No Room for Celebration! ADB Cautions India on Reciprocal Tariffs, Projects Growth Declining for Asia

The Asian Development Bank (ADB) said that the tariffs imposed by the United States will shave growth in Asia by third of a percentage point in 2025 and a full percentage point in 2026, Bloomberg reported. The multilateral institution will also lower its growth forecast for Asia.

"Economies in developing Asia and the Pacific are projected to grow 4.9% this year, down from 5% last year," ADB said in Asian Development Outlook (ADO) April 2025, adding that the regional growth is expected to decline further to 4.7% next year.

It clarifies that the growth forecasts were finalised prior to the April 2 announcement of new tariffs by the US administration, so the baseline projections only reflect tariffs that were in place previously. ADB’s Chief Economist Albert Park said in a virtual press conference that growth will get further revised down in its report in July.

“Rising tariffs, uncertainties about U.S. policy, and the possibility of escalating geopolitical tensions are significant challenges to the outlook. Asian economies should retain their commitment to open trade and investment, which have supported the region’s growth and resilience,” Park added.

The bank also cautioned India against celebrating 26% tariffs as an opportunity since there is no certainty the tariffs would be here to stay. It has further suggested Asian countries to cooperate and engage in more trade between themselves. Noting that 3% of the regional gross domestic product (GDP) depends on the US, Park also highlighted the importance of reaching out to the US.

Trump's Tariffs on Asia

Asia takes big tariff hit from US President Donald Trump. The US imposed the highest tariff rate on Cambodia with 49%, followed by Vietnam at 46%. The tariff rates for countries like Taiwan, Indonesia, Thailand, Bangladesh and Sri Lank ranged between 32% and 44%. India, Korea, Japan and Malaysia faced a relatively low "discounted" tariff rates between 24% and 26%.