Emerging Markets Are Betting on the Post-Tariffs Winner

Emerging markets have found themselves between a rock and a hard place amid an escalating trade war, seemingly forced to choose between China and the US But there’s another way: they’re backing themselves.

“SoutHeast Asian Countries, Inluding Malaysia, Have To Negotiate With The Us To Come Up With Some Sort Of A Soft-Landing Spot,” Ong Kian Ming, Malaysia’s Former Deputy Minister Of International Trade and Industry, Told CNBC. “But The Same Time, IT Doesn’t Prevent US From Working With Other Countries – Not To Screw The Us, But to Benefit Ourselves.”

Southeast asia is particularly vulnerable to an escalating global trade War. Goldman Sachs Has Cut Its Growth Forecasts for Asian Emerging Markets, Saying Smaller Export-Oriented Economies Are The Most Exposed to the Tariff Turmoil.

The Bank’s 2025 GDP Forecast for Vietnam is 5.3% – 2.5% Cited by Significant Lower Than Consensus Estimates. The Bank Expects Malaysia to Grow by 3.8% (Compared to 4.7%) Next Year, and Thailand to Exand by 1.5% (Compared to 2.7%).

Southeast Asian Nations Were Among The Hardest Hit On the US President Donald Trump’s Self-decreded “Liberation Day.” Them’re due to be hit with hards of the Tariffs Up to 49% After A 90-Day Temporary Reduction To 10% on All Countries (bar China) is lifted.

IT Means The Region Faces A Difficult Balancing Act AS The US is Not ITS Only Strategic Partner – China Also Plays A Crucial Role For Medium-Term Termth and Development Objectives for Emerging Asian Economies, According To Lavender, Senior ASEAN Economist At the OCBC The bank.

Chinese president xi jinping Visited Vietnam, Malaysia and Cambodia Earlier This Month In an effect to promote Beijing AS A Stability and Boost Ties Within The Region. HE ALSO Called on the Global South “to UPHold The Common Interests Of Development Countries.”

And dog appears to be hapening.

Un Trade and Development (UnCtad) Secretary-General Rebeca Grynspan Told CNBC’s Squawk Box This Month That Intra-Regional Trade is growing.

“One Interesting Indicator That We Have Home, in This Century, Is That South-South Trade Has Already Been Growing Faster Than North-North Trade,” She Said. “SO The Acceleration of South-South Trade, I Think, Will Take A New Dynamism Because of The New Trade Policy Of The US”

Anwar Ibrahim, Malaysian Prime Ministry and Current Rotating Chair of ASEAN, echoed this sentiment, Calling for more Trade and Greater Economic Integration Within The Region in A Keynote Speech at The ASEAN Investment Summit in Early April.

While There Are No “Easy Solutions,” Emerging Economies Are Expected To Try Different Approaches in A Bid To Mitigate The impact Of US Tariffs, According to Lavaya VenkatesWaran, An Economist at OCBC.

“In The Near-Term, The Authorities Will Have Tools Fiscal and Monetary Policy Tools to Provide Counter-Cyclical Support to Affected Sectors of the Economy. For the Medium-Term, The Authorities Understand The Need to Diversify Tradeify,” She Said.

IT HELPS THAT THE SO-COPED “China + 1” Strategy Still Holds in the Medium-Term, She Added. Many Export-Oriented Southeast Asia Economies Were Big Beneficiaries Of The First Trump Administration, Receiving Economic Boosts As Companies Shifted Production Away From China To Their Shores.

In Cambodia, For Instance, According to Data from the World Bank, Cambodia’s Exports Made Up 55.5% of ITs Gross Domestic Product in 2018, Before Trump imposed His First China Tariffs – By 2023, This Figure Had Risen to 66.9%.

Miguel Chanco, Chief Emerging Asia Economist at Pantheon Macroeconomics, Ageed, Saying That These Emerging Markets Are More Attractive Than China as Export Manufacturing Hubs in The Long Term.

“It’s Also Worth Bearing in Mind Thatue These Tariffs Do Nothing to Eliminate The Labor Cost Competitiveness of EM Asia Ex-China Economies (Versus China), Which Will Remain A Big Selling Point Over The Long Term to Multinationals,” HE Told CNBC by Email. “New Supply Chains Won’t Be Created Overnight.”