KUALA LUMPUR, BEIJING, TAIPEI – When US President Donald Trump unleashed his “
Liberation Day
” tariffs on the rest of the world back in April, many experts predicted doom and gloom for global trade.
But here comes a surprise: 2025 will mark the first time global trade flows surpass US$35 trillion (S$44.9 trillion) on the back of 7 per cent growth – double the pace in 2024 – based on data from the UN Trade and Development (UNCTAD), the UN arm that promotes trade in developing markets.
As for goods, which the Trump government has targeted instead of services – where the US runs a healthy surplus with most trading partners – growth is projected at 6 per cent, triple that of 2024.
Despite its trade war with the US, China reported a
trade surplus
of US$1 trillion in the first 11 months of 2025 – the first time any nation has reached that figure in a year. Meanwhile, Taiwan, South Korea and Malaysia have been big winners from a surge in demand for semiconductors driven by the artificial intelligence (AI) boom.
In China’s case, its shipments to the US between January and November dived by 18.9 per cent compared with 2024 due to escalating trade tensions between the two superpowers. But its exports to other markets more than made up the difference, with the European Union (EU) buying 8.2 per cent more goods from China, while sales to Asean and Africa rose by 13.7 per cent and 26.3 per cent respectively.
Taiwan’s record export growth, in particular, has led the island to revise its economic growth forecast for 2025 sharply upwards to 7.37 per cent – a 15-year high – on the back of roaring AI demand.
In October, outbound shipments surged at the quickest pace in nearly 16 years, jumping 49.7 per cent year-on-year to a record US$61.8 billion. This came on the back of persistent demand for electronic parts and information and communication technology products, which together helped exports grow 48.4 per cent year-on-year in the first 10 months of 2025.
“We think that the export boom has further to run… all the signs point to demand for AI-related goods remaining strong over the next year or so,” said deputy chief emerging markets economist Jason Tuvey of the London-headquartered Capital Economics’.
South Korea is also expected to exceed US$700 billion in annual exports for the first time, in large part due to the strength of the semiconductor sector.
Still, doubts remain over whether demand outside of tech will hold up for 2026, given expectations of slowing global economic growth from the likes of the International Monetary Fund and the Organisation for Economic Cooperation and Development.
UNCTAD data shows slowing momentum in the fourth quarter – less than half the pace of the third quarter’s 2.5 per cent quarter-on-quarter growth.
The agency suggests that front-loading, especially on tech-related products – due to uncertainty over American trade policy – spurred much of the surge earlier in 2025.
“In 2026, global trade growth is expected to be more muted as slowing global economic growth, geopolitical fragmentation, continued policy uncertainty, and heightened vulnerability weigh on trade activity. In addition, rising trade costs contribute to an outlook marked by caution,” UNCTAD said in its December update.
Even those bullish about AI and tech acknowledge heightened uncertainty over what Washington might have in store for semiconductors, which, along with pharmaceuticals and critical minerals, are currently the subject of an ongoing
national security investigation
under the Trade Expansion Act.
Mr Tuvey noted that a key risk is the US slapping punitive tariffs on semiconductors, which are currently exempt from the country-based levies imposed on other imports.
Malaysia Semiconductor Industry Association (MSIA) president Wong Siew Hai believes that much rests on the Trade Expansion Act probe, which also covers manufacturing equipment and derivate products. However, he is hopeful that clear strategic interests will prevail.
“This (US-Malaysia) model of business, with the high-end fabrication in the US and assembly and testing in Malaysia, is a win-win for both sides. Since the reciprocal trade agreement was signed, we do not expect any changes going into 2026,” he said. The trade deal locks in a 19 per cent tariff for Malaysian goods, aside from exempted items imported into the US.
According to the World Semiconductor Trade Statistics organisation, 2026 is expected to see global sales reach close to US$1 trillion, up by over 26 per cent from 2025’s estimated tally.
Malaysia, where total trade is on track to hit RM3 trillion (S$950 billion) for the first time, has seen its trade surplus for January-November 2025 rising by 10.7 per cent to RM132.56 billion.
Datuk Seri Tengku Zafrul Aziz, who was trade minister until Dec 2, told The Straits Times that while November saw a 15.8 per cent surge in imports, it was largely in capital and intermediate goods, signalling “ongoing industrial investment and supply-chain deepening, a positive sign for future productivity and export capacity”.
“To sustain this momentum, Malaysia should continue diversifying its export markets beyond traditional partners, deepen regional economic integration via ASEAN and new FTAs, and strengthen supply-chain flexibility to mitigate tariff risk,” added Mr Zafrul, who now chairs the Malaysian Investment Development Authority.
One such effort was Malaysia inking a memorandum of understanding with five other ASEAN peers in July to “treat each other as partners to collaborate and integrate our supply chains”, said Datuk Seri Wong.
Singapore has also ridden the tech wave, with
non-oil domestic exports rising
by 11.6 per cent year-on-year in November – marking the second consecutive month of double-digit growth.
Mr Chua Hak Bin, regional co-head of macro research at Maybank, said Singapore’s role in the AI supply chain will continue to deepen in 2026, with the opening of Micron’s new S$8.9-billion advanced packaging facility and UMC’s S$6.5-billion wafer plant.
“Singapore is also attracting investments in AI research and development facilities and as a global test bed for new technologies,” he said.
But diversification has also been part of the storyline, according to HSBC’s ASEAN economist Yun Liu, with transport engineering, for example, continuing to grow its exports at a double-digit pace.
“This does not only contribute to the manufacturing sector, but has also boosted related services sectors such as wholesale,” she said.
Singapore’s low 10 per cent baseline tariff gives it a competitive advantage against other US trading partners and will likely mean that investments will be diverted to the republic.
These developments to build resilient supply chains come as trade becomes an increasingly key plank of geopolitical strategy.
OCBC Bank’s head of Asia macro research Tommy Xie believes China’s unprecedented trillion-dollar annual trade surplus will be difficult to sustain, and the export pressure exerted by Beijing will likely cause more trade frictions with countries beyond the US.
Already, Mexico has slapped tariffs of up to 50 per cent on more than 1,400 products from Asian countries, a move widely believed to be aimed at curbing Chinese imports.
China and Europe have also been trading anti-dumping duties on various goods since last summer, such as electric vehicles and pork. French President Emmanuel Macron has threatened further measures should Beijing fail to reduce its trade surplus with the EU, which exceeded US$350 billion in 2024.
The broad sentiment among observers is also that China cannot continue to rely on exports for future growth.
“The economic support from external demand will decline. It can’t be as high as it was this year or last year. This is why domestic demand has become so important. But whether the latter can be held up is uncertain,” said Mr Xie.
There is also lingering concern about overconcentration risk on tech.
Ms Chen Mei-chu, head of Taiwan’s National Development Council’s Department of Economic Development, said the island’s economy is uneven, with the tech industry serving as the backbone while non-tech, “old economy” industries underperform.
For instance, the value of Taiwan’s machinery exports, which face stiff competition from manufacturing powerhouses such as China where costs are lower, dropped to US$24.1 billion in 2024 – the lowest in four years.
In his national day address in October, Taiwanese President Lai Ching-te said the government will be investing tens of billions of dollars more each year to help small-and-medium enterprises move towards digital transformation and net-zero emissions.
In November, Taipei-based Chinese National Association of Industry and Commerce chairman Thomas Wu called on the government to do more to address the imbalance between the high-tech and traditional sectors.
“Taiwan’s AI hardware suppliers have delivered strong earnings results and underpinned robust exports, but the nation cannot lean on the AI boom indefinitely.”