As the reverberations from the latest round of U.S. tariffs continue to jolt global trade, exporters across Asia are scrambling to adapt, with India, South Korea, and Japan each facing their own daunting set of challenges and policy debates. The world’s trade architecture is shifting, and the fallout is being felt in boardrooms, ministries, and factory floors from Mumbai to Seoul.
For Indian exporters, the situation is particularly acute. As reported by businessline, the imposition of 50 percent tariffs by the United States—effective August 25, 2025—has hit Indian goods hard, reversing the growth trajectory that exporters had enjoyed in recent years. This blow is especially painful because the tariffs are 30 percent higher than those imposed on competitors like Vietnam and Bangladesh, putting Indian manufacturers at a sharp disadvantage. Air freight stakeholders have described “serious demand headwinds” on U.S.-bound routes, with the abrupt market deceleration causing widespread concern.
Faced with this scenario, Indian exporters—especially small and medium-sized enterprises (MSMEs)—are lobbying for the reinstatement of the Interest Equalisation Scheme (IES), a government program that previously subsidized bank credit at pre-determined rates. The IES, which lapsed in December 2024, was seen as a lifeline for many. Exporters argue that its continuation would help bring down the cost of credit, which is already much higher in India than in competing countries. They are also pushing for duty credit scrips of 10-15 percent to help offset the tariff gap, but the Finance Ministry remains unconvinced.
According to businessline, a senior official explained, “The Finance Ministry is not convinced that the IES or duty credit scrips would directly result in increased exports. It is still in discussion on the matter with exporters and the Commerce Department, but it is questioning the efficacy of the schemes and is weighing alternatives to help exporters.” The official further noted that the case for duty credit scrips is “even weaker as there is a problem of correlation and attribution because it is not easy to directly link such scrips to the duties on inputs paid by the exporter. It may be WTO non-compliant.”
Instead, the government is considering other means of easing liquidity, such as credit guarantees. The Reserve Bank of India (RBI) is also exploring additional options, including loan repayment moratoriums and favorable exchange rate policies. Still, with the export promotion mission for the 2025-26 fiscal year capped at ₹2,250 crore and no immediate plans to boost this allocation, many exporters are bracing for a tough road ahead.
Meanwhile, the “China plus one” sourcing strategy—a trend where global companies diversify supply chains away from China—has made India a beneficiary in some respects, but the tariff storm has undercut those gains. As industry updates cited by businessline suggest, the market deceleration from the new tariffs is rapidly reversing the growth that Indian exporters had recently enjoyed, especially in airfreight.
Across the Sea of Japan, a different but equally intense debate is playing out. In recent weeks, U.S. President Donald Trump has been touting new trade deals with Japan and South Korea, claiming that in exchange for lowering U.S. import taxes from 25 percent to 15 percent, these countries will provide him with $550 billion and $350 billion, respectively, to invest as he sees fit. The specifics of these commitments remain murky, but the numbers have raised eyebrows—and hackles—among economists and policymakers alike.
Dean Baker, senior economist at the Center for Economic and Policy Research (CEPR), took direct aim at the logic behind these deals in a post published on September 11, 2025. “South Korea is expected to see a reduction of roughly $12.5 billion out of $132 billion in U.S. exports last year, making it hard to understand paying $350 billion to protect this,” Baker argued. He applied similar math to Japan, noting that with $148 billion in exports to the U.S. last year, the expected reduction from tariffs would amount to about $14 billion. “Supporting $550 billion to protect $14 billion in exports is not a favorable deal,” he said, adding that “even if only one-20th of the amount Trump is asking for were used to support domestic workers and companies affected by reduced exports to the U.S., the countries could secure a far more advantageous position.”
Baker also warned of the risks inherent in any deal with Trump, stating, “The serious problem with President Trump is that he is not bound by any deal. He could demand even more money.” This skepticism is echoed by other commentators, who note that Trump’s “America First” approach leaves little room for reliable, long-term agreements. Some suggest that Japan and South Korea may be motivated by concerns over military support from the U.S. in the face of a rising China, but Baker dismissed this as a “foolish strategy,” given the relative economic and military power of the region’s players.
Within South Korea, the government is not sitting idle. The Korea Trade Insurance Corporation (Mubo), under president Jang Young-jin, is taking a proactive stance to buffer exporters from the impact of U.S. tariffs and global trade volatility. As reported by Maeil Business Newspaper, Mubo is expanding its role beyond traditional “accident handling” to act as an “export vanguard.” This means not only insuring against non-payment and other risks, but also providing financial support in advance through mechanisms like “pre-financial limits.”
One recent example: in April 2025, Mubo provided $700 million in financial support to Bell Canada, which in turn plans to use those funds to purchase Samsung Electronics’ communication devices. Mubo has also expanded special guarantees for companies with export contracts but high debt ratios—firms that might otherwise be marginalized by traditional banks. In June 2025, a 4.75 billion won guarantee was extended to an OLED deposition machine manufacturer struggling with losses and foreign exchange headwinds.
President Jang is pushing for a dramatic increase in special guarantees, from 10 billion won in 2024 to 200 billion won in 2025, aiming to keep Korean exporters afloat and competitive. He emphasizes a shift in mindset, urging his team to “give up the mindset of a public company to live” and to be flexible with premium rates and guarantee limits. The ultimate goal is to strengthen domestic supply chains and ensure that Korean manufacturing can weather both short-term tariff shocks and long-term competition from China’s high-tech industries.
With the Korea-U.S. trade agreement now including a $350 billion investment package—much of which is likely to flow through export guarantees—Mubo is ramping up its capacity, adding new departments and negotiating expanded insurance limits. President Jang says, “It will greatly help small and medium-sized cooperative companies that suffer from financial difficulties due to export crises and supply chain reorganization due to rapid changes in the trade environment such as U.S. tariffs, and will also greatly contribute to enhancing the overall stability of our industrial supply chain.”
As trade winds shift and political calculations become ever more complex, exporters in India, South Korea, and Japan are navigating a landscape where old certainties have vanished. Whether through government-backed credit, insurance innovations, or tough negotiations with Washington, these nations are searching for ways to keep their goods moving and their economies growing—even as the rules of the game keep changing.