Trade Tensions Increasing in Asia

October 28th, 2025
Sarah Kumar

Asia is steps away from becoming the new center off trade friction, and must brace for impact. What first started as competition between others has gone into tariffs, tech restrictions and supply-chain battles between major economies: the US and China. But what these two do isn’t just affecting each other; countries like Japan, South Korea, Taiwan, and Vietnam are shielding their industries as they are caught in the crossfire.

The core of the tensions in Asia is economic security. The US recently placed bans on exporting chips to China and 25% tariffs on electric vehicles, batteries, and steel imports from certain parts of Asia. China retaliated by restricting exports of gallium and germanium—the most critical chipmaking minerals—and tightening controls on graphite, also found in electric vehicle batteries. The reprisals have deterred investment, increased production costs and prompted companies such as TSMC and Samsung to move operations to India, Japan and others. Smaller economies and companies that depend on the regional manufacturing network are being hurt as global companies rearrange supply chains to avoid political risk.

Meanwhile, regional forums like ASEAN and trade pacts like RCEP and CPTPP are struggling to keep harmony as leaders are calling for open markets in the midst of rising protectionism. Japan and South Korea are deepening connections with Western countries under the Indo-Pacific Economic Framework (IPEF), while China is seeking more engagement with Southeast Asia under its Belt and Road Initiative and new investment agreements. India, once reluctant, is building its own production push, banning some Chinese tech imports and luring Western companies to "friend-shore" manufacturing. For Asian workers in the millions, what becomes of this shifting trade hierarchy will determine whether Asia remains the spur for global growth—or falls apart as rising political and economic pressure threatens.

The most intense hotspot in Asia's trade war is now the technology front. US lawmakers demanded more extensive prohibitions on the sale of chipmaking tools to China at the beginning of October, claiming that earlier limitations had not been able to stop Beijing's technological aspirations. China increased its export restrictions on rare earths a few days later.

The technological crossfire has focused on sectors that are essential to the manufacturing of semiconductors and defense. Washington reacted once more by imposing stricter regulations on advanced materials, chemical inputs and chip design software utilized in expensive electronics. The White House is even considering a more extensive crackdown on technology sharing with Chinese companies, which may change the way innovation disseminates globally. Asian markets have been shaken by these back-and-forth actions, which have sparked concerns about a protracted technology cold war that would split the world economy for years to come.