What is the potential impact of Trump 2.0?

Singapore faces the steepest challenges due to its highly open economy.

A larger economic growth drag and disinflation in Asia now look more likely in 2025 following US President Donald Trump's re-election, according to a Nomura report.

Trump's return is expected to lead to lower global growth, heightened policy uncertainty, and geopolitical risks, potentially dampening business sentiment and private investment in ASEAN countries. 

Singapore, due to its highly open economy, faces the steepest challenges, with weakened external demand and declining export growth. Meanwhile, Malaysia could see benefits from an uptick in foreign direct investment as multinationals diversify their supply chains. 

The Philippines may be vulnerable to declines in remittances due to stricter US immigration policies and risks to its outsourcing industry. Additionally, geopolitical tensions in the South China Sea pose further threats.

Indonesia and Thailand are somewhat shielded but could still face issues such as limited monetary policy flexibility and challenges to supply chain expansion plans in the electric vehicle sector due to potential US policy shifts.

China could experience a 0.4 percentage point gross domestic product decline if subjected to a 60% tariff on all goods exported to the US by mid-2025, prompting possible retaliatory tariffs and export controls. The changing geopolitical landscape might also incentivise other nations to forge stronger economic ties with China to offset risks, Nomura said.

Japan's immediate economic impacts are predicted to be minimal, though defence spending and production relocation may emerge as longer-term concerns. South Korea's trade agreement with the US may offer some protection, but potential tariffs and protectionist measures could still hit key industries like electronics and automobiles.

Australia could see a modest economic slowdown due to weaker global trade growth, particularly with China, despite its free trade agreement with the US providing some buffer. Meanwhile, India is expected to benefit from strengthened US strategic and economic partnerships, offsetting any friction from trade or immigration policies as it becomes more integrated into shifting supply chains.