Boom Boom Boom Boom - Tariff Attacks & Economic Booms #217

some will win, some will lose.

Four stories that matter from the past week:

1. Washington has set a July 4, 2026, deadline for the EU to fully implement its 2025 trade deal, with tariffs on European cars and trucks jumping from 15% to 25% if missed. A loss of €3.5 billion in 2026 and €5.7 billion in 2027 if this goes through is estimated for the European automotive industry. In fact, European auto suppliers are operating on average EBIT margins of 3.6%, meaning a 25% tariff would push many directly into losses.

2. How to counter-attack in a tariff war? Impose a tariff on another party. On May 28, the EU discusses potential restrictions on Chinese imports. Commissioners were asked to bring examples of Chinese activity across every area, from trade and agriculture to defence, health and digital. Indeed, Chinese imports are sometimes priced at 40% below local EU equivalents, as a result of what we call the “overcapacity strategy”. The surge in imports spans electric cars, machine components, medical devices, and foodstuffs.

3. On May 27, The Economist published an article called “Japan, South Korea and Taiwan are suffering industrial rot”. How come? Taiwan's economy is growing at 13.7%, and South Korea’s corporate profits are up 159%.
   This growth depends a lot on AI and semiconductors (15% rise in the region’s industrial output since 2019). In fact, they make up 80% of Taiwan’s exports and over 40% of South Korea’s, making the region 73% more concentrated than the rich-world average. Excluding chips, Taiwanese exports have fallen 40% since 2022, while non-AI industrial output in South Korea and Japan is also reducing, as Chinese manufacturers have moved from buying Northeast Asian intermediate goods to producing them domestically at lower cost.
   The argument of the Economist was that these 3 countries put all their eggs in one basket, and they should diversify before China or the US would soon take over with cheaper alternatives.
   We laughed a bit when reading this, and remember the Gen Z saying of “oh no, my lobster is too buttery, and my steak is too juicy”. What a champagne problem to have. And plus, what are the actual choices here to diversify? What else to bet on? Footwear? Phones? Spaceships?

4. There might be other parts of East Asia that are worth betting on. We previously published the report on the China-Vietnam Industrial Corridor, mapping out the interesting dynamics of “China+1” under Trump’s reign. We continued to monitor this corridor, and published another analysis on Vietnam alone, explaining Vietnam’s economic boom, and what it means for Investors. Next week, a private delegation will move through 8+ industrial parks and zones in North of Vietnam with our team, with more delegations planned in July and August. We’ll keep you posted on more developments on the ground.

Have a nice week ahead. Stay sharp, and keep building.

Anh & Tri

On behalf of the Tocco team

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Leon’s Thoughts on Vietnam’s Economic Boom

Leon, Tocco Founder & CEO, explained why the narrative of “Vietnam replacing China” is lazy, what the unspoken challenges are for investors and industrialists, as well as the opportunities for those who know how to use Vietnam’s “balancing act”.

This episode is also available on Spotify and Apple.

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Further Readings · Material & Manufacturing News · 06.2026

• (Southeast Asia 🌏) After Hormuz: The Case for ASEAN Energy Sovereignty. Following the March 2026 blockade of the Strait of Hormuz, Southeast Asia is experiencing severe energy shocks. The region’s limited fiscal space (tax-to-GDP ratios of 10-16%) means governments are bleeding emergency funds to stabilize prices. While geographic diversification (buying non-Gulf LNG) is a band-aid, the structural solution is accelerating the ASEAN Power Grid, which could cut regional decarbonization costs by $800 billion compared to siloed national approaches.

• (China 🇨🇳) China’s industrial profits surged 24.7% year-on-year in April, marking the fastest growth since late 2023. Computing and electronics earnings more than doubled, and upstream oil and mining sectors surged due to higher crude prices, while downstream sectors like furniture manufacturing plunged 54.4%. With the Producer Price Index also jumping 2.8%, the most since July 2022, operators should anticipate rising input costs squeezing margins across lower-tier manufacturing.

• (UK 🇬🇧) Scottish designer Elis Blackwood is scaling a slow-craft methodology that uses industrial waste streams and transforms them into highly durable architectural surfaces and art pieces. Blackwood’s approach treats durability as the primary strategy, utilising mechanical fixing and tension rather than permanent adhesives to ensure components remain fully reversible and separable at the end of their lifecycle.

• (France 🇫🇷) Michelin announced plans to eliminate up to 1,500 French roles (nearly 10% of its workforce) between 2027 and 2029, following two factory closures and 1,246 cuts last year. Q1 sales dropped 5.4% to €6.2 billion. The company stated plainly that labour costs, energy prices, and tax burdens in France are “significantly higher than other industrialised nations,” rendering domestic operations unprofitable despite €3.5 billion in local investments over the past decade. Renault is also laying off engineering positions.

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