US Strikes Trade Deals with Asia Pacific Nations, Easing Exporter Uncertainty

Fitch Ratings reports that new bilateral trade agreements between the United States and several Asia Pacific (APAC) countries are reducing exporter uncertainty and may boost their GDP growth. While India lacks a US deal and faces higher tariffs, agreements have been made with China, Japan, Korea, Vietnam, Malaysia, Thailand, Australia, and Cambodia.

A key development is the US halving its 20 percent fentanyl-related tariff on China, potentially reducing it by 10 percentage points. Trade restrictions, including China's rare earth export curbs and US licensing rules, are paused for one year.

Impact: These deals are expected to positively impact economic growth in China and the US (2026-2027). Korea and Vietnam may see growth from increased demand. Clarity on tariffs could boost investment in supply chains for countries like Malaysia, Thailand, and Vietnam, and support non-China rare earth mining.

Definitions: - Bilateral trade agreements: Formal pacts between two countries to facilitate trade. - APAC countries: Nations in the Asia-Pacific region. - Exporters: Businesses selling goods/services abroad. - GDP (Gross Domestic Product): Total value of goods/services produced domestically. - Tariff: Tax on imported goods. - Fentanyl-related US tariff: Tariffs linked to fentanyl trade. - Rare earth exports: Export of elements crucial for tech. - Supply chains: The network delivering goods from origin to consumer.

Rating: 6/10