Trump Tariffs - The Times Of Central Asia

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Trump’s Trade War Against China: Opportunities and Risks for Central Asia

Experts believe that Central Asian countries stand to gain from U.S. President Donald Trump’s renewed trade war with China, but the region also faces substantial risks. Kazakhstan Bears the Brunt On April 3, Trump signed an executive order imposing “reciprocal” customs duties on goods from dozens of countries. Kazakhstan faced the steepest tariff in Central Asia at 27%, while Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan each received a flat 10% rate. Kazakhstan’s Ministry of Trade explained that 92% of the country’s exports to the U.S., including crude oil, uranium, silver, and ferroalloys, were among the exempt categories listed in the order. As a result, only 4.8% of total exports to the U.S. would be affected. The government has announced its intent to hold consultations with Washington to avoid further tariffs. More broadly, global economic uncertainty tied to the trade war may cause further weakening of national currencies across Central Asia. Declining demand for oil could depress prices, posing a particular threat to Kazakhstan, where oil is a primary export. On April 9, Trump announced a 90-day freeze on additional tariffs, applying a temporary 10% duty for more than 75 countries, excluding China. Open Confrontation with Beijing In a sharp escalation, the U.S. raised tariffs on Chinese imports to 145%. Beijing retaliated with 125% tariffs on U.S. goods, effectively halting trade. As the Chinese government noted, duties at this level “no longer make economic sense.” On April 13, Trump, responding to pressure from the U.S. business community, reversed duties on processors, computers, smartphones, and electronics. According to Morgan Stanley, 87% of iPhones are made in China, and production of the upcoming iPhone 17 will also be based there. Additionally, four out of five iPads and 60% of Macs are manufactured in China. Meanwhile, Chinese President Xi Jinping has urged European nations to resist what he described as Trump's erratic trade policies. Central Asia: Strategic Position, Mixed Prospects With Chinese goods effectively shut out of the U.S. market, Beijing is likely to turn to alternative trade routes. While Southeast Asian nations such as Vietnam and Malaysia benefitted during the 2018-2019 trade war, this time Trump has also targeted some of them with tariffs, fearing rerouted exports. China’s growing pivot toward Eurasia places the Central Asian countries at a critical transit junction. Their strategic position on land routes to Europe offers untapped potential for trade reorientation. Kyrgyzstan, in particular, has served as a conduit for Chinese goods, with Chinese-manufactured items re-labeled as Kyrgyz products before entering markets across the CIS. This practice, noted as early as 2015, primarily catered to Russia but also extended to Kazakhstan. More recent findings indicate that illegal Chinese imports into Central Asia may total billions of dollars. The existing smuggling infrastructure could be formalized and scaled, facilitating increased regional trade. Long-term benefits could include heightened cargo traffic through Kazakhstan, Uzbekistan, and Kyrgyzstan, sparking Chinese investment in logistics infrastructure and creating jobs in transport. Risks of Overreliance The trade conflict may also incentivize some Chinese manufacturers to relocate assembly operations...

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Kazakhstan’s Economy Receives Boost Amid Changing Tariff and Commodity Dynamics

Kazakhstan’s economy has recently navigated a series of external market shocks. While the suspension of U.S. reciprocal tariffs by President Trump represents a positive development, its direct impact on Kazakhstan is minimal, as the 27% tariff applied to only a minor segment (4.8%) of the nation’s exports and excluded key commodities such as oil, uranium, and silver. Kazakhstan is still subject to the universal baseline rate of 10%. However, the broader improvement in global market dynamics, spurred by increased demand for commodities that Kazakhstan predominantly produces, has provided a substantial boon to the country's economic prospects. This shift underscores a more favorable outlook for Kazakhstan, with rising global demand aligning closely with its resource-driven economy. On April 9, oil prices, in particular, rebounded strongly after hitting a four-year low earlier in the day. Brent crude rose by 4.23% to $65.48 per barrel. Similar trends were observed in other key commodities. Copper prices jumped nearly 3%, and gold rose over 3%, marking its best performance since October 2023, as investors sought safe-haven assets. U.S. natural gas futures, meanwhile, experienced a significant 8% increase, reflecting broader optimism spurred by the tariff suspension. Uranium futures, another strategic export for Kazakhstan, edged up by 1.18% to $64.40. Rare earth metals also showed exceptional growth, with a 12.5% gain highlighted by the VanEck Rare Earth and Strategic Metals ETF (REMX). This coincides with Kazakhstan’s recent discovery of over 20 million metric tons of rare earth deposits, consolidating its position as a potential global heavyweight in this critical market. The timing of the tariff suspension aligns closely with domestic efforts to address the country’s economic challenges. On April 9, President Kassym-Jomart Tokayev convened a meeting to tackle the ongoing economic crisis triggered by global market collapses and declining oil prices. He stressed the importance of maintaining development priorities while implementing swift actions to mitigate the crisis’ impact. The rise in commodity prices following the tariff halt gives these initiatives fresh momentum and a more favorable outlook for executing recovery measures.

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Trump Tariffs: A Barrier for Kyrgyzstan, or an Opportunity?

Akylbek Japarov, former head of Kyrgyzstan’s Cabinet of Ministers, has described the United States’ newly imposed trade duties as an "economic earthquake" already reshaping global markets. However, he sees an opportunity for Kyrgyzstan, which faces a comparatively low U.S. tariff rate of just 10%. A Regional Advantage Japarov argues that China has been hit hardest by the new U.S. tariffs. “Following the introduction of duties, Chinese goods are 20-35 percent less competitive, not due to the nominal tariff alone, but because of higher overall costs, disrupted logistics, contract renegotiations, and increased risk premiums,” he explained in a Facebook post. “Part of that market is being freed up, for someone else.” Kyrgyzstan, along with Uzbekistan and Tajikistan, faces a 10% U.S. tariff rate. In contrast, Kazakhstan’s goods are subject to 27% duties. Japarov sees this as a competitive edge that Kyrgyzstan could leverage to integrate into new supply chains, especially while global players are adjusting to the new trade landscape. The former prime minister believes the country is well-positioned geographically, situated between China, the Eurasian Economic Union (EAEU), and South Asia, with low production costs and access to regional markets. While Kyrgyzstan’s total trade turnover stands at around $16 billion, the U.S. accounts for only 4% of that figure. Key exports to the U.S. include shoes, tobacco products, animal-derived goods, and pharmaceuticals. Japarov suggests Kyrgyz businesses focus on re-exports, product localization, and packaging. He calls for investments in logistics and customs certification, and for the government to craft a new export strategy. “While some see a threat, others are building export channels. While some are calculating losses, others are increasing production,” he said. An Opening for Business, Not Policy In an interview with The Times of Central Asia, Sergei Ponomarev, president of the Kyrgyz Association of Markets, Trade and Services, said the new tariffs should be viewed as part of a larger negotiation process. “The trade war has begun. China, the European Union, and other countries are already responding. But the duties have also triggered a wave of global inflation. These are high risks but also great opportunities,” he said. Ponomarev noted that Kyrgyzstan’s limited integration with the global economy means it will likely experience only indirect effects. Still, he pointed to past examples of adaptive trade strategies. Before joining the EAEU, Kyrgyz entrepreneurs often re-labeled Chinese products as “Made in Kyrgyzstan” for resale in Russia. In some cases, Chinese producers even falsely labeled their goods as Kyrgyz to benefit from preferential access to the Russian market. He suggested similar tactics could re-emerge under the current trade environment. “Some businesses may exploit the 10% duty. Chinese goods could be repackaged in Kyrgyzstan or processed through joint ventures,” Ponomarev said. “For example, a sweater could arrive from China, sleeves sewn on in Kyrgyzstan, and the product re-exported as local.” Such methods, he noted, may be feasible in low-tech sectors like apparel, but Kyrgyzstan lacks the skilled labor force needed to replicate this in high-tech manufacturing. Ponomarev concluded that while Japarov’s ideas are...