Tariff Cuts Help China Avoid Mass Layoffs — But Job Market Pain Still Deepens

Economic

China–U.S. Trade War

Summary:

The sharp rollback in U.S. tariffs after the Geneva trade truce helped China avert millions of potential job losses and social unrest. However, lingering 30% duties and economic slowdown continue to drag on employment prospects...

A Near-Miss with Social Instability

After April’s tariff shock saw U.S. import duties on Chinese goods spike to as high as 145%, fears of mass unemployment and social unrest loomed large over Beijing’s leadership. For the ruling Communist Party, preserving social stability is vital to regime legitimacy.

Economists such as Alicia Garcia-Herrero had warned of up to 9 million job losses under the triple-digit tariff regime. The Geneva de-escalation last week — which brought tariffs down to 30% — reduced that threat substantially. Current forecasts suggest 4–6 million jobs remain at risk, with potential losses shrinking to 1.5–2.5 million if duties are cut further.

Still, the economic damage has already been done for many. Workers like Liu Shengzun, who lost two factory jobs in a single month, have abandoned manufacturing altogether and returned to subsistence farming.

Lingering Tariffs, Lingering Risk

Despite progress, 30% tariffs remain punitive. A Chinese government adviser told Reuters that while the “worst-case” scenario has been avoided, the current level of duties will “continue to be a burden on China’s economic development.” The uncertainty of Donald Trump’s policy swings compounds this hesitancy.

Lu Zhe of Soochow Securities estimates that job losses could now stay under 1 million, down from nearly 7 million projected at the peak of the trade dispute.

But analysts remain cautious. Companies impacted by the April spike are not rushing to rehire, worried about future shocks. Garcia-Herrero emphasized that “at 30%, I doubt [companies] will say, ‘okay, come back.’”

A Fragile Employment Landscape

China’s export-heavy sectors like lighting, furniture, footwear, and industrial components were already operating on thin margins before April. The tariff shock accelerated workforce reductions, and with global demand weakening, firms are turning even more conservative in their labor strategies.

Li Qiang, once employed in a pneumatic cylinder export firm, is now a ride-hailing driver in Chengdu. Despite the easing of tariffs, he has no intention of returning to the sector: “Trump’s policies toward China could change at any time… I don’t plan to put any effort into working in the export sector anymore.”

Beijing’s Response: Targeted Stimulus

In an effort to contain job losses, China is deploying fiscal and monetary tools. The People’s Bank of China (PBOC) has introduced new funding support for labor-intensive service sectors, including elderly care.

Jia Kang, a key economic adviser, stated that state investment will be the main driver of job creation this year. While Beijing intends to maintain its budget deficit near 4%, a higher ratio remains an option “if a serious situation arises.”

Exporters Still in Retreat

Though full data on April job losses is lacking, the signal from business confidence is clear: the hiring outlook remains grim. Many exporters are downsizing quietly, focusing on survival rather than expansion — a dynamic that could trap the economy in a deflationary spiral.

An unnamed policy adviser likened the situation to “frost on top of snow,” underscoring that the tariffs are compounding pre-existing economic weaknesses rather than acting as the root cause alone.

The U.S.-China trade truce has averted immediate catastrophe for China’s job market, but it has not reversed the damage. Persistent tariffs, sluggish global demand, and structural uncertainty continue to undermine employment in the export sector. The psychological scars from April’s tariff spike are likely to keep both firms and workers wary — and China’s government under pressure to find alternative engines of job growth.

Source: Reuters

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Gerik

Economic

Record Inflows Driven by U.S. Volatility

Amid the financial turbulence unleashed by President Donald Trump’s sweeping April 2 tariff announcement, global investors channeled ¥8.21 trillion ($56.6 billion) into Japanese equities and long-term bonds, marking the largest net monthly inflow in nearly three decades, according to Japan’s Finance Ministry and Morningstar data.

Much of this influx occurred within the first week of April, when the U.S. 10-year Treasury yield spiked by 30 basis points, reflecting growing investor risk aversion, while Japan’s 10-year yield fell by 21 basis points, bolstering demand for yen-denominated assets.

Japan Reclaims Its ‘Safe Haven’ Status

With U.S. markets rattled by policy uncertainty and geopolitical stress, Japanese assets reasserted themselves as a global safe haven. Rashmi Garg of Al Dhabi Capital noted that “sell-U.S.” sentiment pushed large institutional investors — including reserve managers, life insurers, and pension funds — toward Japan’s relatively stable environment.

Japan’s Nikkei 225 rose over 1% in April, while the S&P 500 slipped nearly 1%, reinforcing the relative attractiveness of Tokyo’s markets.

Nomura strategist Yujiro Goto confirmed that institutional capital, rather than retail flows, dominated this surge, especially into long-dated Japanese government bonds and large-cap stocks.

Not a One-Off — But a New Allocation Strategy?

Although the April surge was partly driven by immediate volatility, the underlying strategic reallocation of global capital may have longer legs. OCBC’s Vasu Menon pointed out that U.S. credibility has suffered due to erratic policy shifts, which could lead fund managers to permanently trim U.S. exposure in favor of alternative markets like Japan.

Even as the U.S. has begun de-escalating its tariff wars — including a 90-day truce with China and a new trade agreement with the U.K. — analysts suggest Japan will retain inflow momentum thanks to its internal reforms and macro stability.

Corporate Governance Reforms Add to Momentum

Foreign investors are also responding to Tokyo Stock Exchange (TSE) reforms introduced in 2023. These policies require companies trading below book value to “comply or explain”, incentivizing higher returns to shareholders.

This governance push has already triggered record share buybacks, supporting earnings per share and share prices — a structural shift that asset managers, including Asset Management One International, say will sustain long-term equity attractiveness.

Yen Strength and Rebound Signals More Upside

Despite some recent strengthening of the U.S. dollar, investors still view the yen’s rebound potential as an attractive macro play. Japan’s economy, which contracted mildly in Q1 due to weak exports, is expected to recover, especially if tariffs on Japanese goods are relaxed in upcoming U.S.–Japan trade negotiations.

Kei Okamura of Neuberger Berman remains bullish: “This trend has legs. Japan will likely continue to see good flows,” he told CNBC, emphasizing the realignment of asset allocation away from the U.S.

Morningstar’s Makdad also anticipates net inflows into Japanese equities to continue at a pace not seen in a decade, though he noted that the short-term T-bill trade has faded as negative interest rate arbitrage opportunities have disappeared.

A Structural Rotation in Motion

April’s historic capital shift into Japanese markets was more than just a reaction to tariffs — it was a reflection of changing global asset allocation logic. As Japan maintains macro stability, improves shareholder returns, and reforms corporate practices, it is no longer just a defensive play — it’s becoming a core strategic destination for institutional capital.

With U.S. volatility far from over and Europe increasingly vulnerable to China’s export redirection, Japan’s safe haven credentials and reform-driven equity story position it as one of the most attractive markets in the Asia-Pacific region for the rest of 2025.

Source: CNBC

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Olivia Brooks

Economic

Barclays no longer expects the U.S. economy to slip into a recession later this year and has revised up its growth forecasts, given signs of a de-escalation in U.S.-China trade tensions, the bank said in a note released late Thursday.

Barclays said it now expects the U.S. economy to grow 0.5% this year and 1.6% next year, up from previous forecasts of -0.3% and 1.5%, respectively.

Reduced uncertainty and an improved economic backdrop also led Barclays to lift its euro area growth expectations. It now forecasts flat economic growth this year, compared to a 0.2% contraction previously.

Barclays noted it still expects a technical euro zone recession in the second half of 2025, but with growth contracting by less than previously forecast.

"Overall, we remain downbeat about the growth outlook in the euro area because uncertainty remains very elevated and the negotiations on reciprocal tariffs between the European Union (EU) and the U.S. remain at a technical level and there are no signs of progress," Barclays said in a note.

Source: Yahoo Finance

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Commodity

A Revenue Drop Despite More Oil

Russia exported 7.55 million barrels of oil per day (bpd) in April, up from previous months, but total revenue dropped sharply due to declining oil prices. The IEA reported that Russia’s average oil price was $55.6 per barrel, falling below the G7-imposed price cap. This price weakness was attributed to global market instability, declining demand — particularly from China — and fears surrounding U.S. tariff policies.

Although exports of the premium VSTO blend surged past 1 million bpd, Chinese refineries reportedly cut purchases from Russia’s Far East terminals, likely in response to broader economic uncertainties.

Oil Budget Dependency and Mounting Deficit

Russia's federal budget is heavily reliant on oil and gas, which typically account for about 30% of total revenue. The April revenue slump worsens the country's fiscal deficit, which continues to grow amid sustained military spending on the war in Ukraine.

With Brent crude prices falling over 14% since January, Moscow is now struggling to secure the same dollar-for-barrel value even as it pushes out more volume. A growing oversupply risk, fueled by Iran’s reentry into global markets, is also exacerbating the price slide.

Economic and Strategic Implications

The IEA highlighted a paradox: increased export volume has failed to offset losses in value, due to heavy discounts required to attract buyers under sanctions and price caps. This means Russia’s oil sector is working harder for less return.

Russia’s total oil production in April hit 9.3 million bpd, aided by the partial recovery of domestic refineries damaged in recent Ukrainian drone strikes. Still, the financial strain may be prompting Kremlin officials to view a ceasefire as a potential lever to stabilize the economy.

In Q1 2025, the value of Russia’s overall goods exports stood at $94.9 billion, a 6.8% drop year-over-year, despite stable or growing shipment volumes — a troubling sign of weakening terms of trade.

Russia’s oil industry is producing and exporting more, but at steeply discounted prices that are failing to support the national budget. With global oil demand softening and geopolitical uncertainties rising, the country’s economic resilience — especially in the face of ongoing military expenditure — is being tested more severely than at any time since 2023.

Source: Bloomberg

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FastBull Events

Voices of the Trading Winners: Interview with the Winners of the 2025 FastBull Gold Short-Term Trading Contest_1

The 2025 FastBull Gold Short-Term Trading Contest has concluded, marking the end of an exhilarating two-week competition centered around the popular XAUUSD trading pair. This global event drew skilled traders from across the world, each vying for the top spot by demonstrating their mastery of short-term trading on a demo account. Participants navigated the volatile gold market with $100,000 in virtual funds, executing at least 50 trades with a minimum holding time of 60 seconds. The leaderboard saw frequent shifts, showcasing the dynamic nature of short-term trading. Ultimately, three traders exhibited exceptional consistency and profitability, earning them a share of the $3,500 prize pool.

We had the privilege of speaking with the top three winners to gain insights into their winning strategies and experiences.

Abhishek from India, the champion, surprised even himself with his victory, given that he primarily identifies as a swing trader. "It's a wonderful moment, like a dream come true," he expressed. Unlike typical short-term traders who meticulously watch their positions, Abhishek adopts a remarkably calm approach. "Once I open a position, I simply leave it and don't look at it again. I feel that if you keep looking at it, it doesn't help." He views gold as a favored instrument among traders, especially in competitive settings, noting its tendency to reach expected levels. When asked about managing gold's recent volatility, his strategy was straightforward: capitalizing on existing profits. Reflecting on his success, Abhishek pointed to a unique opportunity: trading amidst "trade war" conditions, which aligned favorably with his positions. His toolkit for identifying trading levels includes a single paid indicator, "Automatic Highs&Lows Ultimate 1" by Bullish Mind. Abhishek's advice to fellow traders emphasizes seizing opportunities, maintaining hope, and, crucially, practicing robust risk management. "Saving your capital is the best thing to earn more," he wisely stated.

The runner-up, zzzkkk777 from Hong Kong, expressed both happiness and honor in securing second place. Also a medium-to-long-term trader with a focus on gold and silver, he emphasized the importance of mindset, particularly with the heightened volatility caused by global tariff wars. He holds a bullish outlook on gold, believing it will reach new historical highs. For short-term trading on the FastBull platform, zzzkkk777 found various technical indicators helpful, including MACD, RSI, and Bollinger Bands, especially when combined with volume-price analysis and key support levels for entry and stop-loss guidance. His impressive comeback on the final day, climbing from eighth to second, was attributed to identifying an oversold condition in gold and capitalizing on the subsequent rebound. His encouraging words to other FastBull users highlighted the platform's features like chat, economic calendar, and charts, wishing everyone success in future competitions.

Manal Amd, also from India, who clinched third place, felt that his victory validated years of hard work. While typically a long-term positional or swing trader, he adapted to the contest's short-term nature, executing around 500 trades in 13 days with a remarkably low maximum drawdown of 7% and a 325% return on his capital. He stressed the significance of quick decision-making in trading but cautioned against impulsive actions without confirmation, emphasizing the binary nature of the market: loss or profit. Manal Amd doesn't encounter many difficulties these days, crediting his five years of market experience and reliance on multiple confirmation signals like trend lines, support, resistance, and indicators such as EMA and MACD. His consistent performance throughout the competition was maintained by a keen awareness of major market events like geopolitical tensions and tariff wars, which helped align his trades with the prevailing market direction. His advice echoes Abhishek's on the importance of risk management and maintaining a winning streak by paying attention to significant market developments.

The diverse strategies employed by these three winners - a calm swing trading approach, a focus on technical analysis and macroeconomic events, and a high-frequency short-term strategy - highlight the multifaceted nature of successful trading. Their shared emphasis on risk management, identifying market opportunities, and maintaining discipline serves as valuable guidance for all traders aspiring to achieve similar success in the dynamic world of gold trading. The 2025 FastBull Gold Short-Term Trading Contest not only identified top talent but also provided a platform for these traders to share their insightful experiences with the broader trading community.

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Gerik

Economic

India–Palestine conflict

A $500 Billion Time Bomb?

According to the Federal Deposit Insurance Corporation (FDIC), U.S. banks recorded $482.4 billion in unrealized losses on securities by the end of 2024 — up 32.5% from the previous quarter. This number is approaching the crisis level seen during the SVB collapse in March 2023 and is not far from the record $684 billion recorded at the end of that year.

These unrealized losses stem from rising interest rates, which have sharply reduced the market value of long-term securities such as U.S. Treasury bonds and mortgage-backed securities (MBS). While these losses don’t hit the income statement unless assets are sold, they pose a major liquidity risk if depositors start to panic and withdraw funds en masse.

Professor Rebel Cole, a former IMF advisor and finance professor at Florida Atlantic University, warns:

“Just one piece of bad news about a vulnerable bank could be enough to spark another crisis — just like in March 2023.”

Interest Rate Pressure and Fragile Balance Sheets

The value of bank-held bonds tends to move inversely with 10-year Treasury yields. With yields now above 4.5%, dangerously close to Q4 2024 highs, analysts are concerned.

Stanford’s Professor Amit Seru notes that a rise past 5% could cause unrealized losses to balloon to $600–700 billion, severely straining the system.

Much of these securities are categorized as “held to maturity” (HTM), meaning their value changes are not reflected in earnings reports — only on balance sheets. However, if any portion is sold, accounting rules require a full market revaluation of the portfolio, potentially triggering capital shortfalls.

Lessons from SVB: Still Unlearned?

SVB, which held over 90% of its HTM portfolio in long-term bonds and MBS, collapsed just days after announcing a $2 billion realized loss. This triggered a bank run and a broader panic across the tech-focused banking sector.

Though the Fed quickly stepped in to protect uninsured deposits and broker acquisitions, the underlying issue — the risk of long-dated securities in a rising rate environment — remains unresolved.

Professor Cole notes:

“Many banks are still holding these securities, and if they’re forced to sell under stress, they’ll be exposed to massive revaluation losses. That’s when regulators step in and shut them down.”

Stagflation Risk Could Prolong the Pain

The potential for stagflation — high inflation paired with stagnant growth — is growing, especially under President Trump's renewed tariff policies. This scenario would keep interest rates elevated for an extended period, compounding stress on banks.

Torsten Sløk, chief economist at Apollo Global Management, warns that credit losses could mount across sectors like tech, growth, and venture lending — where margins are thin and liquidity is tight.

Adding to the risk is a looming commercial real estate crisis, which many experts believe could deliver a secondary blow to already weakened balance sheets.

A Fragile System Waiting for a Spark

Despite regulatory interventions and post-SVB vigilance, key vulnerabilities persist: elevated interest rates, large unrealized losses, limited hedging strategies, and fragile commercial real estate exposures.

As Professor Seru explains, it’s not a question of if another banking shock will happen — but when. And when it does, it may come fast, with devastating speed, just like SVB’s collapse.

The U.S. banking sector may be one bad headline away from its next crisis.

Source: The Fortune

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Economic

Strategic Engagement Signals New Phase in Bilateral Relations

Vietnam and the United States are intensifying efforts to advance their economic and financial partnership, marked by a bilateral dialogue between Vice Minister of Finance Cao Anh Tuấn and Robert Kaproth, Deputy Assistant Secretary for International Finance at the U.S. Treasury. The meeting, held during Vietnam's participation in the SelectUSA 2025 Summit, comes as both nations celebrate 30 years of diplomatic ties and look to consolidate their Comprehensive Strategic Partnership with greater substance.

Vietnam brought a substantial delegation of over 100 enterprises to the investment summit, with ambitions to expand direct investment into the U.S. This move reflects Vietnam’s broader strategy to reposition itself as a reliable, transparent, and complementary partner for U.S. businesses, especially in high-demand sectors like technology, energy, aviation, and agriculture.

Complementary Economies and Shared Strategic Interests

Vice Minister Cao emphasized the structural complementarity between the two economies: Vietnam supplies consumer goods at competitive prices without undermining U.S. industries, while relying on the U.S. for advanced technologies and critical infrastructure. He argued that strengthening financial cooperation would reinforce mutual trust and reflect the nations’ converging strategic and economic interests.

Mr. Kaproth welcomed Vietnam’s efforts and reaffirmed Washington’s intention to deepen financial ties. He reiterated that while trade negotiations remain under the purview of USTR, the Treasury continues to monitor developments closely—particularly as trade imbalances and concerns over customs compliance remain sensitive issues.

Trade Imbalance and Customs Compliance Under Scrutiny

The U.S. expressed its ongoing concerns over the growing trade deficit with Vietnam, highlighting its unsustainable nature. Mr. Kaproth stressed the importance of tightening customs oversight to prevent transshipment and origin fraud, especially as U.S. tariffs on China continue to be rerouted through third countries.

Vice Minister Cao responded that Vietnam is actively deploying new customs enforcement measures to ensure fair trade practices and is open to further dialogue on this matter. He also requested that the U.S. facilitate greater access for Vietnamese firms to high-tech imports and ease technology transfer restrictions, allowing Vietnamese companies deeper integration into U.S.-based supply chains.

Five-Year Financial Engagement Plan and Future Dialogue

Significantly, both parties agreed that this is a timely moment to deepen bilateral financial engagement. Plans are underway for new dialogues, technical cooperation, and policy roundtables to operationalize the strategic partnership, aligning with broader regional shifts and supply chain realignments amid global uncertainties.

Vice Minister Cao also extended an invitation for U.S. Treasury Secretary Scott Bessent to visit Vietnam, underscoring Vietnam’s commitment to long-term institutional collaboration.

Vietnam’s Investment Ambitions in the U.S. Begin to Materialize

In a parallel session, Vice Minister Cao met with James Burrows, Vice President of the U.S. Export-Import Bank (US Exim), alongside Vietnamese corporate leaders from the national energy, maritime, and aviation sectors. These discussions focused on leveraging U.S. financial tools to facilitate Vietnamese investment in America and enhance bilateral industrial collaboration.

Vietnam Airlines recently secured government approval for a fleet expansion involving the purchase of 50 narrow-body aircraft. While awaiting final shareholder decisions, this move is viewed as a gateway project to deepen aviation and aerospace ties between the two countries.

The Vietnam Maritime Corporation (VIMC) outlined its interest in establishing logistics centers in the U.S. and partnering on port development and equipment modernization, potentially with financing support from US Exim.

Meanwhile, the state-run energy conglomerate PVN reaffirmed its intent to expand oil trade with U.S. giant ExxonMobil. Its refining subsidiary BSR has already imported 27 shipments of WTI Midland crude—totaling over 22 million barrels and nearly $1.8 billion in value—from suppliers including Shell, Vitol, and Trafigura.

Towards a More Balanced, Integrated, and Strategic Economic Future

The talks mark a meaningful pivot in U.S.-Vietnam relations. Vietnam seeks not just trade surplus but balanced growth and investment reciprocity. The U.S., for its part, is increasingly recognizing Vietnam as a critical Indo-Pacific partner capable of supporting strategic supply chain diversification.

As both countries navigate a shifting global economic order marked by trade realignment, energy security concerns, and technological bifurcation, the depth and strategic clarity of this financial cooperation may set a new benchmark for bilateral relations in Southeast Asia.

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