Asian Development Bank's Chief Economist warns: US tariffs could seriously drag down global economic growth.

Asia Development Bank's chief economist, Albert Park, said that the comprehensive tariff policy recently introduced by the United States may not only suppress economic growth in the U.S. and globally, shrink export markets, but also force the Federal Reserve to take countermeasures. Park said that unlike previous cases where trade tensions between China and the U.S. led to the transfer of manufacturing to Southeast Asia, this round of tariffs is so broad that it could have a suppressing effect on trade activities in the entire region. He added that the negative impact could dampen economic growth in the U.S. and prompt the Federal Reserve to lower interest rates. Park pointed out, "The scale and breadth of the new U.S. tariffs could seriously slow down economic growth in the U.S. and globally, reduce export opportunities in the entire East Asia region, not just leading to a shift in production within the region." The U.S. tariff measures have imposed high tariffs on numerous trading partners, including Southeast Asian countries, with Vietnam, Laos, and Cambodia facing particularly high tariff rates. On top of the 20% tariffs imposed by the Trump administration earlier this year, China now faces an additional 34% tariff, making the total tariff rate as high as 54%. Park noted that China has heavily relied on exports to drive economic recovery after the pandemic, and is likely to further strengthen its recent policy shift towards prioritizing domestic consumption and increasing trade with partners other than the U.S. China has set its economic growth target for this year at "around 5%." China has urged the U.S. to cancel the new tariff measures and vowed to take countermeasures to protect its own interests. Park also mentioned that Southeast Asian economies face their own high tariff barriers, limiting their ability to absorb transferred trade and reducing opportunities for economic growth. Additionally, Park warned that the likelihood of capital outflows from the Southeast Asian region is high as foreign investors tend to withdraw from higher-risk markets, while the U.S. tariff measures add new uncertainty to the geopolitical and economic situation.