Evidence indicates that US import frontloading has boosted many Asian economies, particularly in electronics, but early warning signs point to upcoming weakness.
US import frontloading provided a temporary boost to several Asian markets, but the aftermath could be severe.
We anticipate a double-digit drop in Asia’s export growth in the second half of 2025.
Recent hopes for US trade agreements with key allies and easing US-China tensions have distracted from the economic consequences of ongoing tariffs.
US imports surged in Q1 ahead of expected tariff hikes. While this surge was led by the EU, several Asian economies also saw gains. Within the Asia-Pacific region, Vietnam, Australia, India, Malaysia, Thailand, and Laos showed clear signs of frontloading. China showed limited evidence of frontloading, likely due to earlier US tariffs imposed in February and the rerouting of Chinese exports through third countries.
The problem with frontloading is what comes after. We expect US real import growth to plunge following the frontloading spike. This could deliver a “double whammy” for Asian exporters—first from the payback effect after frontloading, then from weakened US consumer demand caused by tariff-driven price increases. Demand outside the US remains soft, with Asia’s exports to the rest of the world sluggish, alongside signs of weakening Chinese demand, such as its manufacturing PMI falling into contraction and a sharp drop in import orders. A major export shock seems imminent, with a double-digit decline in Asia’s export growth expected in H2 2025.
Tariffs are hitting businesses broadly, especially sectors deeply integrated in global supply chains and exposed to US-China trade. These include electronics, autos, and consumer goods. Logistics and shipping sectors are also indirectly impacted due to falling trade volumes.
Tariffs have increased costs and are likely to hurt company profitability. For low-margin consumer goods, higher tariffs are passed on to consumers. Trade-production diversion and transshipment are underway due to higher tariffs on China, with firms sourcing more from emerging destinations like India and Guatemala or reshoring within the US. A fall in shipments from China to the US, paired with rises in shipments from China to other countries and from those countries to the US, suggests ongoing transshipment via third countries.
Even if a trade deal or truce is reached, the economic damage is already done. The massive frontloading ahead of anticipated tariffs artificially inflated global and Asian export growth, implying a large payback period ahead, especially for Asia’s electronics and tech exports. Companies are reporting lower profits due to tariffs, causing them to become more cautious with capital expenditure and focus on cost cutting. Uncertainty has dampened new orders, and import demand is starting to ease across economies. Overall, data-driven evidence points to a looming double-digit decline in Asia’s export growth.
