What New Trade Deals Mean for Asia: Trump’s Tariff Strategy Unveiled

US Trade Deals with Asia: A New Chapter

Bangkok: President Donald Trump has revealed new trade agreements with Japan and several other Asian nations, aimed at easing the burden of increased tariffs on exports to the United States for both companies and consumers.

Currently, negotiations with China are ongoing, with US Treasury Secretary Scott Bessent indicating that the August 12 deadline for a deal might be extended to facilitate further discussions.

Despite these developments, high tariffs on US imports of steel and aluminum remain in place, and countries like South Korea and Thailand are still working towards finalizing their agreements. Economists predict that these tariffs will negatively impact growth in Asia and globally.

Recent Agreements Before the August 1 Deadline

In a significant announcement, Trump and Japanese Prime Minister Shigeru Ishiba confirmed a deal that will reduce tariffs on US imports from Japan to 15 percent, down from the initially proposed 25 percent.

This news was welcomed by automakers such as Toyota and Honda, whose stock prices surged in Tokyo. Additionally, trade agreements were also reached with the Philippines and Indonesia.

Following discussions with Philippine President Ferdinand Marcos Jr., Trump stated that the import tax on goods from the Philippines would now be set at 19 percent, a slight decrease from the previously threatened 20 percent.

Indonesia will also benefit from a reduced tariff of 19 percent, down from a previously suggested 32 percent, and has committed to removing most trade barriers for American imports.

Earlier, Trump had indicated that Vietnam's exports would incur a 20 percent tariff, with a higher rate for goods transshipped from China, although no formal announcement has been made.

Potential Extension of Talks with China

While the negotiations with China are currently bound by the August 12 deadline, Bessent suggested that an extension is likely. Another round of discussions is scheduled to take place in Sweden next week.

Trump hinted at a possible visit to China soon, aiming to stabilize trade relations between the two nations.

A preliminary agreement reached in June allowed China to ease some restrictions on its exports of rare earth minerals, essential for high-tech manufacturing.

In May, the US agreed to reduce Trump's 145 percent tariff on Chinese goods to 30 percent for a 90-day period, while China reciprocated by lowering its 125 percent tariff on US goods to 10 percent.

This temporary relief provided companies with a chance to adjust before potentially facing higher tariffs, boosting Chinese exports and alleviating some pressure on its manufacturing sector. However, ongoing uncertainty regarding Trump's decisions has made companies hesitant to invest further in China.

Unresolved Issues for South Korea and Other Nations

As the August 1 deadline approaches, pressure is mounting on several Asian countries to finalize trade agreements.

Trump has communicated via letters on Truth Social that countries failing to reach agreements will face increased tariffs, especially if they retaliate with their own import duties.

South Korea is facing a 25 percent tariff, while imports from Myanmar and Laos could be taxed at 40 percent. Other countries like Cambodia and Thailand may see tariffs of 36 percent, and Serbia and Bangladesh at 35 percent. South Africa and Bosnia and Herzegovina are set at 30 percent, while Kazakhstan, Malaysia, and Tunisia will face a 25 percent tariff.

The status of negotiations with India remains uncertain, with progress likely dependent on the country's heavily protected agricultural sector, which faces a 26 percent tariff.

Since April, nearly every country has been subjected to a minimum 10 percent levy on goods entering the US, in addition to other sector-specific tariffs.

Economic Implications of Tariffs

Even with the easing of some of Trump's most severe tariff threats, the uncertainty and increased costs for manufacturers and consumers are expected to hinder growth in both regional and global economies. Economists have begun to lower their growth forecasts for 2025 and beyond.

The Asian Development Bank recently revised its growth projection for developing Asia and the Pacific to 4.7 percent in 2025 and 4.6 percent in 2026, marking a decrease of 0.2 and 0.1 percentage points, respectively.

The outlook for the region could worsen if tariffs escalate and trade tensions rise. Other risks include geopolitical conflicts that could disrupt global supply chains and increase energy prices, along with a decline in China's struggling property market.

Economists at AMRO are even less optimistic, predicting growth rates of 3.8 percent for Southeast Asia and other major Asian economies in 2025, and 3.6 percent for the following year.

While countries in the region are taking steps to shield their economies from Trump's trade policies, they face considerable uncertainties, according to AMRO's chief economist, Dong He.

"Uneven progress in tariff negotiations and the potential for tariffs to expand to additional products could further disrupt trade activities and negatively impact growth in the region," he stated.