Asia Firms Eyeing More Trade with South Asia, Europe, Middle East as Uncertainty Prompts Rethink, HSBC Survey Suggests

Published: June 19, 2025

The Asian trade map would look drastically different should trade uncertainty persist, with 38% of Asian firms looking to trade more with South Asia, 36% to trade more with Europe, 33% to trade more with the Middle East – but 28% to trade less with North America.

This is according to the findings of HSBC’s 2025 Global Trade Pulse Survey, which offers insight into the business plans and sentiment of 2,750 international firms across seven Asian markets regarding tariffs and trade. 83% of Asian firms say that trade-policy changes are forcing them to rethink their long-term business model, while 81% say that trade uncertainty has made them more cautious about expansion and investment. Asian firms also expect an average decline in revenues of 18% due to supply-chain delays. That said, 87% of Asian firms feel confident about growing their international trade over the next two years.

Aditya Gahlaut, Regional Head of Global Trade Solutions, Asia at HSBC, comments: “Against a backdrop of trade uncertainty, many companies have taken a pause on their capital expenditure so that they can assess the new normal. Capex is never an overnight decision, but what is constant is that wherever trade flows, investment always follows.”

In light of current trade dynamics, Asian firms are more likely to increase trade with South Asia (+26 percentage points), Middle East (+21pp), and Europe (+20pp). At the same time, they are more likely to decrease trade with North America (-5pp). (See table below.)

Question

In light of current trade dynamics, how would you best describe your business's trade strategy in relation to the following regions and markets?

Over the next two years, 52% of Asian firms are considering or in the process of moving production to (or increasing production in) China. The equivalent figure for South Asia is 39%; for Europe it is 35%; for the US it is 29%, and for the Middle East it is 28%.

Currently, the biggest concern to Asian firms (51%) is rising costs due to tariffs and other trade- related factors. 34% of Asian firms have adjusted prices to reflect higher costs, with 51% of Asian

firms planning to do so. In addition, 37% of Asian firms have increased their inventory levels to manage supply disruptions, while 49% are planning to do so.

“Working capital has become a high-priority C-suite agenda item for many clients because much of it is now trapped in either inventory or receivables,” Gahlaut continues. “Ahead of tariffs being announced, many buyers ‘frontloaded’ and raised their stock levels as a means to mitigate potential supply-chain disruptions, which caused a build-up of inventory at the buyer’s end. Once tariffs came into effect, many orders and shipments were either suspended or canceled, leading to a build-up of inventory at the supplier’s end.”

During the current period of trade disruption, Asian firms find cash and liquidity management as the most helpful form of support in managing working capital (61%), followed by improved payment terms with buyers and suppliers (55%), and supply chain finance (51%).