Imagine driving slowly but steadily along the road towards an economic development led by domestic demand, when your navigator advises you to take a faster route via export-led growth. You duly comply – only to find the road blocked by huge tariff barriers.Your navigator then advises reversing out of the cul de sac and choosing yet another way to proceed – which will be a difficult, time-consuming and potentially expensive process, he warns. What do you do? Tear your hair out or jettison the navigator and find your own way forward?This is a rough analogy of the situation in which many Asian economies find themselves as the brave (but broken) new world of Trump’s tariffs lays bare the obstacle-littered way ahead.In the decades just after World War II, East Asian nations led by Japan and the four Asian “tiger economies” of South Korea, Taiwan, Hong Kong and Singapore responded to urgings of Western economists to adopt open economies and export-led growth models. In contrast, India, for instance, chose an import substitution policy – taxing foreign goods to encourage local manufacturing – covering everything from motorbikes to machine tools.The dependence on exports has, however, led many economies into a blind alley as the US market retreats behind tariff walls and the Chinese market becomes increasingly self-sufficient, alongside probably a growing number in Europe. The supply chain route to export-led growth is likely to be at least partially closed too.All this cannot be blamed entirely upon the Trump tariffs. Pernicious trends have been apparent for some time with the overdependence on consumption and imports in the US and other Western markets (with accompanying trade imbalances) becoming increasingly unsustainable, politically and economically. But US President Donald Trump’s “no entry” sign has brought things to a screeching halt.
So, like, you know, imagine cruising down the economic highway, all chill, then your GPS is like, “Hey, take this detour for export-led growth,” and you’re like, “Sure thing, GPS buddy!” But surprise, surprise – the road is blocked by a ton of tariff barriers. Your GPS is like, “Oops, my bad, let’s find another way,” but warns you it’s gonna be a pain in the you-know-what. What’s your move? Freak out or ditch the GPS and figure it out yourself? That’s basically the pickle many Asian economies are in now as they navigate the messy aftermath of Trump’s tariff chaos.
After WWII, Japan and the four Asian “tiger economies” were all about that open economy and export-led growth vibe promoted by Western economists. On the flip side, India was all about taxing foreign goods to boost local production, from fancy motorbikes to cool machine tools. But now, the whole export thing has led to a dead-end as the US slaps on tariffs and China does its own thing. The supply chain path to export success is looking pretty rocky too.
And hey, it’s not all Trump’s fault. The US and other Western countries have been living the high life on consumption and imports for a while now, racking up those trade imbalances like nobody’s business. But Trump’s tariff tantrum has really put a damper on things.
In the end, it’s like, a bumpy ride ahead for these Asian economies as they try to navigate the twists and turns of the post-tariff world. Will they make it out in one piece? Who knows, man, who knows.
