From escalating American tariffs on Asian exports to the enduring disruptions of COVID-19 on supply chains, and the uncertainty over Taiwan – a potential trigger for direct confrontation between China and the USA – Asia is navigating geopolitical shifts that are reshaping trade.

At this year’s Bankers Association for Finance and Trade (BAFT) Asia Bank-to-Bank Forum, held in Singapore on 2 September, one panel focused on whether these shifts are boosting or undermining intra-Asia trade and growth. Moderated by Kaushik Mukherjee, Managing Director at Wells Fargo, the discussion examined how the region’s economies are navigating a political climate defined by uncertainty, highlighting how, amid these disruptions, intra-Asia trade is accelerating. 

During the panel, moderator Mukherjee invited the audience to participate in a live poll, responding to the question: Do you think intra-Asia trade is going to increase? 

The result was unanimous. 100% of the participants, largely industry leaders, said “yes.” 

The Association of Southeast Asian Nations (ASEAN) has overtaken the European Union and the United States as China’s largest trading partner, de-dollarisation is on the rise, and governments are investing in new payment systems and trade agreements to strengthen regional connectivity. 

Throughout the panel, speakers from Ernst & Young, DBS Bank, and ADM unpacked how these tensions are redefining trade and what businesses can do to respond, focusing on risks, opportunities, and strategy. 

Geopolitics: Risk and opportunity 

Contrary to common belief, geopolitical tensions don’t just create disruptions; they also present openings. “If you’re sitting in Singapore, intra-Asia trade is growing at a very fast clip. ASEAN is now the largest trading partner for China,” said Sriram Muthukrishnan, the Group Head of Global Transaction Services Product Management at DBS.

In the first quarter of 2025, ASEAN made up 16.6% of China’s foreign trade, marking its position as China’s top trading partner, signifying the growing infrastructural connectivity between China and ASEAN countries. This points to how China’s rising tensions with the US has triggered increased economic integration within Asia. 

However, while ASEAN countries have gained economic opportunity from geopolitical shifts, other economies, such as India, have seen mounting challenges. As Muthukrishnan put it, “There are certain industry sectors, particularly in markets facing higher tariffs such as India, that are closely watching how quickly they can diversify and find other markets.” 

The US imposed tariffs of 50% on Indian goods, citing India’s purchases of Russian oil as the reason. With the US being India’s largest export market, this recent blow could have detrimental effects for sectors like textiles, jewellery, seafood, and leather – with exports from these sectors at risk of plunging by up to 70%. 

However, this uneven picture highlights how the same geopolitical tensions that present headwinds for India and redirect China can create opportunities elsewhere. “If you are sitting in Bangladesh, you’re saying, ‘Hey, this presents an opportunity to meet a market gap,’” said Muthukrishnan. 

His example illustrates that while intra-Asia trade is on the rise at the regional level, at the country level, others are seizing the chance to step into China and India’s positions as global suppliers. As manufacturers and buyers seek to diversify supply chains, countries like Bangladesh and Vietnam are emerging as potential alternatives. 

In the first four months of 2025, Bangladesh’s apparel exports to the US reached $2.98 billion, reflecting a 29.33% year-on-year growth. Vietnam has followed a similar path, attracting investment from manufacturers that are looking to reduce their dependence on China. 

Such examples reflect how geopolitical tensions are reshaping trade in Asia unevenly. At the regional level, ASEAN has emerged as a winner, deepening its role as China’s trading partner and reflecting a significant boost in intra-Asia trade. At the same time, India’s exporters are struggling with US tariffs and working to secure access to key markets, underscoring the downside of these shifts. However, these disruptions have presented new opportunities for countries like Vietnam and Bangladesh, allowing them to position themselves as alternative suppliers. 

This goes to show that Asian trade is not a single story of decline or growth, but is rather one of redistribution. 

Supply chain rewiring

These trade challenges faced by India and the rise of Bangladesh and Vietnam are also part of a much larger narrative: a structural rewiring of the global supply chain. As Manvendra Upadhyay, the Asia-Pacific Treasurer of ADM, pointed out during the panel, it was the COVID-19 pandemic that exposed the vulnerability of existing supply chains. 

“During COVID, when we had huge shipment backlogs, a lot of companies had to find ways in which they could manufacture closer to the markets,” he said, underlining how the visible fragility of supply chains demanded a move towards regionalisation. 

According to Upadhyay, with Asia hosting some of the world’s largest consumer bases, companies increasingly shifted production into Southeast Asia, China, or India, in order to reduce exposure to risky shipping routes. This operated not just as a short-term response to the crisis caused by the pandemic, but as the beginning of a deeper restructuring. 

A 2021 report by the McKinsey Global Institute estimated that 15-25% of global goods trade could shift to new countries in five years, highlighting how companies were looking to diversify their supply chains for the long term. The COVID-19 shift, coupled with the geopolitical tensions overseen today, points towards the rise of intra-Asia trade. 

Currencies and payments 

It is crucial to note that this rewiring is not just about where the goods are shaped, but also about how they are paid for. Pointing to the role of currency, “We still see a huge proportion of global trade, especially commodities trade, denominated in US dollars. That hasn’t changed significantly,” said Muthukrishnan. The dollar maintains its dominance, but alternatives are growing on the sidelines. 

ASEAN has recently publicised its plan to boost the use of local currencies in trade and investment, as part of its Economic Community Strategic Plan for 2026 to 2030. The plan aims to reduce the region’s vulnerability to external economic shocks – reflecting a further shift towards a regional, intra-Asia economic infrastructure. 

Bhavna Monga, Partner at Ernst & Young, also said, “We’ve been working with regulators of the ASEAN countries, in terms of executing a common payment infrastructure to facilitate more and more intra-Asia trade.” 

One example is the PayNow-UPI linkage between Singapore and India, which allows instant transfers between the two countries and reflects the region’s push to make cross-border payments easier. 

Together, these developments show how Asian trade flows are being rewritten through supply chains, currencies, and payments: fueling a larger structural rewiring that is deepening the foundations of intra-Asia trade. 

Agility, optionality, and speed 

These massive shifts in trade also inform how companies operate. Faced with tariffs, supply chain shocks, and currency shifts, corporations are having to adapt in real time. 

Muthukrishnan summed up this new reality in three words: “agility, optionality, and speed.” Agility to pivot when trade routes or regulations shift, optionality to keep multiple partners and currencies in play, and speed to seize opportunities before they pass. 

As Upadhyay noted, “You can make a medium-term strategy, but you can’t really make a long-term execution plan. Your execution plan has to be short and very flexible, so you can adapt quickly.” 

Intra-Asia trade may be deepening its foundations through geopolitics, supply chains, and currencies, but it is the ability of businesses to adapt that will ultimately determine who thrives in this new landscape. 

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As geopolitical tensions simmer and the pandemic’s aftershocks continue to be felt, the shifts transforming Asia’s trade are not only disruptive but also generative. Intra-Asia trade has become a central flow, reinforced by rewired supply chains, local currencies, and regional infrastructure. 

While uncertainty is here to stay, so is opportunity, and those who can adapt quickly and flexibly will be the ones to prosper.