As global trade uncertainty intensifies, the Asia-Pacific region is navigating a high-stakes moment for economic stability. New U.S. tariffs introduced in April have rippled through global value chains, threatening export income, foreign investment, and employment across vulnerable economies. In response, nations in the region are adapting, seeking ways to build resilience, diversification, and digital readiness.
Armida Alisjahbana writes that Asia-Pacific economies must rethink strategies to protect long-term development and growth in a rapidly shifting global trade landscape.
Countries like Cambodia and Viet Nam, which send over a quarter of their exports to the U.S., face immediate financial threats. Should retaliatory measures escalate, trade-dependent nations could see export earnings collapse, harming domestic economies. Even countries that operate upstream in supply chains—such as Lao PDR, Mongolia, and Brunei Darussalam—are expected to suffer ripple effects that may prove even more detrimental.
Narrow export profiles and a heavy reliance on imported production inputs leave many small and medium-sized economies especially exposed. Larger economies with diversified markets can absorb such shocks better, but the textile and machinery sectors in smaller nations face high vulnerability due to their labor intensity and external dependencies.
“The biggest casualty in Trump’s tariff trade war is the American economy and the nation’s consumers.”
Export sectors relying heavily on female and lower-skilled labor are particularly at risk, as rising trade barriers threaten to wipe out jobs and deter future investment. Unpredictable trade dynamics further reduce investor confidence, stalling economic momentum and strategic planning.
The consequence of this volatility is a climate of regional economic hesitation. Trade flows are slowing, investments are being delayed, and development agendas risk stagnation. To move forward, policymakers must pursue long-term reforms while also managing short-term stability.
Evidence-based decision-making is essential. Governments must assess both direct and indirect tariff exposures, especially through their linkages in global value chains. Supporting micro, small, and medium-sized enterprises with tailored relief policies will be key to minimizing socioeconomic fallout.
Modernizing trade practices through digitalisation must also be accelerated. By simplifying customs, implementing cross-border paperless systems, and supporting seamless data exchange, countries can lower costs and boost trade efficiency. These steps are particularly important for smaller exporters who lack the resources of large firms.
Diversifying trade partners and expanding product portfolios will cushion against future shocks. Reducing overdependence on single markets not only increases resilience but also helps maintain competitive advantage. Nations must also promote domestic innovation, stimulate consumption, and address infrastructure and supply chain constraints.
Digitally delivered services such as finance, consulting, and tech-driven platforms offer a less vulnerable trade avenue. These sectors have been shielded from tariff escalations and provide a strategic counterweight to traditional goods trade disruptions.
“Trump’s latest move in his ongoing trade war drew the ire of many global economies, with China delivering swift retaliation.”
Emerging opportunities lie in the realignment of global supply chains toward Asia-Pacific economies. As least developed countries transition to higher income status, they must reinvest in economic diversification and industrial upgrading to seize new roles in global commerce.
Trade policy must remain transparent, coherent, and stable. Volatility erodes business confidence, especially in smaller and trade-dependent nations. Rebuilding trust in a multilateral, rules-based global system is vital for ongoing trade, investment, and development initiatives.
Regional integration is more urgent than ever. Intra-Asia-Pacific cooperation offers an effective buffer against global trade disruptions. Deeper engagement in regional mechanisms—ASEAN, RCEP, and CPTPP—alongside UN ESCAP-led digital trade initiatives, can enhance resilience and cross-border efficiency.
Harmonising regulations, strengthening digital supply chain links, and offering tariff relief to less developed countries will help create a more balanced economic environment. Collaboration across the region will also support better policy coordination and resource alignment.
Asia-Pacific has weathered crises before, but the scale of current challenges requires coordinated, decisive, and forward-looking responses. With effective leadership and multilateral support, countries can transform adversity into opportunity, building more inclusive and sustainable economies in the long run.
ESCAP stands ready to assist, offering technical support and advanced data tools like the Trade Intelligence and Negotiation Adviser (TINA) and Value Chain Analyser to guide governments through diagnostics and policy design.
“The decisions made now will determine whether the region emerges stronger or more vulnerable in a reshaped global trade landscape.”
