2025-09-02
US Tariff Impact Deepens: Taiwan, Japan, South Korea Manufacturing PMI Remains in Contraction, Eurozone Expands
In August 2025, affected by the reciprocal tariff policy implemented by the United States on August 7, the manufacturing Purchasing Managers' Index (PMI) of Asia's major exporting countries—Taiwan, Japan, and South Korea—remained below 50, indicating a continued contraction in manufacturing activity. Taiwan's PMI for August was 47.9, a slight increase of 0.1 percentage points from July's 47.8, but still marking the fastest contraction rate since April 2024; Japan's PMI final reading was 49.7 (preliminary 49.9, July final 48.9), remaining below the critical 50 threshold for two consecutive months; South Korea's PMI final reading was 48.3 (July final 48.0), continuing seven months below the 50 mark. In contrast, the Eurozone's PMI final reading rose to 50.7 (preliminary 50.6, July final 49.5), marking its first expansion in three years.
Taiwan’s PMI further declined to 47.9, indicating a persistent contraction in manufacturing activity. The six-month outlook index dropped to 37.6, marking five consecutive months of contraction and reflecting businesses' low confidence about future operations.
Although Japan’s manufacturing PMI rose slightly from July's final 48.9 to August's final 49.7, it remained below the expansion threshold of 50. Overseas new orders shrank at the fastest pace since March 2024, mainly due to weak demand from China, Europe, and the
United States. South Korea’s manufacturing PMI increased slightly from 48.0 in July to 48.3 in August but continued seven months of contraction, with export orders worsening especially after the announcement of US tariff policies.
The US tariff policy combined with US-China competition has dealt a double blow to these three manufacturing nations. Some companies’ pre-shipment activities provided short-term data improvements, but export performance and profitability remain under pressure.
Meanwhile, the Eurozone’s PMI reflects an unexpected economic recovery, reaching 50.7, the first expansion in nearly three years.
In summary, in August 2025, the manufacturing sectors of Asia’s major exporters Taiwan, Japan, and South Korea continued to contract due to US reciprocal tariffs and global economic weakness. The persistent PMI readings below 50 have become the norm, with businesses adopting a conservative outlook towards the future. In contrast, the Eurozone economy has emerged from the trough and returned to expansion. In the coming months, Asia’s manufacturing export momentum may face further constraints due to tariff-related cost pass-through and weakening demand. The US ISM manufacturing index, to be released on September 2, and the Federal Reserve’s interest rate decision on September 18, will be key indicators for the market in assessing the direction of the global economy.