CONTRIBUTORS
Li Ting Chan
Research Analyst
Frontloading effects as US companies stockpiled goods in April and May prior to tariffs have resulted in strong headline exports from Asia. That said, we are seeing early signs of a payback effect with exports now moderating due to higher inventories (see Exhibits 1 and 2). And exports to the United States are expected to continue to slow over the coming months.
Exhibit 1: Asia Exports
US$ Billion, Sum of Singapore, South Korea and Taiwan
Sources: Macrobond, South Korea Ministry of Trade, Industry and Energy (MOTIE), SingStat, Taiwan Ministry of Finance. As of May 31, 2025. Past performance is not an indicator or a guarantee of future results.
Exhibit 2: US Inventories: Manufacturers and Merchant Wholesalers
US$ Billion, Seasonally Adjusted
Source: Macrobond. As of April 30, 2025. Past performance is not an indicator or a guarantee of future results.
New export orders across Asia continue to contract amid persistent tariff uncertainty. North Asia, which sits at the higher end of the value chain, faced a sharper dropoff in growth compared to the Association of Southeast Asian Nations (ASEAN), which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. However, this divergence may prove temporary. The interlinked nature of regional supply chains suggests ASEAN could soon experience the same drag. India remains the exception, with Purchasing Managers’ Index (PMI) data showing continued expansion thanks to the country’s rising prominence as an alternative source for goods traditionally supplied by China (see Exhibit 3).
Exhibit 3: PMI New Export Orders
Anything Under Zero Is Contraction, Seasonally Adjusted
Source: Macrobond, S&P Global. As of June 2025. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is not an indicator or a guarantee of future results.
Chinese exports to the world are at highs despite falling exports from China direct to the United States. Chinese firms have rerouted goods into ASEAN markets, feeding oversupply, intensifying deflationary pressures, and squeezing domestic producers (see Exhibit 4). They also have made use of the lower tariffs faced by ASEAN countries by transshipping their goods and circumventing US duties. This evasion raises the risk of future clampdowns by the United States. Increased imports from China have also had the effect of cannibalizing domestic markets, resulting in slower local manufacturing growth and disinflation, which will impact gross domestic product growth.
Exhibit 4: China Exports to United States vs. Total Exports
Rebased to 100 in January 2024, One-Year Moving Average
Sources: Macrobond. As of May 31, 2025. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is not an indicator or a guarantee of future results.
Within Asian countries, sectoral tariff effects are uneven. South Korea has been hit by auto tariffs while Taiwan’s semiconductor exports to the United States have held up due to delays in electronics tariffs. Meanwhile, Vietnam and other ASEAN economies have reported strong headline export growth, largely due to the transshipped Chinese goods (see Exhibit 5).
Exhibit 5: Export Growth (%) to the United States
Source: Macrobond, Vietnamese General Statistics Office, General Department of Customs, Taiwan Ministry of Finance. As of June 2025.
There is some near-term reprieve as trade talks progress. However, longer-term uncertainty remains, which will continue to weigh on export-reliant Asian economies.
Index Definition
The Purchasing Managers’ Index (PMI) is an economic indicator of the prevailing direction of a country’s economic trends in the manufacturing and service sectors. It is a diffusion index that summarizes whether market conditions are expanding, staying the same, or contracting by surveying senior purchasing executives at private sector companies.
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