Asia-Pacific well-positioned to withstand headwinds from Trump 2.0 policies—ADB


Economies across the Asia-Pacific region can withstand headwinds from the policies of the Trump 2.0 administration that are deemed detrimental to global free trade and climate financing, according to a top Asian Development Bank (ADB) official.

Once the United States imposes tariffs, "China, of course, will be affected the most; but for a lot of other economies in the region, the effects will be quite mixed—some may benefit, some may be slightly more challenged," ADB chief economist Albert Park told Manila Bulletin on the sidelines of the Manila-based multilateral lender's 2025 Economists' Forum.

"But we think the region is in a pretty good position to handle or manage any of the changes that might happen" to US policies under returning President Donald J. Trump, Park said.

On his first day in office, Trump already signed a slew of executive orders (EOs) establishing his administration's policies, including an "America First" approach in trade, environmental, and foreign policies; withdrawing from the Paris Agreement on climate change; and reevaluating foreign aid, among many others.

Citing the ADB's January 2025 paper titled "Potential Impact of Higher United States Tariffs on Asian Economies," Park said they found "fairly modest impacts on the region, with some causal effects in some economies" of Trump's plan to deter imports from countries enjoying huge trade surpluses with the US.

"Although the new US trade policies espoused during the [Trump] campaign are expected to contribute to an improvement of the US trade balance and increase employment in the manufacturing sector, they are likely to cause harm to global economic growth, and especially to growth in the US," the ADB paper warned.

"While Asian economies are expected to be less exposed to negative impacts than Canada and Mexico, which rely much more on the US market, many economies will experience negative impacts on their trade balances, although such effects can be lessened by redirecting trade to third economies or by replacing China's exports to the US," it said.

"If all economies affected by higher US tariffs retaliate, the nominal income and production of some economies may be preserved but at the expense of individual and global economic growth," it added, citing that "Cambodia, Taiwan, the Philippines, and Singapore are negatively affected under global retaliation scenarios."

As such, the ADB paper called on Asian economies to sustain the benefits from open international trade "by promoting liberal and freer trade and investment policies," including increased utilization of existing regional free trade agreements (FTAs).

"While Asian FTAs have relatively good coverage of services, investment, and movement of capital, impacts on trade expansion have been relatively limited due to low utilization rates and high compliance costs," it noted.

For the ADB, "closer regional cooperation will become more imperative than ever," as "divergent policy stances in responding to external challenges could also weaken the region's bargaining and negotiating power."

In a separate Jan. 24 report, Oxford Economics lead economist Alexandra Hermann said that "if Trump follows through with his threats on China [of 60-percent blanket tariffs], Thailand and the Philippines could see net benefits thanks to trade rerouting."

The Philippines enjoys a relatively smaller trade surplus, or more exports than imports, with the US, compared with its neighbors like China and Vietnam, which are expected to be targeted with tariffs.

Blanket US tariffs are estimated to slash the Philippines' gross domestic product (GDP) by as much as over 0.5 percent, according to the think tank Oxford Economics, although among the lowest reductions in the region, only after India's.

As for Trump's plan to disengage from the landmark 2015 international treaty on climate change, Park said: "It's a real setback if the US does step back from the Paris Agreement, but we just have to hope the rest of the world carries that mandate forward."

In terms of the impact on US foreign aid, especially climate financing, Park said that "it's a bit early to say, but surely that's a concern—not just the financing for the ADB, but also mobilizing private-sector finance" from American financial institutions.

The US is among the ADB's founding members, with a $22.23-billion capital subscription to the lender, on top of contributing and committing a cumulative $5.02 billion to its special funds, according to an April 2024 ADB fact sheet.

"At least in the ADB, we're still highly committed, and we're directly also supporting the development of green finance in this region," according to Park.