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Asia urged to diversify trade and strengthen domestic demand amid global tariff wars

Image Credits: UnsplashImage Credits: Unsplash
  • Asian economies must diversify trade partners and boost domestic demand to mitigate risks from global trade wars, says ADB chief Masato Kanda.
  • Southeast Asian export-reliant nations like Vietnam and Thailand face rising U.S. tariffs, pushing them to explore regional trade alternatives like RCEP.
  • ADB emphasizes infrastructure, green energy, and workforce development to help Asia transition toward sustainable, high-value industries amid trade uncertainties.

[WORLD] Asian nations must expand their trade networks and strengthen domestic consumption to withstand the ongoing global trade conflict, according to Asian Development Bank (ADB) President Masato Kanda.

Speaking in an interview on Tuesday, Kanda acknowledged that while the region’s export-driven economies have grown more resilient over time, the escalating use of high tariffs—particularly by the United States—poses a continued threat. “There is no room for complacency,” he warned, pointing to Washington’s sweeping tariff policies affecting a broad array of countries.

For decades, export-led growth has underpinned Asia’s economic rise. Japan and the newly industrialized economies (NIEs) pioneered this model in the 1960s, with Southeast Asian countries adopting similar strategies in the following decades. In the late 1980s and early 1990s, China and Vietnam emerged as major exporters of labor-intensive manufactured goods. However, shifting global dynamics now call for a recalibration of this approach.

“This is a time for Asia to boost domestic demand, pursue sound economic policies and diversify industries and trade partners,” Kanda emphasized.

The structure of global trade is changing, with regional and bilateral agreements playing an increasingly important role alongside the World Trade Organization (WTO), which has long served as the foundation of international commerce. These newer frameworks present fresh opportunities for Asian economies to broaden their trading relationships beyond traditional partners.

Trade tensions have already impacted several Asian exporters. In addition to the steep tariffs imposed on Chinese goods—more than doubling their cost for U.S. buyers—nations such as Vietnam and Thailand, heavily reliant on exports, are also facing some of the highest proposed U.S. trade barriers.

Beyond raising immediate costs, these tariffs are disrupting global supply chains, prompting businesses to reassess where and how they source materials. The COVID-19 pandemic further underscored the fragility of these networks, pushing companies toward more resilient and diversified supply strategies.

Strengthening domestic demand, Kanda argued, could provide a vital cushion against external shocks. Developing robust local markets would lessen Asia’s dependency on exports, particularly to major economies like the United States, and offer greater stability in an unpredictable global landscape.

The rise in protectionist policies among leading economies has made global trade more fragmented and uncertain. In this environment, Asian countries must adapt by tapping into emerging markets and reinforcing regional trade alliances to safeguard their economic progress.


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