Amid the Uncertainty of US Tariffs, Asian Exporters Are Forging Ahead

[Editor’s Note: This article draws on a report by GLG that the author partnered on.]

US President Donald Trump’s ‘Liberation Day’ tariffs, announced on 2 April 2025, took the trading world by storm. The rates proposed on exports to the US would have been the highest, by a significant margin, since the Great Depression of the 1930s. In addition to these tariffs, the US has also introduced sectoral tariffs, contingent penalties for alleged transshipments, and the use of tariffs to pursue non-economic objectives. However, a survey conducted by a leading global expert network shows that there is a silver lining for Asia, in particular Southeast Asia.

Countries in the Asia-Pacific region, particularly in Southeast Asia, were some of the hardest hit by the so-called ‘reciprocal tariffs’. Following a series of pauses, the world has witnessed varying reductions in rates, although not enough to move them below the peak of the Great Depression. There has been no shortage of assessments by commentators on the likely impact of these tariffs on the US and the countries facing them. What has been missing is a comprehensive review of how decision makers at firms in the Asia-Pacific and the US are responding. To address this gap, GLG, a leading global expert network firm, conducted a survey in June 2025 of more than 300 C-level executives and department heads at companies across the region. The survey also spoke to 50 importers in the US. The exercise sought to explore their responses to US trade and tariff policies. The findings are detailed in a recent report by GLG, and this article summarises some of the key takeaways. 

Pivoting Away from the US

The survey reveals the growing pains of the new economic order. Half of the respondents in the region have shifted their market focus away from the US, and more than 25 per cent have raised prices, reduced headcounts, or adjusted their manufacturing footprint to non-US markets. These responses, taken even before the tariffs took effect, indicate only the beginning of a realignment that will continue to evolve over the remaining years of the Trump administration. 

US tariffs have had a destabilising effect on firms and trade relationships around the world. But as the uncertainty diminishes, the ongoing realignment could present some bright spots for Asian exporters and consumers, as well as challenges for import-competing domestic producers, especially in Southeast Asia. In China, 66 per cent of respondents said they are looking to target markets other than the US, with more than 70 per cent citing ASEAN as a region of focus. China’s exports to other regions, including ASEAN, have grown sharply since Liberation Day. Respondents also highlighted ASEAN and China as top substitute markets for consumer goods, food, and agricultural products. These respondents are similarly refocusing away from the US. While the increased supply of imports could present consumers with greater choice at lower prices, there is also concern that import-competing producers in the region will face some loss of domestic market share. Indonesia, Malaysia and Vietnam have recently raised anti-dumping duties on imports of steel and other products from China. 

Asian exporters are not waiting for the US to make up its mind, or to keep changing it. They are setting a bolder course for themselves, capitalising on new opportunities and jettisoning the partners they can no longer count on.

The report identified a similar shift at the industry level. More than a third of the respondents in the automotive and aerospace industries said they had already shifted their production to export to non-US markets, and 24 per cent indicated that they would do so in the future. Here, too, ASEAN is poised to be a significant winner: more than half of those making adjustments favour the bloc as a manufacturing location. This suggests a continuation of the reconfiguration of manufacturing supply chains that followed the bilateral tariffs imposed on China during the first Trump administration and escalated during the Biden administration. It may also reflect a perception that the gap between tariffs faced by ASEAN and China, which drove the initial reconfiguration, could remain or increase. 

Just as Asian exporters are shaping their strategies to reduce their reliance on the US, government bodies are advancing policies to accommodate greater diversification. Last month, after almost a decade of stalled negotiations, the EU and Indonesia signed a Comprehensive Economic Partnership Agreement, indicating a willingness to move past previously intractable differences in the interest of compromise. More of such partnerships may soon be formed to build longer-term trust, durability, and growth. The climate may be right to pursue even more ambitious link-ups, such as an EU-ASEAN Minus X or an EU-Regional Comprehensive Economic Partnership (RCEP) deal. Since the EU already has bilateral FTAs with 9 out of the 12 members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and more than half of CPTPP’s members are in the RCEP, an EU-CPTPP-ASEAN/RCEP consolidated bloc could be a long-term target. 

The need to pursue alternative pathways, such as a mega bloc, is underpinned by the fact that the international trade landscape is likely to remain in flux. US policy continues to shift, and the nation’s slowdown in job creation and persistent inflation — a recipe for stagflation —pose considerable spillover risks to the global economy. There are already signs of tariff-related price increases in the US. The US tariff pause ended in August 2025, except for China, and inventories stockpiled prior to the tariffs are running out. Taken together, this means that more price increases are likely. 

Meanwhile, firms across the Asia-Pacific face rising debt and inflation, as well as challenges posed by demographic, technological, and climate change. While manufacturing supply chains in Southeast Asia remain China-centred, the outcome of US-China negotiations will have extensive ramifications on how firms reposition themselves going forward. The meeting between Presidents Trump and Xi in Korea in October has calmed tensions, but details of the proposed deal will be key, as will its durability. Although the path ahead is uncertain, the survey finds that Asian exporters are not waiting for the US to make up its mind, or to keep changing it. They are setting a bolder course for themselves, capitalising on new opportunities and jettisoning the partners they can no longer count on.

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