Macroscope | Asia’s trading powerhouses are more Trump-proof than many feared
High US tariffs not only did not cripple export-oriented economies like South Korea, thanks to the AI boom, but they also pushed policymakers to embark on reforms
At the end of last year, Wall Street banks were rattling off reasons Asia’s economies were acutely vulnerable to the onslaught of protectionism that was about to be unleashed as then president-elect Donald Trump prepared to return to the White House.
In a report in November, Morgan Stanley noted that seven of the 10 economies running the largest trade surpluses with the US were in Asia. It also said the region, excluding China, had become more dependent on America as a source of end demand. Last year, the US accounted for between 16 and 24 per cent of Thai, South Korean, Japanese and Taiwanese exports.
Some parts of Asia have clearly suffered this year. A gauge of Southeast Asian stocks is up only 10 per cent – the broader emerging markets index has risen more than 30 per cent – as global investors continue to sell the region’s shares.
Several factors are at work, including Trump’s repeated climbdowns on his most extreme tariff threats and this year’s steep fall in the US dollar index, which made it easier for Asian central banks to ease monetary policy without endangering financial stability.