Fidelity International warns that sweeping US tariffs announced in April have exacerbated volatility in Asian markets, threatening export-driven economies across the region. Tariff rates of up to 145% on Chinese goods and baseline 10% levies on others, including Singapore, could reshape trade flows and dent global supply chains.
While the US has paused reciprocal tariffs for 90 days to allow bilateral talks, targeted hikes on sectors such as pharmaceuticals, automobiles and semiconductors remain on the table.
Peiqian Liu, Asia Economist at Fidelity International, notes a temporary US-China truce has reduced tensions. However, she highlights growing pressure on Asian economies to secure favourable terms through fragmented, bilateral deals — potentially weakening multilateral trade frameworks.
“Countries like Malaysia, Thailand and Korea are most exposed,” Liu says, given their dependence on manufacturing exports. Meanwhile, India, Japan and the Philippines are better positioned, supported by resilient domestic demand and policy measures such as fiscal stimulus or interest rate cuts.
The shifting landscape, according to Fidelity, reflects a broader decoupling between US and Chinese supply chains. China has reduced direct US exposure since the 2018-2019 trade tensions, rerouting through connector economies like Vietnam and Mexico. These regions now handle greater export volumes to the US, often built on Chinese components.
“The bilateral nature of the trade talks presents further challenges for Asian economies, which are deeply integrated into the global supply chain. The shift away from rule-based multilateral trade platforms and pacts will put more pressure on Asian governments in terms coordination. Rather than collaborating to improve the global and regional trade order, countries are likely to make tailored concessions to the US in exchange for lower tariffs. This could potentially lead to the eventual fragmentation in the region,” says Liu.
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Liu warns of a “one-size-does-not-fit-all” scenario. While some nations offer sectoral concessions — for instance, Japan may open its agriculture sector in exchange for lower auto tariffs — others like India seek reciprocal trade-offs involving metals and agriculture.
As ASEAN chair, Malaysia is driving regional dialogue, though progress remains limited. Overall, Fidelity expects a pivot away from pure export-led growth toward strategies favouring diversification, resilience and domestic demand.
