This shift comes at a delicate time. After a volatile 2024, fears of a global recession have eased slightly, with estimates of recession risk now at 20%–30%, down from earlier highs. However, should the new tariffs take effect, market sentiment could sour quickly. Investors would be forced to re-evaluate global growth assumptions, and volatility would likely return in force.
Global financial markets may appear stable for now, but under the surface, significant risks are re-emerging. Chief among them: escalating trade tensions driven by a renewed US protectionist agenda. As the second half of 2025 approaches, the global economy may once again be entering turbulent waters and open, trade-dependent economies like those in Southeast Asia must brace for impact. More importantly, they must do so collectively.
The US administration is expected to implement a sweeping tariff hike, raising the universal import rate to 20% by July. If enacted, this would mark one of the most significant reversals in trade liberalisation in recent history. The fallout is likely to be broad and consequential, from higher consumer prices and disrupted supply chains to renewed inflationary pressures and capital market instability.
