By Fabiana Negrin Ochoa

The trade deals Asian countries have struck with the U.S. lower the temperature on tensions, but they offer little assurance on the outlook for the year ahead, ING economists said.

As the full impact of tariffs starts to materialize, regional growth is likely to weaken after a better-than-expected 2025, according to ING's 2026 outlook report.

Countries that can cash in on the artificial-intelligence boom may be able to outperform next year, but for others, the trade deals do little to counteract the broader slowdown in trade momentum, said ING's Asia-Pacific research head, Deepali Bhargava, and senior economist Min Joo Kang.

The flurry of pacts hammered out over the past months has brought some clarity to the export-reliant region, with many economies managing to negotiate lower, less punitive duties on their U.S.-bound goods than they faced when the Trump administration first announced its sweeping tariff policy. But manufacturers must still contend with tougher trade barriers.

China, initially hit with much steeper rates than its neighbors, has narrowed the tariff gap with its peers. That stands out as a clear strategic win for Beijing, the economists said, "but most of Asean, except Singapore, now face 19%-20% tariffs."

Asia's exports, which have been rather resilient so far this year, have yet to feel the full impact of the higher levies, they said.

ING expects to see divergence across the region after a year in which economic growth has been propped up by strong demand for technological goods, frontloading to get ahead of tariffs, and government spending.

In South Korea and Japan, it expects faster economic growth as substantial fiscal stimulus filters through to household consumption.

It's a different story for domestic demand-driven economies, the economists said.

India's inability to secure a trade agreement with the U.S. will continue to be a concern unless negotiations progress, while Indonesia is vulnerable to investment headwinds stemming not only from trade-related uncertainty but from subdued government spending.

Economies like Taiwan and Malaysia have benefited from tech-related capital spending, but surveys show growing caution amid slowing global trade, ING's report warned.

Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com

(END) Dow Jones Newswires

December 04, 2025 07:00 ET (12:00 GMT)

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