Asia Communique
Trump Imposes 50% Tariffs on India | TSMC Speeds 2nm Output Amid Trade Scandal | Kim Jong Un to Join Beijing Victory Parade |
Hello Readers,
Asia Communique Newsletter follows below:
Trump Slaps 50% Tariffs on Indian Exports, Risking Strategic Rift
U.S. President Donald Trump has imposed 50% tariffs on most imports from India, escalating trade tensions and putting one of the world’s fastest-growing economies under pressure over its purchases of discounted Russian oil. The move, which took effect just after midnight Wednesday in Washington, doubles the 25% tariff announced earlier this month and has sparked fears of a sharp slowdown in U.S.-India trade.
India, which exported $87.3 billion worth of goods to the U.S. last year, now faces some of the highest duties on any U.S. trading partner, alongside Brazil. While smartphones and select tech products are temporarily exempt, key sectors such as textiles, gems and jewellery, and seafood are bracing for deep losses. Analysts warn that rival exporters from Vietnam, Thailand, and China are already absorbing U.S. market share.
“At a 50% tariff, it is very difficult to export,”
— Santanu Sengupta, Chief India Economist, Goldman Sachs
Economic Fallout
The Federation of Indian Export Organisations (FIEO) reports that textile manufacturers in Tirupur, Delhi, and Surat have already halted production due to collapsing competitiveness. Indian shares tumbled ahead of the announcement, with the BSE Sensex dropping 1% to 80,876. Goldman Sachs now warns that sustained tariffs could push India’s GDP growth below 6% from an earlier forecast of 6.5%.
India’s Defiance
In New Delhi, the mood is firm. Prime Minister Narendra Modi urged citizens to “buy made-in-India goods” and pledged to withstand the pressure. External Affairs Minister S. Jaishankar defended India’s stance on Russian crude, declaring:
“India will continue to buy oil from wherever it is needed to safeguard our energy security. Washington’s demand that we halt purchases of Russian oil is unjustified and unreasonable.”
Officials warn that the tariffs could accelerate India’s strategic drift toward Moscow and Beijing, complicating Washington’s Indo-Pacific ambitions. Jaishankar recently traveled to Moscow to meet President Vladimir Putin, while Modi plans to visit China later this year for the Shanghai Cooperation Organization summit — his first in seven years.
Strategic Repercussions
Despite tensions, U.S.-India trade talks remain ongoing. However, senior Indian officials caution that Trump’s measures have “blown up years of painstaking trust-building” between the two countries, making a near-term reset unlikely.
TSMC Advances 2nm Production Amid Trade Secrets Scandal
Taiwan Semiconductor Manufacturing Co. (TSMC) is moving ahead with plans to begin mass production of 2nm chips in Q4 2025, even as the company faces a high-profile trade secrets case involving its advanced process technology.
According to a DigiTimes report, production will ramp up simultaneously at TSMC’s Baoshan and Kaohsiung fabs in Taiwan, with monthly wafer output projected to reach 45,000–50,000 units by year-end and doubling by 2026. Apple, AMD, Qualcomm, MediaTek, Broadcom, and Intel are among the first customers, with Apple securing 50% of initial orders. Nvidia is expected to join in 2027 as capacity expands further.
Apple plans to debut its 2nm A19 chip in the iPhone 18 series, which is expected to deliver a 10–15% performance boost over current 3nm chips.
However, TSMC’s 2nm push comes amid a legal battle over industrial espionage. On Wednesday, Taiwan’s High Prosecutors Office indicted three former and current TSMC employees — Chen Li-ming (陳力銘), Wu Ping-chun (吳秉駿), and Ko Yi-ping (戈一平) — for allegedly stealing sensitive 2nm process trade secrets and violating the National Security Act.
Prosecutors are seeking prison terms of 14, nine, and seven years respectively, alleging Chen — a former TSMC engineer working at Tokyo Electron Ltd. (TEL) — recruited insiders to obtain confidential data under the guise of securing more TEL contracts. TSMC reported the case on July 8 after an internal investigation flagged unusual activities.
In response, TSMC reaffirmed its zero-tolerance policy toward trade secret violations and pledged to tighten internal controls and cooperate fully with law enforcement to protect its technologies and maintain operational stability.
TSMC appears to be getting ready to begin the construction of a new plant in central Taiwan to manufacture 1.4 nm chips. This comes as both Samsung and Intel’s plan to develop their own 1.4 nm chip appear to have fallen behind.
Kim Jong Un to Attend Beijing’s Victory Day Parade
North Korea’s leader Kim Jong Un will attend a high-profile military parade in Beijing on 3 September, marking his first international-level meeting of leaders since assuming power. China’s foreign ministry confirmed the visit, framing it as part of the commemorations for the 80th anniversary of China’s war against Japan and the end of World War II.
The event, dubbed “Victory Day”, is set to be one of Beijing’s most elaborate displays of military strength in recent years. President Vladimir Putin will also be in attendance, alongside leaders from 26 countries, underscoring Beijing’s ambition to position itself at the center of strategic diplomacy.
Showcasing China’s Military Might
The parade will serve as a debut for the PLA’s new force structure, offering the first public look at China’s latest advancements in aircraft, tanks, anti-drone systems, and precision-guided weaponry. According to Chinese state media, the 70-minute ceremony will feature tens of thousands of troops, hundreds of aircraft, and formations from 45 echelons of the Chinese military, marching through Tiananmen Square under the watchful eye of President Xi Jinping.
For military analysts, the event offers a rare opportunity to assess the PLA’s evolving capabilities, particularly in light of recent reforms aimed at modernizing China’s joint operations strategy.
A Diplomatic Photo Op for Xi
Kim’s presence represents a significant upgrade compared to China’s last major military parade in 2015, when Pyongyang was represented by senior official Choe Ryong-hae. This time, Xi will stand alongside both Kim and Putin, creating a striking image of strategic alignment — one likely to reverberate across Washington, Tokyo, and Seoul.
For Xi, this is more than ceremony; it’s a diplomatic coup. With US President Donald Trump simultaneously seeking deals with Putin over Ukraine and pushing for a fresh meeting with Kim, Beijing is positioning itself as an indispensable player in shaping outcomes on the Korean Peninsula and beyond.
Let’s remember Kim Jong Un cancelled plans to appear at the Victory Day Parade in Russia while he will be making it to Beijing. There is a message here China is sending to the world.
Strategic Timing and US-China Dynamics
The timing is deliberate. The White House has signaled that Trump could travel to Asia at the end of October and remains open to meeting Xi. By hosting Kim and Putin ahead of any potential US-China summit, Xi ensures he enters future negotiations fully briefed and far from isolated.
Western leaders are largely expected to skip the event, with Japan in particular urging European and Asian counterparts not to attend, citing the parade’s “anti-Japanese overtones” and tensions over Russia’s invasion of Ukraine.
Big Picture
Kim’s visit underscores Beijing’s growing role as a geopolitical power broker. With Russia, North Korea, and China presenting a united front — at least symbolically — the parade highlights shifting power balances in East Asia amid heightened US-China competition.
For Washington and its allies, the Tiananmen spectacle will be closely scrutinized — not just for military hardware, but for the emerging contours of a trilateral alignment that could shape future negotiations over Ukraine, Taiwan, and North Korea’s nuclear program.
Philippines, Australia, Canada Hold First Joint Naval-Air Drills Near Scarborough Shoal
Scarborough Shoal, South China Sea — Warships and fighter jets from Australia, Canada, and the Philippines conducted joint air-defense drills on Wednesday, marking the first-ever trilateral naval exercise near the contested reef. The drills come amid heightened tensions between Manila and Beijing following a recent collision between Chinese Navy and Coast Guard vessels near the shoal.
Exercise Alon 2025: A First-of-Its-Kind Multilateral Operation
The combat drills formed part of Exercise Alon 2025, the largest Philippine-Australian military exercise to date, which concludes on Friday. The operation combined assets from the three countries into a maritime task group consisting of:
BRP Jose Rizal (FF-150) — Philippine Navy flagship
HMCS Ville de Québec (FFH-332) — Royal Canadian Navy frigate
HMAS Brisbane (DDG-41) — Royal Australian Navy Aegis destroyer
The ships were joined by Royal Australian Air Force fighter jets, embarked helicopters, and support aircraft. The vessels first rendezvoused in mid-August in the Philippines’ western exclusive economic zone (EEZ) before moving toward Scarborough Shoal for this week’s air-defense phase.
Tensions Escalate in the South China Sea
The drills follow a U.S. Navy freedom of navigation operation (FONOP) earlier this month near Scarborough Shoal, during which Beijing claimed to have “chased off” an American destroyer. In response, Chinese forces have increased their activity in the area, deploying armed Coast Guard vessels and Navy tugboats near Second Thomas Shoal, where a Philippine Navy garrison is stationed.
Tensions have intensified since the August 11 collision involving Chinese and Philippine vessels near Scarborough. Shortly afterward, Chinese J-11 fighter jets intercepted a Philippine Coast Guard plane carrying journalists surveying the area — part of a growing pattern of PLA aerial interdictions against Philippine aircraft over the past two years.
Manila’s Strategic Shift Toward External Defense
Compared to previous drills, Alon 2025 signals Manila’s pivot from internal security operations to territorial defense and a more assertive stance in the South China Sea. The Philippine military is now integrating fighter escorts into patrol missions and expanding joint aerial and naval operations with partners, including the U.S.
Beijing continues to assert sweeping claims over most of the South China Sea, including areas within Manila’s EEZ, under its 10-dash line. Maritime confrontations between the two countries have escalated since 2023, culminating in near-monthly incidents and clashes at Second Thomas Shoal in 2024.
Big Picture
The trilateral drills represent a significant step in the Philippines’ evolving defense posture and demonstrate growing security coordination among middle powers in response to China’s assertiveness. With tensions rising around Scarborough and Second Thomas Shoal, these exercises underline Manila’s strategy to deepen multilateral partnerships while modernizing its naval and air capabilities.
Reads:
China won the rare earths race. Can it stay on top? — Financial Times
Why India Should Not Walk Into the China-Russia Trap — Foreign Policy
China and India May Be Moving Toward a More Coordinated Foreign Policy — Foreign Policy
Xi Unleashes China’s Biggest Purge of Military Leaders Since Mao — Bloomberg
Thank you!