US Tariffs trigger Deep Anxiety across Asian Supply chains, Even Beyond Direct Trade
TAIPEI/KUALA LUMPUR – A wave of uncertainty is sweeping through Asian economies as escalating US tariffs continue to disrupt global supply chains, with businesses reporting conditions worse than those experienced during the COVID-19 pandemic or the SARS outbreak.while not all companies directly export to the United States, the ripple effects are being felt acutely across the region, impacting manufacturers and economies reliant on trade with nations that do sell to the US.
“This is the most stressful and challenging period for my company in our 40-year history – this is worse than Covid or Sars,” lamented Mr. bai,head of a Taiwanese company producing nylon and other yarn,in an interview with the Straits Times. His company exemplifies the broader issue: it doesn’t sell directly to the US market,but its primary customers – garment factories in Taiwan,Indonesia,and Vietnam – are heavily involved in US trade.
“US tariffs do not affect only the companies that sell directly to the US – everyone in the supply chain is impacted,” Mr.Bai explained. The tariffs are creating a climate of instability, forcing businesses to reassess orders, pricing, and future investment.
The anxiety extends beyond textiles. TopTowel, a Taiwanese original equipment manufacturer (OEM) specializing in towels for sportswear and lifestyle brands, reports that approximately 18% of its exports are destined for the US market. Mr. bruce Chang, the company’s sales manager, stated that TopTowel is actively working to diversify its customer base and secure orders in new countries to mitigate the risk.Taiwan’s Response & Concerns Over Trade Diversion
Taiwan, an export-oriented economy, is particularly sensitive to shifts in US trade policy. The government in Taipei has been proactively engaging with Washington to demonstrate its commitment to fair trade practices and to address concerns about potential trade diversion.A key worry is that Chinese exporters might attempt to circumvent US tariffs by falsely labeling goods as “Made in Taiwan.”
Taiwan has repeatedly pledged to rigorously enforce trade rules and prevent such practices. Furthermore, it has signaled its willingness to increase purchases of American products, including US natural gas, in an effort to reduce the trade deficit with the United States.This move is intended to demonstrate good faith and strengthen economic ties.
Malaysia Braces for Economic Slowdown
The impact isn’t limited to Taiwan. In Kuala lumpur, analysts predict that Malaysia’s domestic economy will suffer regardless of any potential trade agreement between the US and other nations. the uncertainty surrounding trade is already dampening investment and consumer confidence.
In anticipation of a slowdown, expectations are growing that Bank Negara Malaysia (the central bank) will cut its overnight policy rate by 25 basis points to 2.75% at its upcoming meeting on july 9th. HSBC analysts,in a report issued on June 25th,indicated that the rate cut is “largely as a means of preempting a potential slowdown in domestic demand.” This proactive measure aims to stimulate economic activity and cushion the blow from the external headwinds.A Regional Challenge
The situation highlights the interconnectedness of the global economy and the far-reaching consequences of trade disputes.The US tariffs are not simply a bilateral issue; they are creating a ripple effect throughout Asia, forcing businesses to adapt, diversify, and brace for a period of prolonged uncertainty. The coming months will be critical in determining the long-term impact on regional economies and supply chains.
Reporting Team: Diditual Report with Gnapathyy Ganapathy in New Delhi, Thank you in AsaPhiaiah in Jakarta, Philippa Wen.
