Countries in Southeast Asia, including the Philippines, must deepen their economic integration instead of retaliating against the reciprocal tariffs that the United States (US) imposed on its trading partners, as a trade war is economically costly.

Asian Development Bank (ADB) principal economist John Beirne said in an April 8 press briefing that the multilateral lender encourages Southeast Asian countries to deepen regional economic integration as a unified response of the region to the tariffs slapped by US President Donald Trump on their imports.

“I have not heard any discussion of coordinated retaliation, that type of unified response—and we have pointed out that retaliation is economically costly,” Beirne said.

Other than the trade giant China, “no other economy has announced that they’re going to impose retaliatory tariffs. Because I think many countries see that this would just exacerbate the economic costs,” Beirne further said.

This came after Beirne recalled the Malaysian government urging the Association of Southeast Asian Nations (ASEAN) to come up with a unified response to the Trump tariffs—”I think the types of responses that are being discussed are to actually deepen regional economic integration.”

“We still believe very strongly that maintaining open multilateral trade and investment, especially among countries in Asia, is one way to build resilience and provide a margin of cushion against the external shocks that are occurring,” Beirne said.

ADB chief economist Albert Park reported that Southeast Asian countries are among those with the highest tariffs, and several of its economies have become more dependent on US demand since 2017.

“The weighted average tariff on ASEAN economies is about 31 percent,” said Abdul Abiad, director at ADB macroeconomic research division.

“Southeast Asia, as a region, will get hit pretty badly by the trade war,” Abiad noted but the degree of the Trump tariffs’ impact would vary across countries.

“Take the Philippines. The tariff on the Philippines is substantially lower at 17 percent. Plus the dependence of the Philippines on US final demand is also lower at 3.4 percent,” Abiad said, suggesting that the country would be relatively insulated from the Trump tariff.

“Countries are likely to try to diversify their own export reliance on the US and to seek new trade opportunities. There will probably be some diversion or reshifting of the direction of trade flows to try to optimize in the face of falling US demand,” Park noted, adding that government “really needs to monitor how trade shocks may be affecting their firms and their workers.”

Park also believes that regional cooperation should go beyond trade, encouraging mutual understanding among economies and working toward solutions that respect each country’s interests.

“That also includes reaching out to the US to negotiate, which many of our countries are doing in the region, which could lead to a better outcome, although still—far from the best outcome,” Park added.