ADB flags tariffs, policy risks to SEA growth

The Asian Development Bank (ADB) is warning that renewed tariff hikes and trade policy uncertainty could slow Southeast Asia’s export momentum, despite the region posting strong gains in the first half of 2025.

In its Asian Development Outlook (ADO) September 2025 report, the multilateral lender said tariff front-running boosted exports earlier this year, but global trade risks remain elevated.

Several Asian economies, including the Philippines, signed trade deals with the United States before the Aug. 1 deadline to avoid additional tariffs. Cambodia, Malaysia, Thailand, Vietnam, and the Republic of Korea also concluded similar agreements.

“Following a 3-month extension, US–PRC (People’s Republic of China) trade negotiations are ongoing. Thus, while tensions have subsided somewhat since April, the risk of renewed tariff escalation persists. Additionally, trade policy uncertainty remains high,” the report noted.

Significant risks

ADB also warned that potential US sector-specific tariffs on semiconductors and pharmaceuticals could pose significant risks. “If these risks were to materialize, they could constrain investment, disrupt supply chains, and dampen consumer confidence, with adverse implications for the regional outlook,” it added.

The lender also flagged geopolitical tensions, a possible deterioration in China’s property sector, and financial market volatility as downside risks to Asia’s economic prospects.

Asia’s developing exports expanded by 8.1 percent in the first half, led by strong global demand for electronics, particularly semiconductor chips used in artificial intelligence-related equipment.

Growth forecasts revised downward

For Southeast Asia, however, the ADB revised growth forecasts downward for 2025 and 2026, citing weak global demand and uncertainty over the trajectory of trade policy.

With the Philippines among the countries that recently sealed trade deals with the US, the report underscores both the opportunities and vulnerabilities facing the country’s exporters.

Electronics remain a key driver of Philippine shipments, but the risk of sector-specific tariffs could weigh on investment sentiment and supply chain stability.