Asian equities stabilised Wednesday after a rough start to the week fuelled by Donald Trump’s Greenland-linked tariff threats, though uncertainty rattling through trading floors saw safe-haven precious metals hit fresh record highs.Japanese bond yields also settled back following Tuesday’s surge on the back of a pledge by Prime Minister Sanae Takaichi to cut taxes.The US president injected a fresh dose of volatility into markets Saturday after threatening to hit several European countries — including France, Germany, Britain and Denmark — with up to 25 percent tariffs over their opposition to his takeover of Greenland.The move has sparked a warning of retaliation, with French President Emmanuel Macron raising the possibility of deploying an unused, powerful instrument aimed at deterring economic coercion.And speaking at the Davos gathering in Switzerland, European Union chief Ursula von der Leyen warned Washington that hitting allied nations with punitive tariffs over Greenland would be a “mistake”.In response, US Treasury chief Scott Bessent said Monday that any retaliatory EU tariffs would be “unwise”.Markets have sunk globally this week, and Wall Street’s three main indexes tanked Tuesday as they reopened after a long weekend.But Asia saw a mixed performance in early trade Wednesday.Tokyo, Sydney, Singapore, Taipei and Manila fell, while Hong Kong, Shanghai and Jakarta rose. US futures advanced.However, concerns about the outlook and concerns the crisis could grow saw precious metals — a go-to in times of turmoil — continue to hit new peaks.Gold topped out at $4,836.80 and silver touched $95.89 an ounce.Eyes are now on Trump’s visit to the World Economic Forum at Davos later in the day.”Traders continue to monitor the prospects for an agreement around Trump’s claim on Greenland, alongside the ongoing pricing of risk that Trump subsequently raises tariffs on European imports… and whether Europe responds with impactful tariffs of its own,” wrote Chris Weston at Pepperstone.”The focus from traders now turns to Trump’s scheduled speech in Davos, but prior to that, the reaction and the ensuing price action through the Asian session.”Bond markets also saw some calm following Tuesday’s rally in Japanese yields to record highs after Takaichi called a snap election for February 8 and said she would suspend an eight percent sales tax on food and beverages for two years if she wins a fresh mandate.Her comments saw 40-year yields surge more than a quarter of a percentage point to a record on Tuesday, marking the biggest jump since Trump’s “Liberation Day” tariff bombshell in April.The moves saw US Treasury Secretary Scott Bessent call Japanese Finance Minister Satsuki Katayama following a lift in Treasury yields.But they fell back Wednesday after Katayama called for “everyone in the market to calm down” and highlighted rising tax revenues and the country’s lowest reliance on debt issuance in three decades.However, Katsutoshi Inadome at Sumitomo Mitsui Trust Asset Management warned: “Katayama’s comments will have some impact on the market, but these are not the type of moves that can be stopped with just verbal intervention.”Bonds will likely be bought today, but the upside momentum is likely to gradually fade.”- Key figures at around 0230 GMT -Tokyo – Nikkei 225: DOWN 0.6 percent at 52,693.43 (break)Hong Kong – Hang Seng Index: UP 0.2 percent at 26,536.78Shanghai – Composite: UP 0.4 percent at 4,131.77Euro/dollar: UP at $1.1729 from $1.1719 on TuesdayPound/dollar: UP at $1.3454 from $1.3433Dollar/yen: DOWN at 158.00 yen from 158.21 yenEuro/pound: DOWN at 87.18 pence from 87.23 penceWest Texas Intermediate: DOWN 1.0 percent at $59.75 per barrelBrent North Sea Crude: DOWN 1.2 percent at $64.18 per barrelNew York – Dow: DOWN 1.8 percent at 48,488.59 (close)London – FTSE 100: DOWN 0.7 percent at 10,126.78 (close)

Taiwan’s economy soared last year on skyrocketing exports of AI hardware and semiconductors, but companies in more traditional manufacturing sectors could only look on with envy as they were clobbered by US tariffs and a strong local currency.The island’s growth has for decades been based on overseas shipments of a range of goods including machinery, metals and chemicals, mostly small and medium-sized manufacturers employing thousands of workers. But the past 12 months saw companies in those sectors dealt a body blow as their goods sold into the United States were loaded with 20 percent levies as part of President Donald Trump’s global trade war, threatening people’s jobs.One area that was exempted, however, was semiconductor chips — a critical sector dominated by Taiwanese tech giant TSMC. That meant economic growth likely ballooned 7.4 percent last year, according to government estimates, which would be the fastest in 15 years.”We don’t really feel that growth,” Chris Wu, the sales director of machine toolmaker Litz Hitech Corp in Taiwan’s manufacturing hub of Taichung, told AFP. “Overall the data looks strong, but for traditional industries, and for our company in particular, exports have declined — we’re down 30 percent.” Trump initially announced a 32 percent tariff on Taiwanese exports, which was later lowered to 20 percent, as part of his sweep of measures against dozens of trade partners last April. A trade deal announced last week cut that again to 15 percent, in line with key manufacturing rivals South Korea and Japan. While it was good news for traditional manufacturers, Wu said it was not a panacea.- ‘Miserable’ – Overseas demand for Litz Hitech’s precision tools and processing machines hasn’t recovered, and a 15 percent tariff is still nearly three times the company’s profit margin.On top of that, Wu said, the Taiwan dollar was stronger than the won, yen and euro, meaning Taiwanese exports are more expensive.”I don’t think there is a single Taiwanese machine toolmaker that can negotiate to absorb (the tariff) in full — maybe two to three percent, but absorbing everything is impossible,” he said.”Our company can’t absorb even one percent.”Taiwan’s information and communication technology (ICT) sector, which includes semiconductor chips, has become by far the biggest driver of the island’s export-dependent economy. Data for last year laid bare the stark difference in fortunes for tech and more traditional industries, with ICT exports soaring, while metals, plastics and metal-cutting machine tools were all lower.  “Last year’s situation was miserable, very miserable,” Jerry Liu, chairman of the Taichung Importers and Exporters Chamber of Commerce, told AFP. Taiwan’s reliance on AI has left some experts worried about the economic impact if the bubble of excitement around the technology were to burst. “That’s dangerous,” said Chen Been-lon, a research fellow and professor in the Institute of Economics at Academia Sinica.”But what can you do? You cannot force people not to invest in semiconductors.”- ‘Gritting my teeth’ – Taiwan hopes its semiconductor industry remains protected from Trump’s tariffs after the trade deal with Washington committed Taiwanese chip and tech businesses to invest up to $500 billion on US soil. However, a potential US Supreme Court ruling against Trump’s power to apply levies could upend the agreement. “If it’s unconstitutional… the current negotiated result may need to be redone,” said Wu Meng-tao, an economist at the Taiwan Institute of Economic Research, raising the risk of tariffs on the ICT sector. Many in Taiwan’s traditional manufacturing sector, including Litz Hitech, have put employees on unpaid leave or reduced their working hours. Wu, the sales director, estimates thousands are affected.Conditions for small and medium-sized manufacturers could get tougher in 2026 if the US Federal Reserve cuts interest rates. The Taiwan dollar, which has pulled back from its highs last year, could come under renewed upward pressure. Liu said he was “gritting my teeth and holding on” — and hoping that the government helped to “stabilise the currency”. But manufacturers also needed to move with the times by adopting AI and offering customers “comprehensive solutions”, said Patrick Chen, chairman of the Taiwan Machine Tools and Accessory Builders’ Association.”Simply selling standalone machines or individual pieces of equipment is a business model of the past.”