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Cushman & Wakefield, a leading global commercial real estate services firm for property owners and occupiers, is optimistic that the current global uncertainty caused by US President Donald Trump’s reciprocal tariffs will ease once tariff negotiations are completed in the next couple of months.
In a virtual briefing by Cushman & Wakefield on its 2025 outlook for key markets in the Southeast Asia region, namely Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam, Dr. Dominic Brown, head of international research, acknowledged that the immediate actions taken by President Trump in his second term are causing uncertainty that will likely last for the whole of this year, but will begin to taper off once tariff negotiations are completed and agreements are reached by early next year.
But even as I write this column, The New York Times has just reported that the New York-based Court of International Trade has stopped Trump’s reciprocal tariff scheme that has caused global economic uncertainty. It is expected, however, that the Trump administration will bring the tariff issue, which seems to have been arbitrarily drawn up, to the Supreme Court.
According to Dr. Brown, “Clearly, there’s been a lot going on in the US. President Trump has been exceedingly active since he started on Jan. 28. Most of it has been through executive orders. And while this will have a range of implications locally for the US, from an Asia Pacific perspective, we kind of need to look at it through two particular lenses.
“Clearly, tariff and foreign policy is one of them, and that’s obviously been attracting a lot of headlines, especially since April 2, but also the impact on the trajectory of the US economy. And that’s important because if there’s a weaker US, then it will have implications for demand for goods and services from Asia Pacific. So these are the two main mechanisms that we’re looking at in this Trump 100 days from an Asia Pacific perspective. Clearly, with what’s going on, there’s a lot of uncertainty out there,” he admitted.
According to Dr. Brown, this is impacting confidence. “And this is the thing that we’re looking at very closely. The longer there is uncertainty, the longer it saps confidence, the greater the implications will be. Our broad house view, though, is that we’re kind of about at peak uncertainty at the moment with tariffs.”
He is optimistic, though, that “as various forms of pressure begin to get exerted in the US, as deals get done, as they’re in negotiations, the level of tariffs will start to come down. So we’re roughly at about a 17.5 percent average tariff at the moment – 10 percent around the world, 30 percent on China, 25 percent on steel and aluminum. If you boil all that down across all goods, it averages about 17.5 percent.”
Based on his research, Dr. Brown is of the opinion that “we think over the second half of this year and into 2026, various deals will be done and the average tariff level will settle much lower than where it was before Trump took over. So we are in the eye of the storm’s peak uncertainty right now.
“So we’re in that first stage of the downturn, which is an annualized rate of GDP. So we expect GDP to start to pick up from the second half of this year as trade deals are done, as there are interest rate cuts – all of those things... that kind of thing starts to come through. The equities markets are going to absolutely love that, and that’s also going to be positive for sentiment. It’s going to be positive for confidence, which will also then benefit commercial real estate.”
As such, Dr. Brown explained, “The question then is, why is all of that important for Asia Pacific? And so, if you look at the charts on the left-hand side, that’s US GDP growth, and Asia Pacific GDP growth. So you can see they are very, very strongly correlated. We’re all part of the global economy, (showing a graph). And if you look on the right-hand side, this is a correlation coefficient score, so it goes from negative one, which is highly negatively correlated – i.e., one thing goes down, the other goes up – to positive one. So you can see Japan, Australia, New Zealand, India, Taiwan, the Philippines – all relatively strongly correlated to the US economy.”
Dr. Brown further explained that the trajectory of US growth is important overall. He was confident that the current trend “doesn’t mean to say that if the US does go into a recession – and it’s about a 50/50 chance at the moment, but it may have just come down a little bit with the 90-day pause with China – I think it’s about a 40 percent chance now of a US recession. If that does happen, it doesn’t mean automatically that all these economies will go into recession. But it will mean that they’ll be a little bit weaker than they would have been otherwise. So that’s sort of the situation that’s emanating out of the US and then how it links into the Asia Pacific.”
He added, “It’ll be interesting to see where tariffs end up, because if everyone ends up with a 10 percent tariff on them, then fundamentally nothing really changes. All the relativities between markets stay the same. But if there’s a variation in those tariffs... that’s when there’s going to have to be some decisions from a kind of manufacturing stance.”
He believes, though, that “we generally think that these tariffs are going to get negotiated down, and so the ones that were first announced back on April 2... we think they’re all going to get negotiated down.”
