with importers, restaurants, and e-commerce platforms to drum up demand. Tamsil believes Indonesia could realistically target 20% of China's 1 million-tonne import market.

Budhi Wibowo, head of the seafood exporters’ association, also sees diversification opportunities in the Middle East, South Korea, Taiwan, and the European Union, especially with Indonesia on the verge of finalizing a free trade agreement with Brussels.

A Slower Path to Growth

Despite the turmoil, farmers like Leonardo remain cautiously optimistic. While he believes demand and supply will rebalance, he admits that the aggressive growth he envisioned for his business is no longer feasible in the near term.

His sentiment reflects a broader outlook among Indonesian producers — survival is likely, but expansion will require strategic realignment, greater market outreach, and a reduction in overreliance on the U.S. market.

The case of Indonesia’s shrimp industry underscores a key lesson from recent global trade frictions: economic diversification is not a luxury — it’s a necessity.

Source: Reuters

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Economic

Stocks

Asian Equities Resilient as Investors Digest U.S. Economic Concerns

Markets across Asia saw modest gains on Wednesday, suggesting regional optimism even as Wall Street grappled with a second day of losses. The movement came amid weaker-than-expected U.S. service sector data and lingering fears over the economic fallout from President Donald Trump's tariffs.

Japan’s Nikkei 225 climbed 0.6% to 40,777.45, supported by anticipation ahead of earnings from major exporters like Toyota, Honda, and Sony. Australia's S&P/ASX 200 also rose 0.6%, while Hong Kong’s Hang Seng edged up 0.2% and Shanghai's Composite Index advanced 0.3%. South Korea’s Kospi, however, declined by 0.3%, with tech and export-sensitive stocks under pressure.

Wall Street Losses Highlight Tariff Risks and Rate Cut Hopes

On Tuesday, the S&P 500 fell 0.5%, closing at 6,299.19. The Dow Jones Industrial Average dipped 0.1%, while the Nasdaq slid 0.7%, as investors reacted to disappointing U.S. services activity data. The ISM Services Index stalled, suggesting that tariffs may be curbing demand in key sectors like transportation and retail.

While such economic signals raise alarms about growth, they simultaneously boost expectations that the Federal Reserve may cut interest rates at its September meeting. Fed rate cut expectations gained further traction following last Friday’s weaker-than-expected jobs report, which sharply pulled down Treasury yields and reinforced fears of a slowing economy.

Profit Season Under Scrutiny

With U.S. equities having surged to record highs since April, market observers are now questioning whether valuations are too rich relative to economic fundamentals. This places heavy pressure on corporate earnings to justify lofty stock prices. Strong results from select firms have helped limit downside, but the broader market remains volatile and highly sensitive to macroeconomic news.

Investors are also watching whether interest rates will drop fast enough to support stock prices, especially in an environment where rising input costs exacerbated by tariffs threaten profit margins. While lower rates would boost equities by making them look more attractive versus bonds, they also risk fueling inflation, which could complicate the Fed’s policy path.

Bond and Currency Markets Reflect Uncertainty

The 10-year U.S. Treasury yield continued to fall, dipping to 4.19%, well below the 4.39% level seen before last week’s jobs report. This ongoing decline reflects growing investor concern about economic deceleration, and potentially a deeper rate cut than previously expected.

In the currency market, the U.S. dollar weakened slightly, falling to 147.34 yen, while the euro inched up to $1.1583. These muted movements reflect investor caution ahead of key monetary and trade policy announcements from the U.S.

Energy Prices Tick Higher

Oil prices rose modestly, with U.S. crude gaining 41 cents to $65.57 per barrel, and Brent crude adding 42 cents to $68.06. The rebound was likely driven by speculation that a Fed rate cut could bolster economic activity and energy demand in the medium term.

Markets will remain volatile as investors await further clarity on Federal Reserve policy, especially amid reports that President Trump is close to nominating a new Fed Governor. Meanwhile, uncertainty over tariffs, including potential escalations with China, Japan, and South Korea, adds a geopolitical layer of risk.

While Asian equities have shown resilience, their performance is tightly tied to U.S. economic sentiment, Fed decisions, and the trajectory of global trade flows in the months ahead.

Source: AP

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Economic

Auto Industry Caught in Diplomatic Delay

South Korea’s Industry Minister Kim Jung-kwan announced on Wednesday that the timeline for the U.S. to cut its 25% tariff on South Korean car imports remains undecided, despite assurances in a recent trade agreement with Washington. President Donald Trump had stated that the U.S. would impose a 15% tariff on most South Korean imports, including autos, as part of a broader trade deal that aims to stabilize relations with one of its key Asian allies.

With the 15% tariff set to take effect on Thursday, South Korean automakers like Hyundai Motor and Kia are lobbying for a swift implementation of the auto-specific tariff reduction. They argue that delays in tariff cuts will leave them at a disadvantage compared to Japanese and European competitors, whose products may face fewer barriers under other bilateral deals.

Japan Also Presses Washington for Action

South Korea is not alone in its concerns. Japan’s lead trade negotiator, Ryosei Akazawa, also revealed plans to visit Washington this week to push for President Trump to sign an executive order that would activate a reduction in U.S. tariffs on Japanese cars and auto parts. Like Seoul, Tokyo is urging clarity and swift enforcement of what was already agreed in principle during recent rounds of trade talks.

Beyond autos, Minister Kim also noted that South Korea and the U.S. will continue negotiations around digital platform regulation, particularly concerning U.S. tech firms operating in the Korean market. While this issue wasn’t included in the most recent trade agreement, U.S. lawmakers and businesses have raised concerns about being treated unfairly under Seoul’s evolving tech legislation.

Kim emphasized that no concessions were made regarding agricultural market access, including beef, rice, and fruit, which remain sensitive topics in Korean domestic politics. However, cooperation will increase in the area of quarantine procedures for fruit and vegetables, which the U.S. views as a non-tariff barrier due to their slow processing times.

Pressure to Reform Quarantine Standards

At a separate parliamentary session, Finance Minister Koo Yun-cheol acknowledged that the U.S. has formally requested South Korea streamline its fruit and vegetable quarantine process using more “rational and scientific” methods. This request is part of a broader push by the U.S. to eliminate non-tariff trade obstacles, especially those hindering American agricultural exports.

Although the U.S.-South Korea trade agreement signaled progress in mending bilateral ties, the lack of clarity on tariff cut implementation timelines for cars and unresolved issues in agriculture and tech regulation suggest that much of the deal remains in negotiation. For now, South Korean manufacturers and exporters must brace for the 15% blanket tariff starting Thursday, while still awaiting confirmation on when promised relief for key sectors will arrive.

Source: Reuters

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Economic

Outlook Darkens as Tariff Deadline Nears

China’s export sector, long the engine of its economic expansion, is now showing signs of strain. According to a Reuters poll of 34 economists, outbound shipments in July likely grew by just 5.4% year-over-year, a modest slowdown from June’s 5.8% increase. Meanwhile, imports are expected to have fallen by 1.0%, a reversal from the prior month’s 1.1% rise, indicating continuing weak domestic demand, particularly from a crisis-hit property sector and cautious consumers.

This slowdown occurs against the backdrop of heightened geopolitical uncertainty. President Donald Trump has set an August 12 deadline for reaching a final tariff deal with Beijing. Without resolution, tariffs on Chinese goods could snap back to triple-digit levels, threatening what analysts describe as a de facto trade embargo between the world’s two largest economies.

Trade Deal Hopes Offer Only Tentative Relief

Trump signaled on Tuesday that the U.S. and China were “close to a deal,” with a potential summit with President Xi Jinping planned before year-end. Yet, despite earlier framework agreements in May and June focused on reducing non-tariff barriers in key areas like rare earths and tech licensing there is little certainty that a comprehensive agreement will materialize.

If talks fail, global supply chains face renewed disruption. The mere possibility of such disruption is already enough to delay export orders, discourage investment, and dampen forward-looking indicators in China’s manufacturing sector.

Trade Surplus Shrinks as Deflationary Risks Mount

China’s trade surplus is projected to narrow to $105 billion in July, from $114.77 billion in June. Coinciding U.S. data revealed that the American trade deficit with China fell to its lowest in over two decades, suggesting weakening bilateral trade ties even before any new tariffs are imposed.

China's domestic demand remains fragile, as the country grapples with a persistent property market downturn and growing signs of deflation, pushing the government to reconsider its long-term economic strategy. Leading policy advisers in Beijing are now urging a shift toward household consumption as the key growth pillar in the upcoming Five-Year Plan. This shift is deemed essential, as external trade becomes an increasingly unstable driver.

Deflation, Employment and the Reform Conundrum

Beyond trade, China’s deflationary pressure is becoming a broader macroeconomic challenge. The central government has pledged to clamp down on destructive price-cutting by Chinese firms particularly in tech and manufacturing that is exacerbating downward price trends. However, the root issue is structural: a demand-side weakness that’s harder to reverse than previous supply-side reforms from a decade ago.

Economists argue that the current downturn threatens job creation, a key pillar of social stability in China. This makes it imperative for Beijing to balance reform goals with immediate economic support, particularly for consumers and the service sector.

Global Pressures Persist

Even if a deal is reached with the U.S., China’s broader trade environment remains hostile. The European Union continues to accuse Beijing of market distortion through underpriced exports, especially in renewable energy, steel, and electronics. Meanwhile, Trump’s administration is cracking down on circumvention tactics, including rerouting Chinese exports through third countries.

Export growth, therefore, is projected to slow sharply in the second half of 2025, reflecting not only tariff risks but deteriorating diplomatic relations and external scrutiny of China’s industrial policy.

As the August 12 deadline approaches, China’s export momentum appears to be cooling, caught in a bind between Trump’s unpredictable trade policy and a sluggish domestic economy. The prospects of a trade agreement offer some hope, but even success may be short-lived given the entrenched geopolitical rivalry and structural headwinds facing China’s economy. A genuine pivot toward domestic consumption and deeper reform may be Beijing’s only sustainable path forward.

Source: Reuters

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Economic

Forex

Dollar Movement Muted Despite Rising Uncertainty

On Wednesday, the U.S. dollar showed little direction as traders exercised restraint ahead of President Donald Trump’s imminent decision on who will fill a key vacancy on the Federal Reserve Board of Governors. While Trump also confirmed a shortlist of four candidates to potentially replace current Fed Chair Jerome Powell when his term ends in May 2026, the lack of clarity and potential politicization of the Fed left markets hesitant.

The dollar index hovered at 98.76, still below Friday’s peak of 100.25 and showing no meaningful recovery after a sharp fall following a disappointing U.S. jobs report last week. Against the yen, the dollar was steady at 147.54, and the euro edged up to $1.5760. The British pound was last trading at $1.3304.

Tariff-Driven Stagflation Fears Complicate Policy Outlook

Economic data released on Tuesday offered stagflation-like signals, adding complexity to the Federal Reserve’s upcoming decisions. The U.S. services sector stagnated in July, while input costs rose at their fastest pace in three years, suggesting that Trump’s aggressive tariff policies are beginning to exert inflationary pressure without stimulating activity. This puts the Fed in a difficult position as it tries to balance price stability against a weakening economic backdrop.

Ray Attrill, head of FX research at NAB, noted that markets may overestimate the certainty of a rate cut in September. While futures still imply a 94% probability of such a move, Attrill highlighted that Tuesday’s ISM report suggests caution, as rising costs might conflict with easing expectations.

Market Attention Turns to Trump’s Fed Pick

The potential market-moving event now lies in Trump’s announcement expected by the end of the week on who will replace the departing Fed governor. The choice could signal how independent the central bank will remain under Trump’s influence, especially given the accusations of partisanship in Fed appointments.

Analysts expect increased volatility if the nominee is perceived to lack credibility or central banking expertise. The appointment could influence expectations not just for the September decision, but for the longer-term path of U.S. monetary policy especially as Trump continues to pressure the Fed to support economic growth amid his tariff wars.

AUD, NZD Edge Higher Despite Domestic Headwinds

Outside the U.S., the Australian dollar rose 0.15% to $0.6479, and the New Zealand dollar gained 0.23% to $0.5914. New Zealand reported a slight uptick in its jobless rate, reinforcing expectations that the Reserve Bank of New Zealand will follow through with a 25 basis-point rate cut in August. Despite soft labor conditions, the Kiwi held steady, supported by dovish central bank sentiment.

The dollar’s subdued behavior reflects an ongoing pause in directional conviction among traders. With economic indicators flashing mixed signals and a politically sensitive Fed nomination on the horizon, markets are in limbo, waiting for clearer policy direction. A poorly received pick for the Fed board or stronger stagflationary data could rekindle dollar volatility, while a credible nominee and stabilizing data might restore calm to FX markets in the days ahead.

Source: Reuters

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Samantha Luan

Cryptocurrency

Forex

Key Points:

● Bitcoin price drops below $113,000 amid whale sell-offs.

● Large liquidations trigger market volatility.

● Macroeconomic factors and U.S. tariffs cited in analysis.

Bitcoin Price Drops Below $113,000 Amid Whale Sell-offs

Bitcoin's price plunged below $113,000 between August 1–3, 2025, driven by global macroeconomic turbulence and large whale sell-offs, triggering substantial market fluctuations across the crypto landscape.This event underscores the impact of institutional trading dynamics and macroeconomic factors on cryptocurrency markets, emphasizing volatility and potential strategic reassessment by traders and investors.

Major institutional traders, known as "whales," sold approximately 80,000 BTC, intensifying the price drop. Binance urged traders to "reduce leverage, monitor U.S. inflation data, and prepare to capitalize on potential opportunities as institutional capital reassesses its entry points." Binance urged traders to reduce leverage and monitor economic data while institutional capital re-evaluates positions.The drastic price decline led to liquidations exceeding $1 billion in a single day, impacting Bitcoin and Ethereum the most. Bitcoin dominance surged as altcoins experienced heavier losses in the market.

Economists cited new U.S. tariffs signed by President Trump as a contributing factor to the existing macroeconomic uncertainty. "The dip was more of a technical correction than a panic-driven selloff, citing ongoing macroeconomic uncertainty following new U.S. tariffs signed by President Donald Trump in late July." The market correction appears to be a technical adjustment rather than panic-driven.The historic precedent shows August as a historically volatile month for Bitcoin, with a median drop of 8.3% since 2011. Market analysts emphasize that BTC’s resilience under $120,000 highlights strong support levels despite prevailing uncertainty.

Despite steep market corrections, "the ability to absorb such large sales without a steeper crash signals strong demand from buyers waiting on the sidelines." strong demand from buyers on the sidelines helped absorb large sell-offs. This is seen as a positive indication of potential market stability and investor confidence in Bitcoin's long-term value proposition.

Source: CryptoSlate

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Gerik

Economic

Commodity

Scope and Impact of the Tariffs

The Biden-to-Trump transition’s intensified trade policy has now sharply turned toward copper. President Trump’s 50% tariffs on semi-finished copper products including wires, tubes, rods, and communication cables affect imports that totaled over $15 billion last year. This new trade measure signals a continuation of Trump’s strategy to revitalize domestic industry by penalizing foreign production, but it also raises costs for U.S. manufacturers and consumers.

Bloomberg’s analysis shows that about $7.7 billion worth of semi-processed copper mostly near-pure metal products and a similar amount of telecom-related cabling are included. These tariffs represent a major market intervention, similar in approach to Trump’s earlier moves on aluminum and steel, which were extended to derivative products to close regulatory loopholes.

Exemptions and Strategic Omissions

Refined copper, worth $8.4 billion in 2024 U.S. imports, is not subject to the new tariffs. This was a major surprise for investors, especially considering the administration’s stated goal of stimulating domestic copper output. However, the U.S. remains heavily dependent on refined copper imports, particularly for industrial and technological applications, which likely explains this calculated exclusion.

Market participants quickly interpreted this as a pragmatic compromise, avoiding direct pressure on essential sectors like electronics and EV production, which could suffer severely from input inflation. Instead, the focus is squarely on semi-finished goods, where Trump argues U.S. manufacturers can scale up quickly.

Economic and Market Reactions

The immediate market impact was severe. The announcement triggered a record decline in U.S. copper futures, reflecting both uncertainty in sourcing costs and concerns over global trade retaliation. Given that the U.S. imported 600,000 tons of semi-finished copper in 2024 35% from Canada, with the rest spread across Germany, South Korea, and Mexico the potential for diplomatic tensions is rising.

The tariffs are value-based, meaning higher copper-content items will face proportionally greater cost increases. For example, nearly pure copper rods will be more heavily affected than copper-containing electronics cables. This has sparked fears among telecom firms, auto manufacturers, and utility companies, which rely on diverse copper-based components.

Policy Outlook: Expansion Likely

The White House has signaled further action. Within 90 days, a plan is expected to extend the tariffs to additional copper-intensive manufactured products. This hints at a broader strategy of building a vertically integrated copper supply chain within U.S. borders. It echoes Trump’s earlier tactic of starting narrow and expanding, as seen with aluminum and steel tariffs.

However, without parallel support for domestic copper smelting and processing capacity, analysts warn that these tariffs could lead to rising input costs without meaningful job gains repeating past criticisms of protectionist trade shocks that ultimately hit downstream U.S. industries hardest.

A Costly Bet on Domestic Industry

Trump’s copper tariffs, while aiming to boost domestic semi-processed output, represent a high-stakes trade gamble. They target an essential industrial metal in a market still dependent on foreign supply, with ripple effects likely across construction, telecom, EVs, and renewables. The 50% rate is among the harshest tariff actions taken under this administration, and though refined copper was spared, uncertainty looms for both global suppliers and domestic users.

Market observers will now watch for further trade retaliation, supply chain adjustments, and upcoming details on how Trump’s 90-day tariff expansion mandate will unfold. For now, the copper trade just got a lot more expensive and a lot more political.