In response, these economies must remain “agile” and not give in to tit-for-tat retaliation. Rather than “throwing rocks into their own harbours” — a phrase originally used by Cambridge economist Joan Robinson to describe the self-destructive nature of protectionism — these countries should accelerate their efforts in regional trade integration, including in digital and services trade and investment.
The ripple effects of the US-led tariffs may be “severe” for Asia’s small, open economies, warns Edward Robinson, deputy managing director for economic policy and chief economist at the Monetary Authority of Singapore (MAS).
“With trade dependencies in the region sometimes exceeding 100% of GDP, the ripple effects may be severe: reduced production, and possibly, renewed capital outflows, raising the prospect of a destabilising loop between the real and financial sectors,” says Robinson in his opening remarks at the 12th Asian Monetary Policy Forum (AMPF) on May 23.
