Despite the tariff wars, China and other Asian countries can benefit from half a dozen opportunities for a shared future.

Image Source: Pexels
 

Scheduled for March 25 to 28, the Boao Forum for Asia (BFA) will take place in South China's Hainan province, amid a historical moment of extraordinary risks and opportunities.

Ever since the Forum was launched in 2001, it has both reflected and shaped vital structural shifts, including China’s entry into the World Trade Organization (2001), its “peaceful rise” (2004), efforts to navigate the aftermath of the West’s great recession (2009), the antidotes to the US tariff wars (2017) and amid external attempts to divide Asia, China’s “global security initiative” (2022).

Through these two decades, the Forum has promoted regional economic integration by bringing Asian countries closer to their economic goals, even against challenging economic headwinds.

The 2025 Forum is no exception.          
 

Negative tariff war futures in Asia     

Half a decade ago, Trump tariffs on imports from China accounted for almost $400 billion, or more than 90% of the trade affected. Today, in what appears to be the first round of US tariffs with Canada, Mexico and China alone could add up to more than $1.3 trillion. That's over 3.5 times more than half a decade ago.

As evidenced by Trump’s threats to launch new tariffs and consequent reversals, economic rationales have given way to geopolitical saber rattling. Unchallenged, these measures will worsen trade tensions and amplify divides, distort trade flows, and disrupt complex and integrated supply chains in Asia.

Vietnam and Taiwan are most exposed to elevated US tariffs, due to high export-to-GDP ratios with the US (30% and 15%, respectively). Other countries will be in the firing line, including Thailand, Malaysia, Singapore and South Korea. Those Asian countries with large trade surpluses with the US – China, Vietnam, Japan and Taiwan – will also be at risk of further tariffs.

As the Trump tariffs move from countries to targeting sectors, including semiconductors, pharmaceuticals, steel, and aluminum, over a quarter of exports from South Korea, Japan, Malaysia, the Philippines and Taiwan are likely to be affected.

But there is worse ahead in April, due to Trump’s planned “reciprocal tariffs.” Effectively, these are unilateral tariffs on every country taxing US imports. The US is also targeting non-tariff measures, value-added taxes (VAT), regulations, government subsidies and exchange rates. Devoid of economic rationales, such actions would impose on the world US-style deregulation, privatization and dollar manipulation. In Asia, countries imposing higher tariffs on US imports than what the US levies would be targeted, particularly India, Thailand, the Philippines (tariff rate differentials 2% to 8%), but also Taiwan, Malaysia and Vietnam.

Being targeted by unwarranted and likely illicit tariffs by the US is the negative “shared future” of Asia. But no threats come without opportunities.
 

Six opportunities for positive shared future in Asia        

First, Asian countries can deepen regional integration and elevate trade ties with the non-US world, particularly the Global South. After centuries of colonialism, the highest living standards remain in the West. However, the US population is barely 350 million; that’s less than 5% of the world population.

Second, Asian economies can deepen inter-regional integration with Europe. Yet the greatest economic growth opportunities are in emerging Asia and the rest of the Global South. Over the past four decades, intra-regional trade in Asia has increased by 43%. More than half of Asian trade is regional. Similar trends prevail for foreign direct investment.

Third, increasing trade diversification fosters complex and globalized supply chains. In its misguided tariff wars, the US has been keen to reduce its reliance on Chinese pharmaceuticals buying from elsewhere, including India. In 2022, Indian companies supplied almost half of all generic prescriptions filed in the US, but the bulk of India’s pharma ingredients come from China.

Fourth, tariff measures are typically absorbed through the supply chain and the end buyer. In the West, the effort is to “reshore” multinationals and entire industries. But that’s a costly game, which penalizes severely businesses and consumers in the West. The tariffs on Canada, Mexico and China alone will cost an average US household over $1,200 a year.

Fifth, as world trade in goods is flattening, service flows in Asia are surging and now employ more than twice as many workers as in 1990. In the past, services have been seen as less productive than manufacturing. Yet, according to the IMF, Asia’s labor productivity in financial services is four times higher than in manufacturing, and twice as high in business services.

Sixth, Asia is benefiting from dramatic acceleration of digitalization and artificial intelligence (AI), and sustainable development.
 

“Industries of the future” in Asia       

A month ago, Chinese President Xi Jinping gave a strong push to the private sector speaking to technology luminaries as Huawei’s Ren Zhengfei, BYD’s Wang Chuanfu, Will Semiconductor’s Yu Renrong, Unitree Robotics’ Wang Xingxing, and Xiaomi’s Lei Jun. These tech giants are both scaling up Chinese innovation and trendsetting Asia’s shared future in advanced services, digitalization and AI, and sustainable development.

In green development, China is already moving to fund the climate transition through a variety of innovative financing mechanisms. With its pivotal role in the global economy, it is accelerating the green transition and offering new development potential across the entire Asia.

In addition to pioneering high-tech and equipment manufacturing industries in electric vehicles, solar cells; and industrial robotics, China is purposely fostering “industries of the future”, including biomanufacturing, quantum technology, embodied AI, and 6G. In mid-January, the leading and lucrative US artificial intelligence (AI) companies were sidelined by DeepSeek, which along with other Chinese companies has developed sophisticated generative AI models at a lower cost than existing offerings.

Spurring faster adoption of AI, China is helping the technology have a larger impact on global economic growth. The greater the regional integration, the stronger will be the acceleration effect across Asia, the world’s most dynamic region. “Today, it contributes over 60 percent of global growth,” as Kristalina Georgieva, head of the International Monetary Fund (IMF), recently affirmed.

In promoting such a shared future, the Boao Forum could prove historical since what happens in Asia won’t stay in Asia.

More By This Author:

Unsurprisingly, U.S. Economic Prospects Take A Negative Turn
Trump’s Reciprocal Tariffs Of Trade Destruction
American Tariff Wars Worsen Global Economic Prospects