When Donald Trump late Friday levied fresh tariff threats against many countries worldwide, he repeatedly referred to “reciprocal tariffs.” It’s hard to know how much intellectual work went into the President’s invocation of the term, or if he even understands what it entails. But reciprocity is a word that resonates for any historian of US commerce, the strand of US policy thinking that was the singular feature binding US tariff levels that, over centuries, were variously high (sometimes very high) or otherwise low (sometimes very low). What gives Trump an excuse now to own "reciprocal tariffs" is something many in trade policy circles may be loath to admit: The 30-year failure of the WTO to make its members draw their tariff commitments to more reciprocal levels, Mark Linscott writes. In the world of pure-play semiconductor manufacturing, there is no company more important than TSMC. The company became that way not just because it is very good at being a chip foundry, but also because it’s highly geopolitically astute. That acumen is now deployed in the world’s fourth-largest economy, Japan, a greenfield destination that itself is walking the tightrope between the US and China. Andrew Staples delves into how TSMC’s Japanese gambit is playing out. How realistic is ASEAN’s ambitions for a regionwide digital economy agreement? The negotiations, aimed to conclude this year, is facing challenges but remains critical to the region’s success, Stephanie Honey writes. Jia Hui Tee takes a look at how the world’s largest economies stack up in tech innovation in an infographic. David Horlock lays out how we can deal with the scourge of modern slavery in Asia and global supply chains. Plus, see what we have been reading on the chaos of Trump’s second week, and register now for the 2025 Canada-in-Asia Conference featuring Stewart Paterson.
ON RECIPROCITY
The trail to Trump’s “reciprocal tariffs” goes back to the WTO
Mark Linscott 11 February 2025
The word “reciprocal,” threaded through Donald Trump’s tariff threats late Friday against countries worldwide, resonates for any historian of US commerce. Over centuries, US tariffs have been variously high or low; they have never been consistently one way or the other. As Doug Irwin, who wrote an 860-page book about it, observed: the common strand that bound US tariff fluctuations was a demand for reciprocity. What gives Trump an excuse now to own the term is the failure of the WTO over its three decades in existence to make tariff commitments more level among its member economies, former Assistant US Trade Representative Mark Linscott writes. Whatever one thinks of Trump, the US still has among the lowest tariffs in the world while other WTO members, including China and India, cling to much higher allowances by claiming special treatment even as they became among the largest economies in the world.
Given its centrality to the digital economy and advanced technologies in general, TSMC has found itself at the heart of geopolitical tensions in recent years. Its pure-play foundry is perhaps one of the most difficult and costly to relocate overseas. But TSMC is known for pulling off the seemingly impossible, even to the extent of defying its home government which would like to keep TSMC as part of its ‘silicon shield’. So TSMC made strategic decisions to build greenfield plants in Arizona, Dresden, and Kumamoto in Japan. Hinrich Foundation Advisor Andrew Staples, now principal of GeoPol Asia, examines TSMC’s high-risk outbound investment and finds it aligned with Japan Inc.’s industrial policy, but running into Japan’s own struggles with labor, immigration, and tech talent.
Navigating digital fragmentation in an age of geoeconomic contest
Stephanie Honey 11 February 2025
To what extent can ASEAN’s Digital Economic Framework Agreement, still locked in talks, bridge the differences within the region over tech rules? Despite strong political backing, progress is likely to be challenging. Countries in the region don’t agree on data flows, data protection and location, e-commerce tariffs, and AI guardrails. They’re hoping to conclude a deal by year-end. As critically important as DEFA remains, it is not immediately clear how these divergent positions can be bridged, trade consultant Stephanie Honey writes.
Technologically innovative economies like New Zealand, Singapore, Japan, and South Korea have consistently ranked among the top performers on the Hinrich-IMD Sustainable Trade Index in recent years. Senior trade policy analyst Jia Hui Tee breaks down in an infographic how large economies compare on R&D expenditure, researchers, patents, tech exports, and scientific articles.
Trump’s latest tariff threats are raising concerns about long-term global economic stability. It remains unclear whether these tariffs are bargaining tactics or the beginning of a broad US war against the entire global trading system. Meanwhile, China’s DeepSeek AI has shaken the tech industry by achieving a major milestone with significantly lower investment and fewer semiconductors, challenging assumptions about innovation and US tech dominance. Check out what we’ve been reading.
The Canada-in-Asia Conference returns to Singapore on 19–21 February 2025. This year’s conference will explore themes in business innovation, geopolitics, the space race, investment, and infrastructure. Join Stewart Paterson, Senior Research Fellow at the Hinrich Foundation, on 20 February as he shares his insights on supply chain uncertainty and critical minerals. Other participants include S&P Global, UNDP, Economist Impact, and more.
Modern slavery is very real in Asia and in global supply chains, including factories worldwide, supply chain expert David Horlock writes. It is emerging in scam farms, garment factories, and agricultural plantations. It is sometimes descent-based, meaning children are born into slavery just because their parents had been tricked into becoming forced labor. Horlock explains what modern slavery is, provides examples of which businesses have had to deal with it, and breaks down how firms can deal with the scourge.
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