Tariffs to 'Damage' Asia's Growth and Exports, Morgan Stanley's Ahya Says

Asian economies are bracing for potential headwinds as the U.S. considers imposing higher tariffs on a range of goods, according to Morgan Stanley's Chief Asia Economist, Chetan Ahya. In an interview, Ahya warned that these tariffs could significantly impact Asia's economic growth and exports.



Ahya highlighted that the direct impact of tariffs on exports may not be as severe as initially feared. However, he emphasized that weaker corporate confidence could weigh more heavily on Asia's growth outlook. Despite the tariffs imposed on China during 2018-19, China's market share in global goods exports improved, indicating that companies have adapted to these challenges.

Ahya also noted that companies have invested in diversifying their supply chains since the U.S. started imposing tariffs on China. This diversification may mitigate the impact of tariffs on Asia's exports and economic growth. However, he cautioned that the effects on individual economies would differ based on their exposure to China.



In response to the potential impact of tariffs, Asian countries are planning to mitigate the impact on their economies by fostering regional cooperation, developing free trade agreements, expanding international investments, and redirecting export markets to regions like the European Union and Africa. They are also considering flexible trade policies, reducing compliance costs, and increasing the utilization of free trade agreements to enhance their competitiveness.

Ahya's warnings come as the U.S. considers imposing higher tariffs on a range of goods, including those from China. While the direct impact of tariffs on exports may not be as severe as initially feared, the indirect effects on corporate confidence and supply chain diversification could still pose significant challenges for Asian economies. Asian countries are taking proactive measures to mitigate these impacts and ensure the continued growth and competitiveness of their economies.