Asian Factory Activity Recovers from Tariff Slump

After factory activity in Asia suffered a slump after April's U.S. tariff announcements, major purchasing managers' indices on the continent have returned to growth territory. As of January, factory output in China, Taiwan, South Korea, Vietnam, Indonesia and Japan was once again expanding, newly released incides from S&P Global, Rating Dog (formerly Caixin) and Au Jibun Bank show.

Other countries in Asia are playing a pivotal role in equalizing global trade (and continuing the region's export prowess). As China is currently subject to the highest U.S. import tariffs, goods exports from the country to the United States have dropped. However, China has been successful in redirecting export streams to its neighbors, at times being accused of flooding other Asian market with cheap goods.

But the region's economies have also also taken it upon themselves to step up to import needs the U.S. might have now that fewer Chinese goods are coming in. According to new data from the Census Bureau, U.S. imports from so-called Pacific Rim locales, including China, Australia, Indonesia, South Korea, Japan and Taiwan, were only slightly down between January and October 2024 and the same time span in 2025 despite major losses in Chinese imports. Overall, U.S. imports even rose slightly over the given time frame from around $3 trillion to $3.1 trillion.

Upon the introduction of U.S. tariffs, factory activity in Asian economies faltered, while manufacturing purchasing managers' indices rose in the United States and Europe. Manufacturing powerhouses like Taiwan and South Korea saw larger, but later dips in activity, while these were more abrupt but shorter in Indonesia and Vietnam, for example. China, the country most affected by U.S. tariffs, did not see the biggest dips in factory activity in Asia despite the fact that low domestic demand compounded its issues.