Asia-Pacific Economies Face Rising Pressure From US Tariffs, Says Moody’s Ratings
New US Tariff Deadline Raises Stakes for APAC Trade Negotiations
Global credit rating agency Moody’s Ratings has warned that the latest US tariff measures are intensifying economic pressures on Asia-Pacific (APAC) countries, especially as the deadline for new trade deals approaches. The region’s economies, heavily dependent on goods exports to the US, are now among the most vulnerable to higher import duties.
US Tariffs Hit APAC Trade—But Exports Temporarily Up
- APAC’s goods exports to the US climbed by 4% in April–May 2024, reaching $223 billion, even after reciprocal tariffs were imposed.
- This growth—from $214 billion in the same period a year earlier—demonstrates the region’s strong trade ties and supply chain resilience, but Moody’s warns that the outlook remains uncertain as tariff pressures mount.
High Exposure, High Risk
- Moody’s Ratings highlighted that the 25 sovereign APAC economies it rates accounted for nearly 40% of all US goods imports in 2024.
- The region forms the “backbone of global supply chains,” making it particularly exposed to shifts in US trade policy.
Varying Impact Across Countries
- Since July 7, the US has imposed new tariffs on 23 countries under its reciprocal trade regime.
- Tariff rates in Asia-Pacific vary widely:
- The Philippines received the lowest at 20%.
- Laos and Myanmar faced some of the steepest at 40%.
- While some economies received partial relief, others are now grappling with sharply higher costs and the threat of supply chain disruptions.
Uncertain Future: Average US Tariffs Set to Rise
- According to Moody’s, the “final configuration” of the US tariff regime is still evolving.
- Moody’s expects average effective US tariff rates to settle in the 10–15% range—with targeted duties reaching as high as 50% on imported steel and aluminum and 25% on autos and auto parts.
India: A Bright Spot
- Amid the overall uncertainty, India emerged as a beneficiary during this period, with its exports to the US rising as other countries were hit by steeper tariffs.
Conclusion: APAC Urged to Accelerate Trade Deals
Moody’s warning comes as a signal for Asia-Pacific economies to hasten trade negotiations and seek new market access to cushion the blow from US protectionist policies.
- The region’s heavy reliance on US trade means the stakes are high—with significant implications for supply chains, export competitiveness, and overall economic growth.
