US tariff increases not only impact the macroeconomic outlook but also have significant impacts for startups across Asia that export their products to US customers, particularly those that rely heavily on electronics and semiconductors.

Startups which mainly operates in developing smart devices, electric vehicles, consumer tech, and IoT solutions will be at risk due to higher tariffs on their exported goods to the US. In the long-term, this situation will reduce margins and slow expansion.

Taiwan, South Korea, and Malaysia are directly exposed countries that manufacture electronics and semiconductors, and this will further affect startups that rely on these technologies for their operations. The startups most affected by the increase in US tariffs are primarily located in Vietnam, South Korea, and China. For instance, Vietnam is a major electronics assembly hub, and its young tech firms could face new challenges in maintaining cost advantages.

South Korean and Chinese startups, especially in sectors like electric vehicles, AI hardware, and smart appliances, will struggle with reduced competitiveness in the US market due to the added tariffs.

However, Southeast Asian countries like Malaysia and Thailand would probably feel a mixed impact from the tariffs. While they are involved in global supply chains for electronics and automobiles, recent investments from the China+1 strategy offer some protection. Malaysia’s semiconductor startups and Thailand’s auto parts companies will likely face tariffs, but they can take advantage of the recent US investments to adapt.

On the investment front, rising tariffs make venture capitalists more cautious. Funding could slow for export-focused startups as investors prefer those targeting domestic or regional markets. However, in the long run, increased US foreign direct investment in ASEAN could open up new opportunities for startups in technology, manufacturing, and energy sectors.

In response to these challenges, startups should rethink their strategies. They could diversify their supply chains by shifting production from China to countries like India, Vietnam, or Indonesia to reduce tariff risks. Another way could be to form new partnerships within ASEAN to strengthen their regional presence instead of relying primarily on the US market.