Counting the potential toll of Trump's tariffs on major Asian economies

BANGKOK (AP) — The trade war that U.S. President Donald Trump has escalated in his second term is a challenge for all Asian economies, large and small, in an era when the most populous region of the world is expected to drive global economic growth.

Export manufacturing and free trade helped transform China and other Asian countries into economic powerhouses over the past decades. Trump’s barrages of tariffs, aimed at compelling companies to keep or set up their factories in the United States, are rupturing trade agreements often made at great political cost to trading partners.

The White House says the criteria for raising tariffs will include not just U.S. trade deficits but also various taxes, exchange rates, government subsidies and various non-tariff trade barriers. Apart from the tariffs to be announced on Wednesday's “Liberation Day,” as Trump calls it, 25% tariffs on imports of autos and auto parts are due to take effect on Thursday.

Trump has also ordered levies against China, Canada and Mexico; expanded tariffs on steel and aluminum, and imposed tariffs on countries that import oil from Venezuela. He plans more import taxes on pharmaceutical drugs, lumber, copper and computer chips.

Higher costs already have led many manufacturers to shift away from China to other economies in South and Southeast Asia, Africa and Latin America. But for now the prevailing uncertainty over what Trump will do with what he calls “reciprocal” tariffs may lead most to sit tight and see what comes next.

“There’s no script for how reciprocal tariffs get priced, and uncertainty is the only constant,” Stephen Innes of SPI Asset Management said.

Here's a look at how higher U.S. tariffs might affect some major Asian economies.

China

Despite some decrease in trade since Trump launched a trade war with China during his first term in office, the U.S. trade deficit has continued to climb, hitting $295.4 billion last year.

China, the world's No. 2 economy, has leaned heavily on exports to make up for weak demand at home. The ruling Communist Party has made exports of autos, especially electric vehicles, and batteries a priority, but 27.5% tariffs on auto exports and 102.5% duties on EVs have in effect closed the U.S. market for its automakers. China is the second largest supplier of auto parts to the U.S. behind Mexico.

During Trump's first term, higher tariffs led leader Xi Jinping to champion a shift to high-tech production. That will likely continue as U.S. pressure intensifies, causing job losses due to changes in manufacturing rather than direct damage from the tariffs themselves, Raymond Yeung of ANZ Research said in a report.

As Trump has rolled out rounds of tariff hikes that have piled on an extra 20%, China has raised its own import duties, targeting U.S. farm goods. It also expanded export controls, especially on strategically important minerals used in high-tech electronics.

U.S. exports of liquefied natural gas (LNG) to China have fallen since the beginning of the year, and are expected to fall further after Beijing imposed a 15% tariff on U.S. LNG imports.

Japan

Prime Minister Shigeru Ishiba said Tuesday that his government was making last ditch efforts to get the United States to exclude his country from auto tariffs. The U.S. absorbs about one-fifth of Japan's exports, or about 1.5 million passenger cars a year.

Even though major Japanese automakers like Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. have factories in the U.S. and increasingly, in Mexico, it's an important industry back home. Nearly 5.6 million people are employed in auto-related jobs, according to the Japan Automobile Manufacturing Association.

Japan's exports of electronics, machinery, chemicals and steel are also potential targets. A central bank survey released Monday found business sentiment among large manufacturers worsened in the past quarter, for the first time in a year. Tokyo's Nikkei 225 share benchmark has fallen more than 10% in the past three months, while shares in Toyota Motor Corp. have tumbled 27%.

Taiwan

More than 60% of the self-governed island's economy comes from exports, and it ran a trade surplus with the U.S. of nearly $74 billion last year. Computer chips are one of Taiwan's biggest exports to the United States, along with computers and other office machines and consumer products.

Taiwan Semiconductor Manufacturing Corp. is expanding its U.S. factories in Arizona, enticed by U.S. incentives and its own strategic needs. In early March, its CEO C.C. Wei pledged $100 billion in new U.S. investments.

South Korea

South Korea ran a $66 billion trade surplus with the U.S. last year, and autos, electronics and computer chips were a large share. The country could boost investments in making autos, steel, and semiconductors in the U.S. and also consider revising the Korea-U.S. Free Trade Agreement to promote more balanced trade, Patrick Cronin of the Hudson Institute said in a recent report.

South Korea is among several big importers of LNG that may try to buy more of the gas from the US to help balance trade, researchers at RaboBank said in a recent report.

Vietnam

Like most of its Southeast Asian neighbors, Vietnam has emulated Japan, China and other major exporting nations in relying on trade and foreign investment to develop their economies.

It had the third-largest trade surplus with the United States last year, after Mexico and China, at $123.5 billion. Its biggest exports are machinery, textiles and footwear.

A 14% increase in exports helped Vietnam's economy expand at a sizzling 7.1% annual rate last year. The government recently said it would slash tariffs on LNG, autos, ethanol and some other farm products, moves meant to placate Trump and reduce its trade surplus. Vietnam also has agreed to allow a five-year trial launch of Elon Musk's Starlink satellite internet service.

India

The world's most populous country ran a trade surplus of nearly $46 billion with the U.S. in 2024, according to the U.S. Trade Representative's office. The main exports are medicines and chemicals to make them, pearls, diamonds and other gems.

Exports account for just under a quarter of India's GDP, providing millions of jobs, and the U.S. is its largest overseas market.