The potential for retaliatory tariffs highlights the fragility of global trade relationships and the interconnectedness of economies, particularly in Asia.
The IMF's projections suggest that despite the challenges posed by tariffs, Asia's economic growth remains robust compared to other regions, indicating resilience in the face of external pressures.
If Trump proceeds with the proposed tariffs, it could trigger a series of retaliatory measures from affected countries, leading to a potential trade war that may further disrupt global supply chains.
The tightening of monetary policy by the US Federal Reserve in response to inflation could have ripple effects on Asian economies, potentially leading to increased volatility in financial markets.
The International Monetary Fund (IMF) has issued a warning regarding the potential economic repercussions of retaliatory tariffs, particularly in Asia, where growth is projected at 4.6% this year and 4.4% next year. IMF's director for Asia and the Pacific, Krishna Srinivasan, highlighted that such tariffs could disrupt supply chains and inflate costs, posing a threat to the region's economic stability. The warning comes in light of US President-elect Donald Trump's proposed tariffs of 60% on Chinese goods and at least 10% on imports from other nations, which could lead to a tit-for-tat scenario in global trade.
The IMF's forecast indicates that while Asia remains a significant driver of global economic growth, the uncertainty surrounding trade policies and monetary policies in advanced economies may lead to increased risks in capital flows and exchange rates. The global economy is expected to grow by 3.2% in 2024 and 2025, but the impact of these tariffs could hinder this growth, particularly affecting exporting countries and contributing to inflationary pressures in the US.
