Shane considers US restructuring as the trade war threatens the London IPO program

Good morning, I’m back to Firstft Asia. In today’s newsletter:

The scene explores US restructuring

Vietnam celebrates the 50th anniversary of the war, and the end of the US

The sudden change in trade brings closer to Singapore’s elections

Shane is exploring ways to restructure US businesses if the Trump administration is stuck with punitive tariffs on Chinese imports.

Tariff Hit: The US business of first fashion companies (which accounts for about a third of $38 billion in annual revenue) will be subject to a major burden if the tax exemption, known as “De Minimis,” closes this week. That way, Shane, whose orders are shipped directly from Chinese warehouses to shoppers’ homes, pays 120% tariffs on cheap clothing that sells to customers in the US, the largest market.

Search for workarounds: Two people who know the company’s deliberations said one workaround under consideration is to divert production from the US market to countries other than China. Shein has several manufacturing capabilities in Brazil and Turkey, but it is doubtful that supply chains in these countries will scale to match Shein’s operations in China, which has a network of 7,000 suppliers. According to industry insiders, shifting production elsewhere would significantly reduce Shane’s supply to US businesses.

President Donald Trump’s efforts to address tariffs by moving manufacturing out of China could also attract government anger.

Is the London IPO at risk? If tariffs cause permanent damage to Shein’s US operations, the company would be forced to push back the widely anticipated London IPO originally scheduled for the first half of this year. “Internally, it’s focused on coming up with ways to deal with the tariff situation at the moment. Before we clarify that, no one can even think about the IPO,” said an executive who refused to be named because of the sensitivity of the issue. Please read the entire story.

Here’s more news about the US-China trade war:

Huawei: The tech giant has begun delivering advanced AI chips “Cluster” to Chinese clients, which are increasing orders after being cut off from Nvidia’s semiconductor due to Washington’s export restrictions.

China’s economy: According to an official survey, China’s manufacturing activities have been the most contracted since April 2023, with early signs of economic impact from Trump’s trade war.

US GDP contract: The US economy shrunk by 0.3% per year in the first quarter.

Here is the other thing we keep tabs today:

Economic Data: South Korea has released trade figures for April.

Bank of Japan: According to Reuters, central banks are expected to stabilize interest rates when they announce their monetary policy decisions. BOJ will also publish its economic outlook report.

Results: One of the companies reported by Amazon, Apple, Mitsui and Sumitomo.

How should central banks navigate the New World Order? We will raise questions about monetary policy with Chris Giles and other FT experts and ask them to answer them in a live Q&A next Wednesday.

Five more top stories

1. US Secretary of State Marco Rubio urged India and Pakistan to “remove tensions” after the fatal attacks in India-controlled Kashmir last week, highlighting Washington’s widespread warnings about friction between nuclear-armed neighbours. Rubio’s appeal came yesterday in separate telephone conversations with senior officials from India and Pakistani.

India-UK Trade Talks: People who discussed the two countries were locked up in the final stages of negotiating a free trade deal with both sides on key demands in London this week.

2. Yesterday, the US and Ukraine signed a “economic partnership” agreement, with Washington having access to the country’s important minerals and natural resources, ending weeks of negotiations. The agreement establishes a “reconstruction investment fund” for Ukraine, which Trump advocated as a way to repay America for past aid. Details are shown below.

Other Ukraine News: The EU is preparing a “Plan B” on how to maintain economic sanctions against Russia if the Trump administration abandons Ukrainian peace talks and seeks a settlement with Moscow, according to top bloc diplomats.

3. Vietnam’s top leaders welcomed the country’s “justice victory” and its rapid development as Southeast Asian countries celebrated the 50th anniversary of the end of the war with the United States. Yesterday, celebrations involving a spectacular military parade in Ho Chi Minh City have led to Trump’s tariffs threatening the economy, including Vietnam.

4. Chinese investors are piling up gold funds at record rates. According to the World Gold Council, 70 tons (or about $7.4 billion) of Chinese gold exchange trading funds have so far traded a total of 70 tons or about $7.4 billion this month. This is what drives you to buy.

5. Microsoft outperformed quarterly revenue yesterday as its cloud division reported robust sales growth against strong demand from AI-related services. The group’s cloud unit, known as Azure, has grown revenue by 20% to $42.4 billion over a year ago.

Detailed news

The election results for Singapore on Saturday will provide citizens with a rare moment of relatively certainty as Prime Minister Lawrence Wong is widely expected to spread control of his people’s Party of Action with his 16th consecutive victory. But many others are in fluidity for Singaporeans as Trump’s trade war changes the world that has built up wealth since independence 60 years ago.

We’re reading too. . .

The chart of the day

Indian Prime Minister Narendra Modi this month welcomed the “new energy” in New Delhi’s relationship with Latin America.

Take a break from the news

. . . And read about the British towns that can’t wait to become a theme park. The sixth Universal Studios branded theme park is in Bedford, and residents are overwhelmingly supportive of the plan despite widespread disruptions expected.