Is Grab immune to Tariffs?

More than meets the eye...

Tariffs have set the entire market alight, regardless of geography, sector etc… and Grab is no exception.

We’re now approaching a 40% drawdown on the stock from the recent 52W highs set in Nov-24.

Fundamentals of the business haven’t changed, but the key question is how tariffs might affect Grab going forward.

Here are my thoughts:

1st Order Impacts:

Grab operates exclusively in Southeast Asia, with no significant operations or direct revenue from the US. Its business relies on a gig economy workforce, local merchants, and a growing digital payments ecosystem.

Trump’s tariffs have included a universal baseline tariff of 10% on all goods entering the US alongside “reciprocal tariffs” targeting specific countries. In SEA, countries of note have been hit heavily: Cambodia (49%), Vietnam (46%), Thailand (37%), Indonesia (32%).

Since Grab is a service-based business rather than a goods exporter, it faces zero direct exposure to these tariffs. Its core offerings (ride-hailing, food delivery, digital payments) are digitally or locally executed services.

Therefore, at first glance, it appears that tariffs would have zero impact on the fundamentals nor operations of the business.

However, there are nuances to consider that I will refer to as second and third order impacts.

2nd Order Impacts:

The real impact on Grab lies in the indirect economic consequences of Trump’s tariffs on Southeast Asia’s economies, which could ripple through Grab’s user base, merchant partners, and operational costs.

1. Economic Slowdown in SEA

Southeast Asia’s export-driven economies (e.g., Vietnam, Thailand, Indonesia, Singapore) rely heavily on trade and thereby the US markets.

For instance, VN’s exports to the US were $120B in 2024, nearly 30% of its GDP. These major tariffs will no doubt have a huge impact on trade and therefore threatens to slash export revenues, weaken currencies and ultimately slow GDP growth.

A regional economic slowdown could reduce disposable income for Grab’s customers. Ride-hailing and Food Delivery are discretionary services. When households face financial pressure, they may cut back on non-essential spending, shrinking Grab’s tx volumes.

Economic uncertainty often pushes more workers into the gig economy, a sudden increase in supply could lead to increased competition and lower per-rider revenue.

2. Reduction of FDI into SEA

Southeast Asia has also benefitted from the China+1 strategy, where firms shifted manufacturing from China to avoid US tariffs. Trump’s new tariffs on SEA could reverse this trend, deterring FDI.

For Grab, this matters because FDI is a key driver of urbanisation and job creation, expanding the middle class that uses Grab’s services. A reduction in FDI could lead to a slowdown in growth.

3rd Order Impacts:

These refer to effects that are longer-term, downstream consequences that emerge from the first and second order impacts already discussed. The idea here is that tariffs could disproportionately harm Grab’s rivals, leaving Grab in a better position to dominate the Southeast Asian region.

Grab operates in a competitive but fragmented market across Southeast Asia. Its key rivals include:

GoTo (Gojek + Tokopedia): Indonesia-based, offering ride-hailing, delivery, and e-commerce, primarily dominant in Indonesia but expanding regionally.

Shopee (Sea Group): A Singapore-based e-commerce giant with ShopeeFood (delivery) and digital payments (SeaMoney), competing with Grab in food delivery and fintech.

Bolt: A smaller, Estonia-based ride-hailing player with a presence in Malaysia and Thailand.

Local Players: Country-specific competitors like Angkas (Philippines), Be (Vietnam), and Maxim (Indonesia), which often focus on niche segments or lower pricing.

These competitors vary in scale, funding, and resilience, making their vulnerability to tariff-induced economic shocks a critical factor in this analysis.

Trump’s tariffs are likely to disproportionately harm Grab’s competitors because of their weaker financial positions and/or narrower operational focus.

1. Funding and Profitability Pressures

GoTo: GoTo has struggled with profitability, reporting a $1.1 billion loss in 2022 before narrowing it in 2023. It relies heavily on investor funding (e.g., SoftBank, Tencent), but a tariff-induced regional slowdown could spook investors, especially if Indonesia’s economy falters under a 32% tariff.

This is also in view of the recent acquisition attempts by Grab. A desperate business facing weakening market share + a struggle to maintain profitability, is often the recipe for a successful acquisition.

SeaLimited (ShopeeFood): Sea is a much larger player than Grab in the grand scheme of things. But in the area they currently compete, Grab is a much larger behemoth. ShopeeFood, a direct rival to GrabFood, operates on thin margins. In light of tariff pressures, Sea could elect to scale back loss-making segments like food delivery in favour of its key focus segments, ceding ground to Grab.

Smaller Players: Bolt, Be, and Maxim lack the scale and diversified revenue streams of Grab or GoTo. A drop in demand or rising operational costs could render them unviable, leading to market exits or bankruptcies.

2. Consumer Behaviour Shifts

Price Sensitivity: An economic slump could make consumers more price-conscious, favouring platforms with scale and efficiency. Grab’s larger network and ability to cross-subsidise services (e.g., using FinTech profits to offset ride-hailing losses) might allow it to offer competitive pricing or promotions, outlasting rivals who can’t afford to compete on price.

Consolidation Preference: As trust in smaller platforms erodes amid economic uncertainty, users might gravitate toward established “super-apps” like Grab, which offer a one-stop solution (rides, food, payments), accelerating the decline of single-service competitors.

Scenarios that I can foresee:

1. GoTo Retreats or Merges: If GoTo’s cash reserves dwindle and Indonesia’s economy weakens significantly (e.g., slowdown in GDP growth or severe fall in consumer spending/confidence), it might exit less profitable markets or seek a merger with Grab to survive. A Grab-GoTo merger, as has been speculated in recent months, would cement Grab’s dominance.

2. Shopee Scales Back Delivery: If Sea Group prioritises its core e-commerce business over ShopeeFood to conserve cash, GrabFood could capture a larger share of the food delivery market, especially in Vietnam and Thailand, where competition is fierce.

3. Small Players Collapse: Bolt, Be, and others could simply run out of runway if demand or funding dries out, leaving Grab as the default choice in affected markets.

Resulting Stronger Environment for Grab

If competitors are wiped out or severely weakened, Grab could emerge in a stronger position over the medium to long term (2–5 years). Here’s how I think this could play out:

1. Market Share Gains

• Ride-Hailing: With fewer players, Grab could increase its share of rides in key markets like Indonesia (currently split with GoTo) or Vietnam (where Be competes). A monopoly or near-monopoly would boost pricing power and revenue per ride, boosting margins.

• Delivery: ShopeeFood’s retreat or smaller players’ collapse would funnel more orders to GrabFood, strengthening its merchant network and customer loyalty.

• FinTech: As economic conditions falter, smaller, less capitalised competitors could drop out of the race, allowing GrabPay to stake a major claim on the digital payments space. The long term secular tailwind of mobile wallets and banking of the underbanked/undeserved is unlikely to stop.

2. Economies of Scale

• Cost Efficiency: Fewer rivals mean less need for aggressive marketing or subsidies, improving Grab’s margins. Its scale across eight markets would amplify this advantage, allowing it to spread fixed costs (e.g., tech development) over a larger user base.

• Network Effects: A larger, consolidated user base strengthens Grab’s ecosystem—more drivers attract more riders, more merchants attract more customers—creating a virtuous cycle that competitors can’t easily replicate.

3. Strategic Flexibility

• Expansion: With rivals weakened, Grab could double down on underserved markets (e.g., Myanmar, Cambodia) or new verticals (e.g., healthcare, logistics), using its cash reserves, bolstered by higher margins, to outpace any remaining competition.

• Innovation: Reduced competitive pressure could free up resources for R&D, such as autonomous delivery or enhanced FinTech offerings, solidifying Grab’s lead.

Likelihood and Timeline

The likelihood of competitors being wiped out depends on the tariffs’ severity and duration. A short-term shock (6–12 months) might weaken smaller players but leave GoTo and Shopee intact.

A prolonged trade war (2+ years) with no relief could push marginal players to the brink, with 1–2 major exits plausible by 2027. Grab’s ability to weather the storm, thanks to its diversification and $6 billion+ cash pile gives it a strong chance to outlast rivals.

It is my belief that Grab will emerge stronger from these tariffs and strengthen its dominant position in ride-hailing and deliveries. In essence, Grab will get hit hard by a massive tariff war, but its competitors will likely be completely decimated. In the long game, Grab stands to benefit.