Emerging Asian markets absorb over 20% of tariff costs

China, Japan, and South Korea absorb less than 10%, shifting most costs to consumers.

Newly industrialised countries (NICs) in Asia, like Singapore, where economies rely on advanced manufacturing and high-value exports, absorb more than 20% of tariff costs, according to Nomura’s Asia Economic Monthly report.

In contrast, China, Japan, and South Korea absorb less than 10%, with most of the costs passed on to buyers due to stronger market positioning.

China’s rate, at 7.6%, points to limited margin flexibility for firms after years of disinflation.

In ASEAN, absorption is effectively zero, with exporters passing all tariff costs through, reflecting the low margin flexibility of labour-intensive exports.

Moreover, Asia’s export prices have declined in sectors including autos (Japan/Korea), semiconductors and electronics (NICs), cutlery & hand tools (China), chemicals (Korea), aluminium articles, and fabricated metals (China), amongst others.

Meanwhile, prices have increased in sectors like textiles (ASEAN), pharmaceuticals (Singapore), electrical equipment (China, Korea, Japan, Thailand), motor vehicle parts (Korea, Japan), jewellery, base metals, and more.

Nomura’s report noted that this divergence highlights the greater capacity of advanced manufacturing economies to shoulder tariff costs compared to lower-margin, labour-intensive exporters.