Asia-Pacific Growth to Drop if US Enforces Reciprocal Tariffs: S&P

Significant Asia Pacific economies such as India, China, and Japan are projected to experience a decline in growth of 0.2-0.4 percentage points (ppts) in the next two years if the US enforces the reciprocal tariffs that were revealed on April 2, according to S&P Global Ratings.

It stated that the US's threat and enforcement of tariffs will hinder global trade and trust. The area's reliance on exports to China and the US will significantly impact manufacturers and smaller economies.

"Should the tariffs announced on April 2, 2025 resume for economies ex-China, the geopolitical and economic fallout will be deep," S&P Global Ratings, Asia-Pacific Head of Research, Eunice Tan said.

In March, S&P forecasted a growth rate of 6.5 percent for 2025 and 6.8 percent for 2026 in India. If the reciprocal tariff declared by US President Donald Trump is put into effect, S&P anticipates the growth to decrease to 6.3 percent and 6.5 percent, respectively.

Following the global shock to stock markets from the April 2 announcement, Trump on April 9 delayed the reciprocal tariffs by three months, except for China, which will face a 125 percent tariff. However, the 10 percent extra duties on exports to the US, which was declared on April 2, remains in effect.

S&P indicated that credit conditions in the Asia-Pacific region will continue to be firmly negative as the trade conflict between China and the US represents a major intensification in relations between these nations, adversely affecting growth and confidence in Asia-Pacific.

S&P stated that business confidence is expected to decline further due to pauses in new investments and declining household sentiment. Additionally, equity and debt markets are expected to remain unstable