Asia-Pacific must boost trade resilience

The global trade environment is changing at a rapid pace, with Asia and the Pacific being on the front line. The US tariffs announced in April have sent shockwaves through the global value chains, threatening exports, jobs and investment across the region. For economies already struggling to meet the UN Sustainable Development Goals, this adds additional hurdles to overcome.

Many countries in the Asia-Pacific are deeply integrated into global value chains. Cambodia and Vietnam, whose more than 25 percent exports are US-bound, could see a significant decline in trade revenue if retaliatory tariffs or disruptions escalate. Countries such as Laos, Mongolia and Brunei which are part of upstream supply chains could face indirect but potentially larger knock-on effects.

The tariff burden can be particularly damaging for economies with narrow export bases and high reliance on imported inputs, in contrast to larger economies with sizeable domestic markets or more diversified export structures which can largely absorb the trade shocks.