Donald Trump’s announcement that the United States would impose a 25% tariff on imports from countries continuing to trade with Iran has today - January 13 - sent a jolt through Asia’s most trade-exposed economies. While the measure is framed as part of a renewed “maximum pressure” campaign against Tehran, its practical effect would be to widen US trade confrontation well beyond Iran itself, ensnaring some of Washington’s most important Asian economic partners.

The countries most exposed - China, India, Japan, South Korea, Taiwan, Pakistan, Indonesia and Malaysia - differ widely in the scale and nature of their links to Iran. Yet all would face varying degrees of disruption, either through direct trade losses, secondary sanctions risks or wider uncertainty around access to the US market.

China and India: energy ties under renewed scrutiny

China, Iran’s largest trading partner, would be the most obvious target and this is more than likely why Trump opted for such a move. Despite US sanctions, Chinese refiners have continued to import significant volumes of Iranian crude, often through opaque shipping and re-labelling practices. A blanket 25% tariff on Chinese exports to the US would hit at a time when trade relations are already strained, affecting sectors ranging from electronics to machinery. Even the threat of such tariffs would raise costs for Chinese exporters and could accelerate supply-chain decoupling already under way.

India’s exposure meanwhile, even though narrower is also politically sensitive. While New Delhi has reduced Iranian oil imports in recent years under US pressure, it has maintained limited trade ties, including through pharmaceuticals, rice exports and infrastructure interests linked to Iran’s Chabahar port. A punitive US tariff would only complicate India’s efforts to balance strategic autonomy with deepening economic ties to Washington, particularly as Indian manufacturers seek greater access to the US market.

Japan, South Korea and Taiwan: collateral damage risk

For Japan and South Korea, the danger lies less in current Iran trade which is minimal following earlier sanctions, and more in the precedent such tariffs would set. Both countries rely heavily on exports to the US, particularly in automobiles, electronics and advanced manufacturing. A unilateral tariff justified by third-party trade would heighten fears that economic security considerations are increasingly trumping alliance politics in Washington.

Taiwan, which has negligible reported direct trade with Iran, could nevertheless be swept up indirectly. Its export-led economy is deeply integrated into US technology supply chains, making it vulnerable to any broad application of tariffs. For Taipei, the announcement would reinforce concerns that US trade policy is becoming less predictable, even towards close partners.

Pakistan, Indonesia and Malaysia: emerging market pressure points

Pakistan’s exposure is also modest in absolute terms but significant relative to its fragile economy. Trade with Iran, largely informal and energy-related, plays a role in border regions and fuel supply. Any US tariff pressure would come at a time when Islamabad is already grappling with balance-of-payments constraints and IMF conditionality. Indonesia and Malaysia face a different challenge, however. Both maintain limited but lawful trade with Iran, while relying heavily on US demand for manufactured goods, electronics and commodities. Even the perception that they might fall foul of US policy will now unsettle investors and complicate efforts to attract foreign capital amid a slowing global economy.

How Asian nations may respond

Faced with the prospect of punitive tariffs, most of the above listed countries are likely to pursue a mix of quiet diplomacy, trade re-routing and strategic hedging, rather than outright confrontation with the US.

China is expected to respond most robustly, as much out of pride as anything else. Beijing may test the credibility of the threat by continuing Iranian oil imports while signalling a willingness to negotiate exemptions. At the same time, it could prepare retaliatory measures or accelerate efforts to reduce reliance on the US market, including through greater trade with the Global South and expanded use of non-dollar settlement mechanisms – both eventualities that Trump may have pushed along in his decision to add anti-Iran-trade tariffs to an already contentious issue.

India though, known for its tendency to seek appeasement instead of confrontation, is more likely to seek talks with the US. New Delhi has previously secured US waivers on Iranian oil and infrastructure projects, and would probably intensify diplomatic engagement to argue that limited trade with Iran serves regional stability rather than undermining sanctions. Quiet compliance, rather than defiance, remains India’s preferred path.

Japan, South Korea and Taiwan would focus on alliance management. Their response would centre on high-level lobbying in Washington, emphasising their near-total compliance with Iran sanctions and the risk that broad tariffs could damage trusted supply chains. In the case of Japan and South Korea, the placement of US forces on Japanese and South Korean soil numbering in the tens of thousands, may also come into play. Still, these economies are unlikely to adjust Iran policy significantly, but may push for clearer carve-outs and legal certainty.

On the other hand, Pakistan’s options are limited. It may scale back visible trade with Iran to avoid attracting US scrutiny, even if this exacerbates domestic energy challenges. Alternatively, Islamabad could is potentially more likely to seek greater reliance on regional partners such as China to offset potential losses.

Indonesia and Malaysia are likely to adopt a heads down, cautious, but technocratic response. Both would stress adherence to international law, quietly reduce exposure where possible and diversify export destinations to limit vulnerability to US tariffs.

Collectively, Trump’s announcement underscores a broader shift in global trade across Asia, where, for the region's Iran-linked trade partners, the challenge will be navigating US pressure without sacrificing economic stability and political harmony.