What’s Changing for Asia and the World Economy
The United States under President Donald Trump has opened a new front in global trade tensions by rolling out a baseline 10% tariff on all U.S. imports, layered with additional, higher duties on selected products and specific trading partners—including several in the Asia‑Pacific. Markets across the region are now grappling with what these measures mean for exporters, supply chains, currencies, and—ultimately—household purchasing power.
This in‑depth explainer expands on our initial report, providing added context, scenario analysis, country risk highlights, and a practical checklist for consumers, businesses, and investors in Asia.
President Trump’s administration believes that tariffs are the most effective tool to bring manufacturing jobs back to American soil. While an initial 90-day pause was implemented for countries to negotiate deals, this deadline passed on July 9th with only a few agreements reached. Subsequently, revised tariffs were announced for several nations, including many in Asia, with another pause until August 1st.
Asia-Pacific Consumers: Feeling the Ripple Effect
While the immediate impact of these tariffs is often highlighted for American consumers, who will likely face higher prices for imported goods, the Asia-Pacific region will also experience significant ripple effects. Economist Saul Eslake emphasizes that the primary burden of these tariffs will fall on American businesses and consumers. However, producers in countries like India or Southeast Asia could be harmed if they choose to absorb the tariff costs themselves to maintain competitive pricing, or if passing on the costs leads to a loss of market share to US domestic producers or other countries with lower tariffs.
Conversely, there’s a potential silver lining for consumers in Southeast Asia or India: they could benefit from lower prices for goods diverted from countries facing high tariffs to the US, most notably China. If Chinese producers struggle to sell products in the US due due to punitive tariffs, they might redirect these goods to other markets at a lower cost.
Ultimately, a key concern for Asia-Pacific economies is the potential for reduced trade flows to the US. This could lead to a less vibrant economy with diminished growth capacity for countries reliant on exports to the American market, impacting the average consumer through broader economic slowdowns.
Who’s in the Firing Line?
Several nations, particularly in the Asia-Pacific, have been singled out for these increased tariffs:
- Japan (25%): President Trump has heavily criticized Japan for its perceived reluctance to import US-grown rice and accused it of “unfair” motor vehicle trade practices. He has also urged Japan to import more American oil. Japan is actively seeking concessions for its substantial automobile industry.
Other Asian Nations: While Japan faces a significant tariff, other countries in Asia, including India, Vietnam, Malaysia, South Korea, Bangladesh, Cambodia, Indonesia, and Thailand, have also been impacted by varying tariff rates, with some seeing increases compared to earlier announcements. Many of these nations are actively engaged in negotiations with the US to mitigate the effects of these duties.
The global trade landscape remains dynamic, with countries attempting to navigate these new tariff barriers. The outcomes of ongoing negotiations and the long-term effects on global supply chains and consumer prices are still unfolding.
In Brief : US President Donald Trump’s new wave of unilateral tariffs, set to take effect on 1 August, has alarmed Southeast Asian governments and reinforced the hollowness of US claims to support global democracy and economic stability.In contrast, defending open trade and implementing RCEP commitments can help Southeast Asian economies protect employment and boost growth, softening the blow of lost US demand.
Published on 23/07/2025
By Nicholas.