China Research

It is not a new analytical conclusion that the absurd tariffs of President Trump also damage emerging markets though with different intensity from country to country. This harming American policy certainly also affects Asian countries which recently has been confirmed by the updated forecast of the Asian Development Bank (ADB). The weakening outlook for the Asian member countries of the ADB also means a limited setback for Western corporations in their attempt to diversify their export markets as a reaction on the deteriorating conditions on U.S. markets. However, Asian growth performance will remain superior to the rest of the world.

Negative growth effects from tariffs but partly offset by domestic policy

ADB summarizes its revised forecast from September 2025 as follows: “Developing Asia’s growth forecasts are trimmed to 4.8% in 2025 and 4.5% in 2026, down by 0.1 and 0.2 percentage points from April. The revisions reflect offsetting factors. The updated trade agreements and tariffs led to a broad shift toward higher US tariffs, which will weigh on the region’s exports and growth. However, fiscal and monetary policy responses are expected to cushion the impact…” (see https://www.adb.org/outlook/editions/september-2025).

It also should be observed that China still has not achieved a deal with the Trump administration. This means a major shortcoming or uncertainty in the ADB forecast -despite the fact that many Asian countries indeed have a trade agreement with the U.S. since August 1. But who knows which trade deal can be regarded as stable?

As far as China is concerned, the ADB explains that GDP forecasts for the People’s Republic of China (PRC) have been kept unchanged due to domestic growth support. At the same time, the ADB still mentions concerns about China’s “continued weakness in the property market”. My own interpretation of the ADB view on the PRC means continuing concerns, reflected by the decelerating GDP-growth forecasts for 2025 and 2026 (4.7 and 4.3 percent).

India has to accept some downward revision of its growth as well but remains the fastest (major) economy in Asia (expected GDP growth: 6.5 percent in both 2025 and 2026).

Unfortunately, South East Asia will have to face the most negative growth impact in 2026 from Trump’s trade restrictions. Indonesia (GDP +5.0 in the September forecast for 2026, down from +5.1 percent in April)is still considered to remain on track – but countries such as the Philippines (to +5.7 from +6.1 percent), Thailand (to +1.6 from +2.9 percent), Vietnam (to +6.0 from +6.5 percent) and Malaysia (to +4.2 from 4.8 percent) lose quite some momentum – mainly due to American tariffs.

Conclusion: American protectionism certainly affects Asia negatively as a whole – but certain countries more than others. However, altogether Asia will most probably remain the fastest growing region or continent also in the future – as a message to the corporate sector, at least as long as China can avoid a (financial) meltdown.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University