Asia Pacific Economies Brace for Impact Amid US-China Tariff Escalation

Major Asia Pacific economies face growth reductions due to US-imposed tariffs on April 2, 2025. S&P Global Ratings warns that these tariffs will affect manufacturers, small economies, and global trade. If fully implemented, the tariffs could deeply impact Asia, leading to decreased business confidence, disrupted supply chains, and economic fallout.

Major economies in the Asia Pacific region, such as India, China, and Japan, face the likelihood of a 0.2-0.4 percentage point drop in growth over the next two years, should the United States choose to implement the reciprocal tariffs announced earlier in April, according to S&P Global Ratings.

The imposition and threat of these tariffs are predicted to curb global trade and confidence significantly. The region's heavy reliance on exports, particularly with China and the US, places manufacturers and smaller economies in a vulnerable position, poised for substantial impact.

In more specific terms, S&P forecasts that India's growth rates for 2025 and 2026 could drop to 6.3% and 6.5%, respectively, should these tariffs be enforced. While President Donald Trump has temporarily postponed the tariffs' implementation, the additional 10% duty on US exports, announced on April 2, remains in effect.

The Asia Pacific region is bracing for a downturn in credit conditions and a deterioration in business confidence, driven by a tense economic standoff between China and the US. China's response has included imposing a 125% levy on US imports and maintaining export restrictions on rare earth minerals, signaling strained relations that threaten to disrupt global trade and supply chains.

(With inputs from agencies.)