The International Monetary Fund has warned that imposing “reciprocal” tariffs could undermine Asia’s economic prospects, raise costs and disrupt supply chains, even as it expects the region to remain a key growth engine for the global economy.
“Reciprocal tariffs threaten to disrupt growth prospects across the region, leading to longer and less efficient supply chains,” IMF Asia-Pacific Director Krishna Srinivasan said at a forum in Cebu on systemic risks.
Srinivasan’s comments come amid concerns about US President-elect Donald Trump’s plan to impose 60% tariffs on Chinese goods and a tax of at least 10% on all other imports.
Tariffs may hinder global trade, hinder growth in exporting countries, and may raise inflation in the United States, forcing the US Federal Reserve to tighten monetary policy despite the lackluster expectations for global growth.
In October, the European Union also decided to increase customs duties on electric vehicles manufactured in China to up to 45.3%, prompting Beijing to respond in kind.
The International Monetary Fund’s latest World Economic Outlook forecasts global economic growth of 3.2% for both 2024 and 2025, weaker than its more optimistic forecast for Asia, which is 4.6% for this year and 4.4% for next year.
Srinivasan said Asia is “going through an important period of transition,” creating greater uncertainty, including an “acute risk” of escalating trade tensions between major trading partners.
He added that uncertainty surrounding monetary policy in advanced economies and related market expectations may impact monetary decisions in Asia, affecting global capital flows, exchange rates and other financial markets.
