New Delhi [India]: The Asia-Pacific Economic Cooperation (APEC) has warned of a sharp slowdown in trade growth across its 21 member economies this year, attributing the decline primarily to escalating US trade tariffs and broader economic uncertainty. According to its latest Regional Trends Analysis report, trade growth in the APEC region is projected to rise by just 0.4 per cent in 2025, a significant drop from the 5.7 per cent recorded in 2024.
“Trade growth is set to decline sharply across APEC due to lower external demand, particularly in manufacturing and consumer goods, while rising uncertainty over goods-related measures weighs on services trade,” APEC said in a statement.
In addition to trade concerns, APEC has also slashed its economic growth forecast for the region to 2.6 per cent, down from 3.3 per cent last year.
US Tariff Actions Raise Alarms Across Asia-Pacific
Much of the trade turbulence stems from the Trump administration’s renewed tariff policies, which have imposed duties on imports affecting over half of APEC’s member economies. These actions risk reversing decades of progress in trade liberalisation, which had seen regional tariff rates fall from 17 per cent in 1989 to 5.3 per cent by 2021, fueling a nine-fold increase in merchandise trade.
The protectionist stance has sowed uncertainty across supply chains, particularly in manufacturing hubs and among service exporters in the region.
Trade Diplomacy and WTO Reform on the Agenda
Trade representatives from APEC nations are convening in a two-day summit starting Thursday to address these growing challenges. The discussions will focus on:
- Strengthening multilateral trade frameworks
- Revisiting World Trade Organization (WTO) reforms
- Exploring cooperative mechanisms to stabilise regional trade
The US has previously halted funding to the WTO, alleging that the body unfairly favours China—a move that has added tension to the APEC platform.
China-US Trade Talks: Limited Progress
China’s Vice Commerce Minister, Li Chenggang, is attending the APEC summit and was recently engaged in bilateral trade discussions with US representative Jamieson Greer in Geneva. Although both parties agreed to a temporary 90-day tariff reduction, it remains unclear whether further meetings will take place during the current summit in Jeju, South Korea.
This ministerial meet is part of a larger sequence of APEC engagements culminating in a high-level leaders’ summit in Gyeongju later this year.
Global Implications of Regional Trade Decisions
The APEC economies collectively account for 60 per cent of global GDP and nearly half of global trade. Consequently, decisions taken at this summit could significantly impact the trajectory of global economic recovery, especially as nations grapple with inflationary pressures, geopolitical instability, and shifting supply chains.
As protectionism threatens to unravel decades of cooperation, all eyes are on whether the APEC bloc can restore confidence in rules-based international trade.