New Delhi: The bilateral trade agreements between the US and several APAC countries reduce uncertainty around the outlook for Asia's exporters, and could marginally increase the GDP growth of these nations over the next few years.The US-based agency also said that although India is yet to secure a trade deal with the US, its 50 per cent tariff is now significantly higher than those faced by most other Asian exporters - though the two countries may still reach an agreement in the near future.
"The recent series of bilateral trade agreements between the US and several APAC countries reduce uncertainty around the outlook for Asia's exporters, and could provide a slight lift to GDP over the next few years for the countries involved," Fitch said in a statement.However, many details are still to be clarified, and tariff rates remain subject to change, it added.
Over October 20-30, the US announced deals with China, Japan, Korea, Vietnam, Malaysia, Thailand, Australia and Cambodia. The greatest economic impact is likely to stem from a halving of the 20 per cent fentanyl-related US tariff on China; this would reduce its effective tariff rate on China by around 10 percentage points, other things being equal.
The US and China have also agreed to pause for one year their recent tightening of trade restrictions, involving China's curbs on rare earth exports, the US extension of export licensing requirements to companies majority-owned by entities on its key restriction lists, and higher bilateral tariffs, Fitch said.
"We expect these developments to have a small positive impact on economic growth in China and the US over 2026-2027. Some other Asian countries, especially Korea and Vietnam, should also see an uplift through the influence of stronger demand in China and the US, although in general the deals' direct boost to growth will be more limited," Fitch said.However, US tariffs on China remain higher than those on most other countries, even after the latest agreement.
"Greater clarity about tariffs should strengthen exporters' confidence in planning medium- and long-term adjustments to supply chains. This, in turn, could support investment growth, particularly in markets with significant exports to the US, such as Malaysia, Thailand and Vietnam," Fitch said.The trade deals indicate strong US support for the expansion of rare earth mining in non-China markets and could help drive investment in that sector in Southeast Asia and Australia, though the macroeconomic impact is unlikely to be significant in the next few years, Fitch said.
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