The latest US tariffs look sweeping. Their impact on Asia is far more limited

• The tariffs are not as broad as they appear. The US replaced its expiring temporary tariffs with new Section 301 forced-labour duties of 10% or 12.5%, but the actual impact depends on each country's export mix and how the tariffs are applied.
  
  
• Technology exports are largely shielded. More than 860 exempted tariff lines cover much of the semiconductor and electronics value chain, significantly limiting the impact on Asia's key growth industries.
  
  
• Taiwan and South Korea are largely insulated by semiconductor exemptions, with Singapore also benefiting from broad carve-outs. China faces stacked tariffs, while India's export mix has limited exemption coverage.
  
  
• Asia is more resilient than during the 2018 trade war. Companies have diversified supply chains, reduced dependence on US demand and expanded intra-regional trade through agreements such as RCEP and CPTPP, making the region less vulnerable to any single country's trade policy.
  
  
• The structural bull case for Asia remains intact. AI-driven investment, semiconductor leadership, digitalisation and expanding domestic demand continue to underpin earnings growth, while attractive valuations make tariff-driven pullbacks an opportunity for long-term investors rather than a reason to exit the region.

For a policy with a name as blunt as "forced-labour tariffs," the measures unveiled by the US Trade Representative (USTR) on 24 July 2026 have produced a surprisingly uneven outcome across Asia.

South Korea, Taiwan, China, India and Singapore were all hit by new duties on the same day. Yet the economic impact is far from uniform. The difference lies not in the headline tariff rate, but in what each economy exports to the United States - and what the USTR quietly excluded from the new measures.

A closer examination suggests that the latest tariffs are more likely to become a manageable macroeconomic headwind than a structural threat to the long-term investment case for Asian equities.

Why were these tariffs introduced?

The story begins in February 2026, when the US Supreme Court struck down President Donald Trump's reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA), ruling that emergency powers do not grant the president unilateral authority to set tariffs - a power reserved for Congress.

To bridge the gap, the administration invoked Section 122 of the Trade Act, allowing a temporary 10% global tariff for up to 150 days. That authority expired on 24 July 2026.

Over the intervening months, the USTR conducted investigations into 60 trading partners under Section 301, assessing whether their governments had adequate measures to prevent imports made with forced labour. The outcome introduced a new tariff regime: economies judged to have sufficient safeguards, or credible commitments to implement them, received a 10% tariff, while the rest were assigned a 12.5% rate.

Among the major Asian economies, China and Singapore face the highest headline tariff rate of 12.5%. South Korea was also assigned a 12.5% rate, but the duty is applied after accounting for existing most-favoured-nation tariff treatment under its bilateral trade arrangements. Taiwan qualified for the lower 10% tier due to its existing statutory prohibitions on forced labour, while India also secured the 10% rate after making labour-related commitments during the USTR's review.

Importantly, these economies were not starting from a clean slate. Existing trade measures, including legacy Section 301 tariffs on China and Section 232 duties on steel, aluminium, automobiles and certain other products, remain in force. Rather than replacing these measures, the new forced-labour tariffs are layered onto the existing tariff framework, although the way they are applied differs across economies.

Table 1: The estimated tariffs applied to key Asian economies

Economy	Forced Labour Section 301	Other major layers	Approx. tariff rate
South Korea	12.5% (netted)	·         15% bilateral cap on general goods; ·         Section 232: 15% - 25% depending on products, 50% steel and aluminium	·         ~15% on general goods;
Taiwan	10% (netted)	·         15% bilateral adjusted reciprocal tariff cap ·         Section 232: 15% - 25% depending on products, 50% steel and aluminium	·         ~10-15% on general goods; ·         Semiconductors largely exempted due to investments to US
China	12.5% (Additive)	·         Legacy Section 301 tariffs 7.5–25% ·         Section 232: 15% - 25% depending on products, 50% steel and aluminium	·         A blended tariff of 25%-32% estimated
India	10% (Additive)	·         Section 232: 15% - 25% depending on products, 50% steel and aluminium	·         ~10% + MFN rate on general goods
Singapore	12.5% (Additive)	·         Section 232: 15% - 25% depending on products, 50% steel and aluminium	·         ~12.5% on general goods with zero MFN rate under the US – Singapore Free Trade Agreement.
Source: The White House, US Trade Representative, Zonos Docs. iFAST Compilations. Data as of 24 Jul 2026.

Severe, or manageable? The sector composition is the tell

Treating the policy as a blanket tariff on 60 economies misses an important point. The actual economic impact depends on what each country exports.

Buried within the USTR's ruling are two broad exemption mechanisms:

• The first excludes products already subject to Section 232 tariffs, meaning those goods continue to face their existing sector-specific duties rather than the new forced-labour tariff.
• The second, and arguably more important, is a universal exemption list covering roughly 863 tariff lines across all affected economies. This exemption extends well beyond semiconductor chips themselves. It effectively covers much of the AI and electronics supply chain (Table 2).

In practice, much of Asia's technology hardware ecosystem falls outside the scope of the new tariff.

Table 2: Almost the entire semiconductor-to-device value chain are exempted from the tariffs

Exempt category	HTS codes	Product coverage
Computers/servers	8471.30–8471.90	Laptops, desktops, servers, storage units, input/output devices
Computer parts	8473.3	Parts/accessories for the above
Semiconductor devices	8541.10–8541.90	Diodes, transistors, LEDs, discrete semiconductor devices
Integrated circuits	8542.31–8542.90	Processors, controllers, memory chips, amplifiers
Chip fab equipment	8486.10–8486.90	Semiconductor manufacturing machinery
Chip metrology	9030.82 9030.90.84 9031.41/49/80/90	Wafer/device testing and measuring instruments
Flat-panel displays	8524.11–8524.99	LCD/OLED panels and display modules
Cellular phones	8517.13	Smartphones specifically
Network equipment	8517.62	Routers, switches, base station apparatus
SSDs	8523.51	Solid-state storage
Source: US Customs and Border Protection. iFAST Compilations Data as of 24 Jul 2026.

South Korea and Taiwan are structurally the least exposed among the major Asian economies, as their export baskets are heavily concentrated in precisely the product categories exempted by the USTR. In South Korea's case, automobiles, steel and aluminium accounted for more than 75% of its exports to the US in 2025. Of the remaining exports, a substantial portion comprises memory chips and display panels, which are also exempt under the new tariff framework.

Taiwan is even better positioned. Information and communications technology audiovisual products and electronic components accounted for 74% of its total exports in 2025, with exports to the US even more heavily skewed towards semiconductors, AI servers and other computing hardware that largely fall within the exemption list.

Singapore also looks less exposed than the headline suggests. According to the Ministry of Trade and Industry, only around one-third of domestic exports to the US are expected to be subject to the new tariff, implying that roughly two-thirds are exempt. This reflects Singapore's export concentration in semiconductors, pharmaceuticals and high-value electronics.

Related article: Confirmed but contained: Singapore's 12.5% US tariff takes effect, thesis intact

India appears slightly more exposed among the major Asian economies. According to India's Ministry of Commerce, pharmaceuticals, smartphones and certain other specified products, which together account for roughly 45% of India's exports to the US, remain exempt from the new tariffs. Much of the remaining export basket, including textiles, apparel, gems and jewellery, and engineering goods, has limited overlap with the exemption list and is therefore more directly affected.

The textile and apparel sector is particularly vulnerable. The US is India's largest export market for these products, with shipments totalling nearly USD11 billion in the financial year ended March 2025. Higher tariffs could squeeze exporters' margins, delay orders and prompt US buyers to redirect sourcing towards Bangladesh and Indonesia, which enjoy duty-free access for specified export volumes under the US tariff-rate quota (TRQ) system. Recognising these risks, industry groups such as the Apparel Export Promotion Council (AEPC) have called for an accelerated bilateral trade agreement with the US to safeguard India's export competitiveness. Even so, the impact is likely to remain concentrated in labour-intensive export sectors rather than the broader economy.

Lastly, China also benefits from many of the same technology exemptions. Smartphones, laptops and integrated circuits remain among its largest export categories to the US, and these products are largely excluded from the new tariff. However, two factors make China's position slightly more vulnerable. First, unlike Korea and Taiwan, China's new duty is additive, stacking on top of existing Section 301 tariffs rather than offsetting them. Second, a large share of China's remaining exports, including furniture, textiles, toys and other consumer goods, does not qualify for the exemptions and therefore faces the higher effective tariff burden.

That said, China's direct dependence on US demand has fallen substantially since the first trade war began in 2018. By 2025, exports to the US accounted for just 8.8% of China's total trade, reflecting years of supply-chain diversification toward ASEAN, Europe and other emerging markets. While the tariffs will still weigh on selected exporters, they are unlikely to derail the broader economy.

The broader investment case for Asia remains intact

The latest measures undoubtedly increase trade frictions, but they fall well short of triggering a new trade shock for Asian equities.

There are three key reasons for us to remain constructive.

First, much of the policy risk had already been priced into markets after nearly two years of shifting tariff announcements. The 24 July 2026 measures largely replaced an expiring temporary tariff rather than introducing an entirely new layer of protectionism.

Second, the region's largest equity markets are increasingly driven by technology hardware and AI infrastructure. These sectors account for a significant share of earnings in Taiwan, South Korea and Singapore, and much of their export value chain remains outside the scope of the new tariffs. Global demand for AI infrastructure, advanced computing and data centres continues to outpace supply, providing a powerful tailwind that is unlikely to be derailed by this round of trade measures.

Third, Asia today is fundamentally different from the region that entered the first US-China trade war in 2018. Supply chains have become more diversified, companies have broadened their manufacturing footprints, and export markets have expanded well beyond the US. Trade agreements such as Regional Comprehensive Economic Partnership (RCEP) and the Progressive Agreement for Trans-Pacific Partnership (CPTPP) have accelerated regional integration, allowing businesses to serve a growing share of demand within Asia itself. As a result, the region is far less dependent on a single end market than it was eight years ago.

Risks remain, but they are becoming more targeted

This does not mean investors should become complacent.

None of this means risks have disappeared. China continues to face the highest cumulative tariff burden, and separate US investigations into manufacturing overcapacity could lead to additional sector-specific measures for the Asian region. India also faces uncertainty from proposed legislation targeting imports linked to Russian oil purchases. These developments warrant close monitoring.

However, these risks are increasingly company- and sector-specific rather than systemic. The extensive exemptions for semiconductors, computing hardware and other high-value technology products significantly limit the macroeconomic impact of the latest tariffs. More importantly, they leave intact the industries that are expected to generate the bulk of Asia's earnings growth over the coming years.

For long-term investors, the latest tariff announcement should be viewed less as a reason to retreat from Asia. The region's competitive advantages - its leadership in semiconductor manufacturing, deepening regional supply chains, expanding middle class and accelerating adoption of artificial intelligence - remain firmly in place. We remain constructive on Asian equities, and hold on to a 3.0 star “attractive” rating for the region.

Table 3: Recommended Products

Market / Sector	Recommended Products
Asian Markets	M&G (Lux) Asian A Acc USD Fidelity Asia Pacific Dividend A-USD iShares Core MSCI Asia ex Japan ETF (HKEX: 3010)
Asia Semiconductors	Global X Asia Semiconductor ETF (HKEX:3119)
South Korea	LionGlobal Korea USD Franklin FTSE South Korea ETF (NYSE: FLKR)
Taiwan	Franklin FTSE Taiwan ETF (NYSE: FLTW)
Singapore	iFAST-Amova Singapore Equity A SGD Amova Singapore STI ETF (SGX: G3B)
China	Fidelity China Focus A-SGD T. Rowe Price Funds SICAV - China Evolution Equity A USD
China Tech	iShares Hang Seng Tech ETF (HKEX:3067) GF CSI All-Share Information Technology ETF (SZSE:159939)
Hong Kong	Tracker Fund of Hong Kong (HKEX: 2800)

Declaration:

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.