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Asia, Pacific must reinforce trade resilience amid global uncertainty

The shifting global trade landscape presents an opportunity for the Asia-Pacific to emerge stronger, if countries look more inwardly to improve domestic resilience and intraregional coordination while helping to lift others that might be more vulnerable to external pressures.

Armida Salsiah Alisjahbana (The Jakarta Post)
Bangkok
Mon, May 26, 2025 Published on May. 24, 2025 Published on 2025-05-24T09:01:24+07:00

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Asia, Pacific must reinforce trade resilience amid global uncertainty Heavy equipment load and unload freight on Sept. 10, 2024, at the International Container Terminal (JICT) of Tanjung Priok Port in North Jakarta. (Antara Foto/Muhammad Adimaja)

T

he global trade environment is shifting rapidly, and Asia and the Pacific is on the front lines. New tariffs the United States announced in April have sent reverberations through global value chains, threatening export earnings, jobs and investment across the region. For economies already struggling to meet the Sustainable Development Goals, this adds extra hurdles to overcome.

Many countries in the region are deeply integrated into global value chains. Cambodia and Vietnam, where over a quarter of exports are US-bound, could see significant drops in trade revenue if retaliatory tariffs or disruptions escalate. Countries like Laos, Mongolia and Brunei Darussalam, which are part of upstream supply chains, face indirect but potentially larger knock-on effects.

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

Export-oriented sectors such as textiles and machinery, particularly in smaller and less diversified economies, are especially vulnerable. These sectors are often labor-intensive, hiring many lower-skilled and women workers who could face disproportionate risks of employment loss. Meanwhile, business investment and strategic decision-making are affected by unpredictability, potentially constraining future economic growth.

Although the intensity of these impacts varies, the broader outcome is clear: Heightened uncertainty is dampening regional trade flows, deterring investment and complicating long-term development.

To respond effectively given this evolving landscape, policymakers should take a longer-term view on reforms and put in place forward-looking strategies, even as they seek stability in the near term.

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An important step is to deepen evidence-based analysis to identify where risks and gaps lay, including through assessing both direct and indirect exposure to the tariffs through value chain linkages. Tailored support for hard-hit export sectors, especially for micro, small and medium enterprises, will be vital.

Governments should also accelerate trade digitalization, streamlining customs procedures, adopting cross-border paperless trade systems and enabling seamless data flows across supply chains to reduce trade costs and improve efficiency. At the same time, governments should aim for broader structural resilience and diversify trade partners and products in the long run, reducing overreliance on any single market.

These steps can cushion the impact of future trade shifts and help smaller exporters stay competitive.

Expanding trade in digitally delivered services, such as in financial, business and various professional services, offers a promising pathway. These sectors have been less affected by recent trade tensions and could help offset some of the disruptions in goods trade.

Countries can also prioritize policies that promote domestic consumption, foster innovation and address supply-side constraints, thus expanding their development base and reducing vulnerability to external shocks.

Strategic potential might lay in the possible realignment of global supply chains toward Asia and the Pacific. Countries graduating from least developed status and facing the loss of trade preferences, as well as middle-income countries striving to move up the value chain, could leverage new avenues and invest in economic diversification and industrial upgrading.

More fundamentally, policy coherence, stability and predictability must remain key to trade, investment and business engagements. In an environment where uncertainty undermines economic confidence, especially for smaller or more exposed economies, upholding a transparent, multilateral, rules-based system is more important than ever.

Regional cooperation and integration will be increasingly critical. Reinforcing intraregional trade and investment can reduce exposure to global disruptions and help build more resilient economic ecosystems.

Deeper engagement in subregional mechanisms such as ASEAN and mega trade agreements like the Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), along with initiatives such as Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific (CPTA) of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) offers a way forward.

Regulatory convergence and harmonization, enhanced supply chain linkages and cross-border trade digitalization should be prioritized to strengthen connectivity and competitiveness. To further aid smaller and less developed economies with limited trade negotiation and policy capacities, governments could consider reducing or exempting tariffs on their goods. As countries navigate an increasingly volatile global environment, such collaboration will be crucial to support policy adaptation to shifting dynamics.

The Asia-Pacific region has bounced back from past crises, but today’s challenges require coordinated, forward-looking responses. With the right policies and strengthened regional partnerships, countries can turn current trade headwinds into an opportunity to build more inclusive, diversified and resilient economies.

ESCAP stands ready to support countries in this effort through targeted technical assistance, regional dialogue platforms and data-driven tools like the Trade Intelligence and Negotiation Adviser (TINA) and Value Chain Analyzer, which help governments diagnose vulnerabilities, prioritize interventions and coordinate policy responses.

The decisions made now will determine whether the region emerges stronger or more vulnerable in a reshaped global trade landscape.

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The writer is under-secretary-general of the United Nations and executive secretary of ESCAP.

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