How Have Tariffs Affected Asia So Far?

BusinessToday

2 days ago

Fresh trade data up to June reveals that US tariffs, introduced by President Donald Trump in April under his 'reciprocal' trade policy, are beginning to reshape flows between Asia and the United States, though the impact remains uneven across countries, according to a report by BMI.
Imports From Asia Show Frontloading
US imports from Asia rose modestly, coming in nearly 4% above pre-Trump trends in May and June, suggesting frontloading as companies rushed shipments ahead of tariff hikes. However, the effect varied across markets.
Imports from Mainland China showed little deviation from trend, suggesting muted frontloading. By contrast, Australia and Vietnam posted clearer signs of early shipment surges, with Australia's data indicating that companies had begun frontloading as early as December 2024, soon after Trump's re-election. Hong Kong displayed similar patterns.
Rest of the World Trade Stable
Asia's exports to non-US markets have largely remained on trend, although BMI cautioned that deviations could emerge in the coming months as the tariff regime gradually feeds through global supply chains.
Export Prices Reveal Mixed Adjustments
Export pricing adjustments also vary. Taiwan recorded the sharpest decline in export prices, particularly in May, as firms absorbed tariffs to maintain market share in the US — a strategy made possible by their relatively wide profit margins. South Korea showed smaller adjustments.
China's export prices, however, have remained largely steady, reflecting broader declines in producer prices rather than tariff-specific effects. Meanwhile, Japan benefitted from a weaker yen, which cushioned exporters without requiring significant price cuts.
Financial Markets Hold Up
Despite initial shocks, Asian equities have risen 18% year-to-date while currencies gained 3%, demonstrating resilience to the tariff environment. Thailand was a notable exception, with its markets lagging due to political instability and its border conflict with Cambodia.
Policy Responses and Outlook
So far, no major Asian government has rolled out targeted measures to cushion tariff impacts. BMI noted that the most severe economic toll will fall on smaller, highly US-dependent markets. Cambodia has seen the steepest GDP forecast downgrade for 2026, while larger economies in the region face only modest forecast cuts of 0.2–0.3 percentage points.
BMI concluded that while Asia has 'weathered the tariff storm well' in the short term, risks remain, particularly if the yen strengthens in 2026, eroding Japan's currency buffer, and if US tariff actions extend further into new sectors.