- Asian Exports Surge as Firms Race Tariff Deadline.
- Vietnam, Taiwan, Thailand Post Record US Shipments.
- Trump’s Tariff Threat Fuels Front-Loading of Asian Goods.
The trade deficit between the United States and Asia is growing at a rapid pace as importers scramble to stock up on goods before President Donald Trump’s proposed reciprocal tariffs kick in this July. This rush to import is shaking up the usual seasonal trade patterns and putting extra strain on the ongoing talks between Washington and its Asian trading partners, reports SCMP.
Record Export Surges from Vietnam, Taiwan, and Thailand
In May, Vietnam, Taiwan, and Thailand all reported record-high exports to the US. Shipments from Vietnam and Thailand jumped by 35% compared to last year, while Taiwan’s exports nearly doubled, soaring by almost 90%. South Korea’s shipments are also nearing record levels and seem to have continued to rise into early June, based on the latest data.
Usually, Asian exports to the US peak in the latter half of the year, just in time for the holiday season. However, the looming threat of new tariffs has caused a significant shift, pushing businesses to speed up their shipments.
Implications for US Trade Data and Negotiations
These unprecedented increases are likely to show up in the upcoming US trade data for May, which could complicate discussions between the US and various Asian economies about tariff levels. The sudden influx of goods might temporarily inflate the trade deficit and bolster Washington’s case for imposing new duties.
Trade Deficit Projected to Break Records
The US trade deficit is expected to have hit $91 billion in May, bringing the total for the year to nearly $643 billion so far. This would break previous records for the same timeframe, including the peak seen during the pandemic. A new wave of sweeping tariffs in July could sharply reverse the current export momentum, posing a threat to economic growth in exporting countries.
Policy Volatility Takes Toll on Asian Economies
The Asia-Pacific Economic Cooperation (APEC) recently revised its GDP growth forecast for 2025 down to 2.6%, a drop from 3.3% in March. The organisation pointed to rising trade tensions as a major reason for this adjustment. Economies throughout Asia are now preparing for the fallout from shifts in US trade policy, particularly if talks with Washington don’t go as planned.
China Faces Export Strain Despite Truce
China’s trade is already feeling the pinch of this policy uncertainty. Exports to the US fell in May, even though a tariff truce was established in Geneva earlier that month. The ongoing high import taxes from the US are pushing some exporters to find alternative routes for their goods, a tactic known as origin washing.
Meanwhile, Chinese companies are working hard to boost their domestic sales and explore new foreign markets. However, if exports continue to decline, it could put significant pressure on China’s economy, which is still trying to bounce back from a property downturn and sluggish consumer spending.
Broader Regional Risk from Tariff Escalation
Other Asian economies might soon encounter similar growth hurdles if they can’t secure tariff exemption agreements with the US. A sharp increase in duties could undermine their export competitiveness, potentially stalling growth across the region and exacerbating the economic fallout from ongoing trade disputes.
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Source: Scmp
