Political Overview 04.07.25

Welcome to this week’s edition of the Political Compass from Bespoke Business Development’s political risk advisory team.

Overview

This issue examines China’s reaction to the U.S.’s recent protectionist policies. At the same time, Japan is preparing to enter negotiations over the new tariffs, Germany’s emerging coalition is taking shape, and South Africa’s national unity government is in a fragile state. Additionally, South Korea is expected to announce its presidential election date soon, Serbia is nominating its next prime minister, and both Ecuador and Gabon are gearing up for presidential elections.

Global Snapshot

As policymakers worldwide assess the impact of the U.S.’s dramatic move towards protectionism, our China analysis lead, Gabe Wildau, offers insights from Beijing.

China’s Response to “Liberation Day” Tariff Announcements

On April 4, the Chinese government introduced a series of retaliatory measures. These included a sweeping 34% tariff on U.S. imports, new restrictions on U.S. agricultural products, additional export controls, and an anti-monopoly probe targeting U.S. chemical giant DuPont. This more aggressive package—compared to earlier rounds of 10% tariffs imposed in February and March—signals China’s reduced optimism for reaching a trade deal with the United States.

Looking Ahead

Reports indicate that Chinese officials have decided against approving a deal to permit the sale of TikTok, a move they had hoped would help reset U.S.-China relations. Domestically, Beijing is preparing to boost monetary and fiscal stimulus to cushion the effects of U.S. tariffs. Furthermore, on April 7, the Chinese sovereign wealth fund Central Huijin helped stabilize financial markets by purchasing index funds.

What to Watch

Asia-Pacific

Japan
On April 7, Prime Minister Shigeru Ishiba spoke with President Trump and plans to send a senior delegation to Washington to discuss tariff issues. Japan has effectively ruled out imposing its own retaliatory tariffs, as it strives to minimize domestic economic fallout while maintaining its security alliance with the U.S. Meanwhile, Tokyo is already drafting policies to assist companies affected by the tariffs, and debates continue over measures to support consumers, with some opposition parties advocating for a reduction in the consumption tax.

South Korea
Following the removal of President Yoon Suk-yeol, the government is expected to announce that the next presidential election will be held on June 3. The opposition Democratic Party is likely to nominate Lee Jae-myung—who led in the 2022 presidential race and is currently favored in the polls—as its candidate. Known for championing progressive populist policies such as universal basic income, Lee may soften his stance to attract independent voters. Meanwhile, Yoon’s People Power Party is set to choose its candidate, though no clear frontrunner has emerged.

Europe

Germany
Coalition talks among prospective partners are anticipated to conclude this week. Concessions made by Friedrich Merz to the Social Democrats—especially the EUR 500bn investment fund—have drawn criticism from the Christian Democrats. However, approval in an SPD membership vote remains the key indicator. Additionally, polls show that the far-right Alternative for Germany is gaining ground amid perceptions that Merz is not fulfilling his election promises. The future chancellor appears to be paying an early political cost for not being more transparent about domestic and international pressures for increased investment.

Serbia
On April 6, President Aleksandar Vucic nominated Djuro Macut—a well-respected physician with limited political experience—as the prime ministerial candidate. Although officially independent, Macut is one of the founders of the People’s Movement for the State, a new political organization initiated by Vucic. In the coming days, his proposed cabinet and policy agenda, subject to parliamentary approval by April 18, will be crucial in determining whether his appointment signals a shift toward a more technocratic government or simply continues the current policies of the ruling Serbian Progressive Party.

Latin America

Brazil
Former President Jair Bolsonaro’s pro-amnesty law rally in São Paulo on April 6 attracted over 50,000 supporters—ten times more than the previous week’s anti-amnesty demonstration. Speaking for nearly thirty minutes, Bolsonaro argued for amnesty for those involved in the January 8, 2023, assault on official buildings in Brasília. The rally also featured seven potential conservative presidential candidates eager to win over Bolsonaro’s supporters ahead of the October 2026 elections. However, polls suggest that the amnesty bill is unlikely to gather enough support, as most voters oppose it.

Ecuador
The presidential run-off between President Daniel Noboa and leftist challenger Luisa Gonzalez is set for April 13. While most polls give Gonzalez a slight advantage, one of the more reliable pollsters, Comunicaliza, shows a narrow lead for Noboa. The outcome remains uncertain given the close first-round results in February and the tendency for many voters to decide late. Any missteps by the candidates or unforeseen events—such as emerging scandals or further natural disasters—could tip the balance, potentially delaying results or sparking disputes over alleged fraud.

Africa

South Africa
South Africa’s domestic political situation and its ties with the U.S. are deteriorating further. The government of national unity coalition is on shaky ground, with the ANC and Democratic Alliance in tense discussions over the budget and power-sharing on April 7. Additionally, relations with the U.S. have hit a new low after South Africa faced harsher-than-expected tariffs and the U.S. Congress introduced two bills specifically targeting the country.

Gabon
Gabon is preparing for its first presidential election since the August 2023 coup, scheduled for April 12. Interim President Brice Clotaire Oligui Nguema—who led the military coup that ousted former President Ali Bongo Ondimba—will face seven challengers, including ex-prime minister Alain-Claude Bilie By Nze. However, with a divided opposition, polls indicate that Nguema is likely to win.

The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect those of Bespoke Business Development. They are intended to encourage discussion and reflection, rather than serve as legal, financial, accounting, tax, or professional advice.