China’s trade with Asia could plug hole left by US tariffs, economists say

Deeper, more expansive trade with neighbours could help offset damage to China’s GDP growth, according to economic surveillance office

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Stronger trade ties between China and Asian countries like Vietnam could help make up for shortfalls created by high US tariffs. Photo: Reuters

Published: 6:00am, 16 Apr 2025

China’s growth could drop by as much as one percentage point this year if soaring US import tariffs hold up, but its increasingly deep ties with Southeast Asia can help offset that loss, a regional economic surveillance body said on Tuesday.

US import tariffs of 145 per cent on Chinese shipments will limit expansion of the world’s second-largest economy to a “quite optimistic” 4.8 per cent this year, said Hoe Ee Khor, chief economist with the Asean+3 Macroeconomic Research Office (AMRO).

The office made its prediction based on a strong first quarter followed by weak periods, particularly the second half of the year. Beijing has made “around 5 per cent” its official gross domestic product growth target for 2025.

“With the new tariff of 145 per cent, exports are going to be hit quite hard,” Khor said at a news conference on Tuesday. “The tariff will definitely cause exports from China to drop substantially.”

The economic surveillance office, which tracks developments in China, Japan, South Korea and the 10-member Association of Southeast Asian Nations (Asean) bloc, said Chinese reliance on the US market – which provided some US$525 billion in export value in 2024 – will set it back this year and next if the US tariff rate does not change, with a projection of 4 per cent GDP growth in 2026.

US President Donald Trump has launched a protracted trade conflict with China, sending tariff rates through the stratosphere and leading to rates of 125 per cent being imposed by Beijing in reply. While there have been recent, perhaps temporary, exemptions allowed for certain goods, it is unclear how the landscape will evolve.

China’s increasingly tight trade and investment ties with Southeast Asia will help fill the void left by limited access to the US market, AMRO economists said at the conference.