Businesses in Southeast Asia are adapting their supply chains following the United States’ announcement of tariffs on April 2, 2025. According to the UOB Business Outlook Study 2025, approximately 67% of businesses in ASEAN anticipate an increase in intra-ASEAN trade as a result of these tariffs. Additionally, 47% expect a rise in overseas expansion.
The study highlights other strategies businesses are adopting to counteract the US tariffs. About 60% foresee an acceleration in digital adoption, aiming for benefits such as enhanced productivity and customer experience. Furthermore, 56% of businesses plan to increase their focus on sustainability to improve company reputation and attract investors.
Business sentiment has declined in Southeast Asia and Greater China since the tariff announcement. Currently, only 48% of businesses express a “positive” or “very positive” outlook on the business environment, down from 77% prior to the tariff announcements.
In Singapore, concerns about rising business costs and inflation have grown due to the tariffs. The percentage of businesses with a positive outlook has decreased from 82% to 53%. Despite this decline, companies are adjusting strategies by strengthening intra-ASEAN trade ties and enhancing digitalisation and sustainability efforts.
Eric Lian, Head of Group Commercial Banking at UOB, stated: “Businesses are actively planning their next steps following the US tariff announcements. Nearshoring looks set to be a longer-term trend as companies rebalance their supply chains within ASEAN. UOB is ready to connect with businesses to provide support and solutions to calibrate their needs proactively.”
The main research for the UOB Business Outlook Study was conducted in January 2025 among approximately 4,200 businesses across ASEAN and Greater China, including around 900 from Singapore. Following the US tariff announcement in early April, an additional survey was conducted between April 9 and April 12 involving about 800 businesses.
Supply chain disruptions are significant challenges highlighted by the study, particularly felt in Indonesia and Hong Kong. Businesses are adopting localisation strategies to enhance stability by sourcing closer to home. Challenges include rising supply costs, high interest rates, and difficulties procuring supplies.
Workforce issues also present challenges; nearly six out of ten respondents report facing manpower-related issues like high employee expectations and talent retention difficulties. In Singapore specifically, younger generations’ expectations pose significant challenges post-tariff announcements.
The study notes that women-led businesses reported higher revenue growth in 2024 compared with male counterparts and demonstrated strengths in sustainability practices but may need support acquiring customers.
Next-generation leaders focus on digital adoption and strategic challenges over short-term concerns. They prioritize technologies like artificial intelligence and blockchain.
Sustainability remains crucial with increased adoption rates noted particularly among large enterprises in Hong Kong, Singapore, and Malaysia who seek credibility post-tariff announcements.
For more detailed insights from the UOB Business Outlook Study 2025 (SMEs and Large Enterprises), visit: https://www.uobgroup.com/asean-insights/articles/uob-business-outlook-study-2025-regional.page
