Asia’s export powerhouses are showing surprising resilience a month after US “reciprocal tariffs” took effect, easing concerns that had prompted growth downgrades and warnings from regional central banks.
Fresh manufacturing data this week signaled momentum from Thailand to Vietnam, with order books expanding, inventories thinning, and factory sentiment improving. South Korea’s August exports, a closely watched trade bellwether, held steady, while July shipments from Thailand and Sri Lanka advanced at double-digit rates.
Economists at Bank of America upgraded their 2025 growth forecast for emerging Asia by 30 basis points to 4%. Vietnam, once seen as most vulnerable to tariffs, is among the beneficiaries. BofA cited a mix of regional trade agreements, domestic demand, resilient technology exports, and firmer-than-expected growth in China. “Compared with our June outlook, macro uncertainty appears to have eased,” the economists noted.
The resilience points to domestic policy buffers—rate cuts, intraregional trade, and strong household demand—helping economies absorb tariff shocks. U.S. demand has also remained solid despite frontloaded imports earlier this summer, muting the impact of President Donald Trump’s levies.
Investor sentiment is reflecting the optimism. Asian equities have rallied since Trump scaled back tariff threats in April, with the MSCI Asia Pacific Index outperforming the S&P 500 this year.
Japan’s economy exceeded forecasts in the second quarter, powered by domestic consumption and steady capital investment. In Southeast Asia, August manufacturing activity hit its fastest pace in over a year, while business confidence saw its sharpest rebound in five months, according to S&P Global’s PMI.
South Korea’s semiconductor-led exports stayed firm in August. Elsewhere, July shipments surged in Sri Lanka, topped expectations in the Philippines and Indonesia, and stayed above trend in Thailand. Vietnam’s exports are also on track for another double-digit gain, according to a survey.
Trade deals signed in July between Trump and leaders from South Korea, Japan, Vietnam, and Indonesia are underpinning external demand. Regional central banks are also in easing mode: Indonesia has cut rates three times this year, Malaysia reduced borrowing costs for the first time in five years, and Thailand’s benchmark is among the lowest globally at 1.5%.
Still, risks remain. Possible tariffs on semiconductors and pharmaceuticals under a US national security review could disrupt technology supply chains, especially after Washington revoked waivers for firms such as Samsung Electronics and TSMC. For now, Asia’s export hubs remain steady, with both domestic and external tailwinds keeping factories humming despite Washington’s tariff push.
