Asian Shares Sag Amid US-China Trade Tensions

The Asian markets have been feeling the heat of the ongoing US-China trade tensions, with shares sagging across the region. The US-China trade war, which began in 2018, has had a significant impact on Asian economies, particularly those in the ASEAN region. The trade war has contributed to slower worldwide economic growth, which weighs on external demand for ASEAN goods. The US-China Tensions index has risen to historically high levels, indicating increased bilateral frictions (Rogers, Sun, & Webster, 2021). This, in turn, has raised concerns about the potential impact on global growth and trade, with Asian economies particularly vulnerable to changes in Asia-Pacific trade.

The trade war has also led to a redirection of trade and investment, with ASEAN countries benefiting from companies seeking to diversify their supply chains and reduce exposure to trade barriers. In 2018-20, ASEAN's share in the value of US imports rose by 2.6%, coincidentally the same amount by which China's share declined (Coxhead, 2022). However, higher tariffs and anti-dumping tariffs from the US pose risks to ASEAN economies, potentially leading to lower real exports and economic growth (Chin, 2023).

To mitigate these risks, ASEAN countries are diversifying their trade relationships, with the Regional Comprehensive Economic Partnership (RCEP) being a notable example (Urata, 2021). By fostering dialogue and cooperation among its members, the organization has been able to present a unified front in the face of global challenges and promote economic integration, reducing the region's reliance on any single trading partner (Severino, 2019).

Asian companies have responded to the trade war in various ways, with some strategies proving more effective than others in navigating the current economic climate. Many Asian companies have been diversifying their supply chains to reduce exposure to trade barriers. Some companies have been investing in technology and innovation to stay competitive. For example, Alibaba pledged to invest more than 380 billion yuan ($53 billion) on AI infrastructure over the next three years, making it one of China's biggest AI infrastructure spenders (Bloomberg, 2025). This investment can help these companies maintain a competitive edge in the global market.

However, the trade war has also presented challenges for Asian companies. Higher tariffs and anti-dumping tariffs from the US pose risks to ASEAN economies, potentially leading to lower real exports and economic growth (Chin, 2023). To address this, ASEAN countries can engage in multilateral trade negotiations, such as the WTO, to advocate for lower tariffs and fair trade practices. They can also work together to present a unified front in trade disputes and promote regional economic integration.

In conclusion, the US-China trade war has presented both opportunities and challenges for Asian economies, particularly those in the ASEAN region. To mitigate these risks, ASEAN countries can diversify their trade relationships, engage in multilateral trade negotiations, invest in infrastructure development, and promote regional economic integration. By working together and adopting proactive policies, Asian economies can better navigate the challenges posed by the trade war and capitalize on the opportunities it presents.