KUALA LUMPUR: ASEAN faces fresh economic headwinds as global powers reshape trade policies in an increasingly protectionist landscape.

The region is bracing for the ripple effects of escalating global trade tensions, particularly from the US' new tariff measures. 

These shifts are set to impact investment flows, trade dynamics, and economic growth across the region.

Here are six key ways these tariffs could economically impact ASEAN:


1. Decline in Foreign Direct Investment (FDI)

Investor confidence may waver amid policy uncertainty and rising trade barriers. This could slow capital inflows critical to the region’s long-term growth.

2. Trade Diversion Due to Overcapacity

With export routes restricted, goods may be redirected to alternative markets. The resulting oversupply risks creating bottlenecks and inefficiencies across member economies.

3. Disruption of Supply Chains

Southeast Asia’s role in global manufacturing could be destabilised. Tariff pressures may hinder the movement of key components, affecting production and delivery timelines.

4. Decrease in GDP

A drop in trade and investment could shrink national output. Weaker economic activity may challenge fiscal planning and overall resilience in the bloc.

5. Slowdown in Global Growth

Regional economies, deeply integrated into the global market, are vulnerable to demand shocks. A broader economic deceleration could further dampen recovery prospects.

6. Impact on Employment in Export-Oriented Sectors

Sectors such as electronics, apparel, and machinery may experience job losses. Reduced orders threaten the livelihoods of workers in export-dependent industries.