Tariffs reshape trade: Asia-Pacific’s air freight hit by 50% tariff shocks

Asia-Pacific air freight markets are facing severe disruption as new US reciprocal tariffs, set to take effect on August 1, 2025, compel shippers, freight forwarders, and airlines to respond reactively. From freight rate hikes and capacity bottlenecks to policy ambiguity and severe weather, the region’s air cargo supply chains are facing unprecedented pressure.

According to Dimerco Express Group’s Asia-Pacific Freight Market Report (August 2025), air cargo volumes have surged across several Southeast Asian nations as exporters race to move goods ahead of steep tariff impositions. These shifts are colliding with peak monsoon and typhoon seasons, creating significant volatility across major transpacific and intra-Asia lanes.

In Thailand, where the United States has imposed one of the highest tariffs in the region, 36% exporters have responded with an aggressive pre-deadline push. Airlines operating from Bangkok and other Thai airports are reporting full bookings to the United States and Canada for the first half of August. Freight rates have escalated sharply, and booking windows have stretched well beyond normal timelines. The urgency is compounded by Thailand’s ongoing rainy season and a mid-August public holiday window, which threatens to delay operations further.

Vietnam, too, is experiencing extreme pressure on its outbound air lanes. Without direct connectivity to the United States, Vietnamese exporters are dependent on transhipment via regional hubs such as Singapore, Kuala Lumpur, and Bangkok. With airlines now prioritising US-bound cargo from Vietnam, forwarders are facing gridlock at key Asian airports. The report recommends booking large-volume cargo at least two to three weeks in advance, underscoring the strained state of regional air capacity.

In the Philippines, the 19 per cent tariff on US-bound exports has triggered a similar rush. With typhoon season peaking between June and November, there are added concerns about weather-related delays. Airlines are navigating an especially fragile operating environment, where moisture-damaged cargo, rerouted flights and congested terminals are becoming increasingly common. The risk to high-value air freight, including electronics and perishables, is particularly acute.

Malaysia, already subject to a 25 per cent tariff, has not seen any relief either. The pre-tariff surge continues well into August, particularly from Kuala Lumpur and Penang. As air freight rates climb steadily, carriers are now managing daily booking adjustments to handle the volume, even as demand is expected to soften slightly in the post-deadline period.

While Singapore's final tariff designation is still pending at the time of writing, exporters are not waiting for clarity. The city-state, long considered Asia’s most dependable logistics hub, is already experiencing a surge in air freight demand to the United States. Capacity is tightening rapidly, and rates are climbing in tandem. The final US ruling on Singapore’s tariff rate is expected to significantly shape its future role as a regional air cargo gateway. Should the US assign Singapore a preferential rate, it may maintain its strategic advantage; if not, transhipment volumes may shift to alternate hubs with more favourable tariff treatment.

Across the broader Asia-Pacific, weather has emerged as a second destabilising force. Typhoons and monsoons are disrupting logistics across key nodes in South Korea, Taiwan, the Philippines and southern China. Dimerco's report warns that shippers should expect longer lead times, delayed flights, and port congestion throughout August. Airlines are rescheduling services with minimal notice, and carriers are adjusting rates dynamically in response to erratic capacity availability.

South Korea’s air freight market remains relatively stable for now, though high demand on US-bound routes is beginning to stretch available space. Booking lead times of one week or more are now standard practice. The upcoming merger of Asiana Airlines with Air Incheon, effective 1 August, is also expected to recalibrate the regional air cargo landscape, though the full implications are yet to unfold.

At the same time, trade policy developments are reshaping the rules of global engagement. The United States has been actively negotiating new bilateral deals that attempt to reframe long-standing trade dynamics. A new agreement with Indonesia will see Indonesian exports face a 19 per cent tariff into the United States, while US goods enter Indonesia duty-free. The deal includes high-value U.S. exports such as energy, agricultural products and Boeing aircraft. The Philippines has accepted a nearly identical arrangement.

Japan’s deal with the US is more complex. While Japanese goods will now be subject to a 15 per cent tariff, Tokyo has pledged an eye-catching USD 550 billion investment in the United States. The terms of this investment remain unclear, but Japanese officials have indicated that they will be reviewing the agreement carefully before formal ratification.

On the other hand, Brazil has emerged as an outlier. The US has imposed a 50 per cent tariff on Brazilian goods, citing digital trade barriers and intellectual property violations. A Section 301 investigation into Brazil’s practices is underway, and early indications suggest a significant shift in Brazil’s trade flows. Coffee, a major export, may soon be rerouted toward Asia and Europe to avoid US market exposure.

Mexico’s status remains ambiguous. While Washington has signalled that US-Mexico-Canada Agreement (USMCA) compliant goods may remain exempt, there is no confirmation yet regarding the final application of the new tariffs to Mexican-origin products. Mexican officials, including President Claudia Sheinbaum, have confirmed that progress is being made on bilateral discussions, though key details remain unresolved.

Meanwhile, Europe has issued its own response. The European Commission has extended countermeasures originally planned for mid-July, citing ongoing negotiations with Washington. European leaders are now preparing contingency plans in the event that talks collapse, with a proposed 30 per cent retaliatory tariff on US imports still on the table. Some reports suggest this may eventually be lowered to 15 per cent, but no decision has been finalised.

Amid these sweeping developments, a new area of concern has emerged in the form of transhipment policy. Although the US has not formally published a legal definition, officials have hinted that goods manufactured in third countries using a “significant portion” of Chinese components could be reclassified as Chinese origin. That includes products exported from Vietnam and Indonesia using Chinese materials. Commerce Secretary Lutnick recently stated that any such re-exportation of Chinese content through third countries would be treated as transshipment. The absence of a clear threshold for what qualifies as a “significant portion” has left shippers in a difficult position, potentially subjecting their cargo to full tariff enforcement without prior warning.

Taken together, these developments signal more than just temporary market volatility. As Alvin Fuh, Vice President of Ocean Freight at Dimerco, puts it, “These aren’t temporary market fluctuations. We’re seeing fundamental changes in how global trade operates.” That statement now rings true across the air freight sector, where schedules, costs, and routes have all become moving targets.

The Asia-Pacific air freight market is no longer shaped by seasonal peaks or predictable trade flows. Instead, it is now driven by political announcements, tariff timelines and climatic disruptions. For shippers and forwarders alike, success in this environment demands more than operational excellence, it requires agility, real-time intelligence and the ability to pivot in the face of an ever-changing regulatory and economic landscape.

With multiple disruptions at play this August—from evolving tariffs to volatile weather—air cargo operations demand agility and precision to maintain flow amid global flux.