The trade war reshapes the global trade landscape, and Asia faces a historic opportunity

As tariffs evolve from a trade tool to a weapon of geopolitical competition, the global economy is undergoing a profound restructuring. During the Boao Forum for Asia Annual Conference 2026, a forum gathering global leaders, economists, and heads of international organizations engaged in an in-depth dialogue on “The New Global Trade Pattern Under the Impact of the Tariff War.”

Impact of the Tariff War

Former Singapore Deputy Prime Minister Tharman Shanmugaratnam stated that global trade has entered a new phase, and geopolitical competition is profoundly changing the economic and trade landscape. Tariffs are no longer just trade tools; they have become an important variable affecting global economic stability. The uncertainties they trigger have become potential obstacles to global development, possibly leading to more trade friction. The narrowing of government policy space, rising business uncertainties, and unstable consumer expectations have made the global economy more fragile.

Tharman summarized three significant impacts of the tariff war that deserve high attention: First, predictability has decreased. Countries are becoming more cautious in choosing trade partners and cooperation methods, and trust levels have declined. Second, supply chains are being rapidly restructured. Governments are reducing strategic dependence through investment screening and nearshoring, while businesses are diversifying buyers and establishing regional hubs to spread risks. In this process, countries in the Global South face more challenges. Third, the regulatory environment is becoming more complex. Different governments adopt varying technical standards and policies; while large enterprises can cope, small and medium-sized enterprises are under significantly increased pressure, further exacerbating economic uncertainty.

Daniel Palotai, Deputy Governor of the Hungarian National Bank, also believes that the impacts of the tariff war on the economy are multifaceted, one of which is the restructuring of supply chains and “nearshoring.” Tariff shocks lead to shorter supply chains, and countries hope to enhance resilience by entering safer markets. However, this process also increases costs, hindering the optimal allocation of resources and subsequently affecting product prices.

Palotai emphasized that predictability is crucial for businesses, and the current high level of uncertainty is affecting global growth potential and causing long-term harm to the labor market. For national banks, the tariff war and the fragmentation of global trade have also raised inflationary pressures, increased fiscal instability, and may lead to more extreme situations.

Robert Koopman, former Chief Economist of the World Trade Organization and professor at American University, stated that modern production systems are a large network. Once a tariff war occurs, other trade-related policies will spread through the trade chain, affecting investment decisions both upstream and downstream.

Asia as the “Center of Re-globalization”

In the face of the impacts of the tariff war, the global trade system has not collapsed but is accelerating its restructuring.

Koopman suggested that the restructuring includes the shifting of production and technology centers, establishing deeper ties with friendly nations, and nearshoring. Data shows that global merchandise trade grew by 4.6% in 2025, surpassing the World Trade Organization’s prediction of 0.5% for 2026. Service trade grew even faster, reaching 4.8%, outpacing manufacturing trade.

“Asia is the largest integrated trade region… and also the largest manufacturing hub.” In Koopman’s view, Asia is at the “center of re-globalization against de-globalization,” providing an important foundation for future economic development. If the European Union strengthens coordination and cooperation with regions under frameworks such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), it can offset the negative effects of U.S. policies.

Li Cheng, a professor in the Department of Politics and Public Administration at the University of Hong Kong, also noted that 30 years ago, there were very few middle-class individuals in Asia, whereas now the center of the global middle class has shifted to Asia. This structural change means that Asia’s voice in global affairs will continue to rise.

Faced with a more fragmented and uncertain global trade system, Tharman suggested that regional cooperation is increasingly important. “The lesson from the past year is that no country can go it alone in such an uncertain environment.”

He believes that Asia has a unique opportunity to build stability, which can be achieved in three specific ways: First, deepen regional integration. ASEAN provides a model; even as the global economy becomes increasingly unstable, ASEAN remains united. Additionally, ASEAN is strengthening relationships with partners such as the EU and the Gulf Cooperation Council, providing diverse opportunities for member countries. Second, strengthen the construction of trade institutions. By implementing the “China-ASEAN Free Trade Area 3.0” and advancing the “ASEAN-Korea Free Trade Agreement,” as well as the continued deepening of RCEP, these institutional arrangements can ultimately pave the way for more free trade agreements. Third, promote advanced digital cooperation. In the context of rapid developments in artificial intelligence, generative AI, and robotics, without common security standards and policy standards, technological development may bring greater fragmentation risks.