EWT Overview

Taiwan's Defense Budget Announcement: Taiwan's President Lai Ching-te has proposed a $40 billion defense budget over the next eight years to enhance military capabilities in response to U.S. pressure and China's military threats.

Focus on Asymmetrical Defense: The budget will fund significant arms acquisitions from the U.S. and develop the 'T-Dome' defense system to protect against various military threats from China.

Increased Defense Spending: Taiwan's defense spending is projected to rise to 3.3% of GDP by next year, with a commitment to increase it to 5% by 2030, reflecting the urgency of the security situation.

U.S. Support and China's Opposition: The U.S. State Department has welcomed Taiwan's budget as a demonstration of resolve, while China has condemned the military ties between the U.S. and Taiwan, asserting that Taiwan's military buildup will not prevent reunification.

Overseas Market Performance: Overseas markets, particularly South Korea, Vietnam, and Mexico, have significantly outperformed the S&P 500 year-to-date, highlighting the importance of diversifying investments beyond U.S. borders.

U.S.-China Trade Deal Impact: Positive market sentiment is driven by the anticipated U.S.-China trade deal, with aggressive buying in major stocks and ETFs, while rare earth stocks face selling pressure due to speculation about China's market actions post-deal.

Argentina's Political Shift: Javier Milei's election victory in Argentina, supported by U.S. financial backing, is seen as a win for President Trump and reflects a global shift towards right-leaning politics, resulting in a surge in Argentine stocks.

Investment Strategies and Market Trends: Investors are advised to maintain long-term positions while considering protective measures like cash or short-term trades, and to focus on high-quality bonds in a traditional 60/40 portfolio strategy amidst current market conditions.

Taiwan's Postal Service Suspension: Taiwan’s postal service, Chunghwa Post, has halted shipments of small parcels to the U.S. due to the Trump administration's decision to eliminate the "de minimis" duty exemption for low-value imports.

Impact on Global Postal System: The suspension is attributed to the lack of a global postal system that allows senders to prepay customs duties, alongside announcements from contracted carriers regarding the cessation of merchandise mail deliveries.

Japan Post's Similar Action: Japan Post Co. is also suspending shipments of certain small packages to the U.S. in response to new tariffs imposed by the U.S. government.

Executive Order Effects: An executive order issued on July 30 will end duty-free treatment for personal use mail starting August 29, leading to increased costs and reduced shipments for retailers and logistics firms involved in cross-border commerce.

Taiwan's Defense Spending Proposal: Taiwan plans to increase its defense budget to NT$949.5 billion ($31.2 billion) for 2026, aiming to strengthen its military capabilities amid rising tensions with China.

Response to U.S. Pressure: The proposed budget increase is partly in response to President Donald Trump's call for Taiwan to take more responsibility for its own defense.

Significant Budget Increase: The new budget represents a nearly 23% increase from the previous year and will allocate funds for the Coast Guard and veteran pensions for the first time.

Economic Impact: The defense spending would account for 3.32% of Taiwan's economic output, surpassing the previously set target of 3%.