The latest round of US Section 301 tariffs is expected to have only a limited impact on exports from ASEAN-5 countries and India in the near term, as broad product exemptions and relatively low effective tariff rates should help cushion the blow, according to OCBC Bank Malaysia.
In a regional economic report, OCBC said the tariffs, which took effect on July 25, are less disruptive than initially feared, with a significant portion of exports from Southeast Asia and India remaining exempt from the new duties.
The new measures, imposed by the Office of the United States Trade Representative (USTR), target imports from 60 economies over concerns related to forced labour. Countries that have implemented or committed to enforcing bans on imports produced with forced labour, including Malaysia, India and Indonesia, face a 10% tariff, while the remaining economies are subject to a 12.5% rate.
OCBC estimates that after accounting for extensive product exemptions, the actual tariff burden facing exporters across the region remains relatively modest.
Singapore enjoys the lowest effective tariff rate at 6.1%, followed by Malaysia at 8.1%, India at 8.2%, Thailand at 8.3%, the Philippines at 10.7%, Vietnam at 11.2% and Indonesia at 13.6%.
The research house noted that much of the region’s exports to the US remain shielded from the new tariffs.
Based on 2025 trade data, approximately 68.1% of US imports from Singapore remain exempt, followed by the Philippines (65.7%), Thailand (63.7%), Malaysia (63.1%), India (54.4%), Vietnam (53.9%) and Indonesia (21.7%).
Malaysia and Indonesia will also be subject to a new three-year textile tariff-rate quota. Textile and apparel exports will continue to enter the US without additional Section 301 duties provided shipments remain within specified quotas. Imports exceeding those limits will be subject to the additional tariff.
Despite the new measures, OCBC expects exports from the region to remain resilient, supported by continued exemptions for key industries such as semiconductors and pharmaceuticals, which account for a significant share of ASEAN’s exports to the US.
The bank noted that the latest tariffs effectively replace the “reciprocal” tariffs previously struck down by the US Supreme Court earlier this year, reducing the overall shock to exporters.
However, OCBC cautioned that while the immediate economic impact appears manageable, the broader geopolitical implications remain significant.
US President Donald Trump’s commitment to maintaining an aggressive tariff agenda means trade policy uncertainty is likely to persist, even if implementation is less severe than initially proposed.
The research house warned that exporters across the region continue to face risks from ongoing US investigations into structural excess capacity and industrial overproduction under a separate Section 301 probe launched in March 2026.
The investigation covers 16 economies, including Malaysia, Singapore, Indonesia, Thailand, Vietnam, India, China, Japan, South Korea, Taiwan and the European Union, with findings yet to be announced.
For Malaysia, OCBC believes export momentum should remain intact in the near term, although businesses will need to navigate an increasingly uncertain global trade environment.
The bank said prolonged policy uncertainty could weigh on corporate investment decisions, particularly if additional tariffs are introduced ahead of the US mid-term elections or if geopolitical tensions in the Middle East continue to disrupt global supply chains.
Overall, OCBC expects the region’s export outlook to remain supported by resilient demand for tariff-exempt products, but warned that evolving US trade policies and geopolitical developments will remain key risks for ASEAN exporters over the medium term.
