Asia’s factory slump deepens under China demand, U.S. tariffs

Asia’s manufacturing sector shrank in May as weak demand from China and rising U.S. tariffs hit exports and clouded the region’s economic outlook.

Factory activity across Asia declined in May, driven by subdued Chinese demand and escalating U.S. tariffs under President Trump. Japan and South Korea—both heavily reliant on trade—saw their manufacturing sectors contract again, with PMI readings below 50 for the 11th and fourth consecutive months, respectively.

China’s official data also showed shrinking activity for the second month. India’s factory growth slowed due to inflation and geopolitical tensions. Economists warn that reciprocal tariffs and cheap Chinese exports are putting deflationary pressure on the region.

Trump’s decision to double global tariffs on steel and aluminum and ongoing U.S.-China tensions continue to fuel uncertainty. Meanwhile, Vietnam, Indonesia, and Taiwan also reported contractions in manufacturing, and analysts see little hope for a near-term recovery.

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