Asia-Pacific Economic Cooperation (APEC) ministers and senior trade officials gathered on Jeju Island, South Korea, this week to confront mounting evidence that new U.S. import levies are choking off regional commerce. In a stark forecast unveiled at the bloc’s annual trade ministers’ meeting, APEC warned that exports across its 21-member economies will grow by a mere 0.4 percent in 2025—down from 5.7 percent last year—while overall economic expansion is likely to cool to just 2.6 percent. With the United States having slapped tariffs on more than half of APEC’s membership, Washington’s protectionist turn is now sending shockwaves through both goods and services markets across the Pacific rim.
“Trade growth is set to decline sharply across APEC due to weaker external demand, particularly in manufacturing and consumer goods, while rising uncertainty over goods-related measures also weighs on services trade,” APEC policy director Carlos Kuriyama told delegates on the opening day. Kuriyama highlighted that the fallout has already spilled over into financial markets, and that confidence among exporters and importers has slumped to levels unseen since the pandemic recovery period.
China, the region’s largest exporter and a founding APEC member, has been steadily reshaping its approach amid this tariff storm. In mid-April, Beijing formally denounced Washington’s “tariff numbers game,” declaring that it would ignore U.S. estimates of targeted duties and instead rely on World Trade Organization (WTO) rulings. Commerce Ministry spokesperson He Yadong emphasized that many of the recent Section 232 “national security” tariffs violate multilateral trade rules, and that China has lodged a formal complaint with the WTO’s dispute settlement body. Simultaneously, China surprised markets by appointing Li Chenggang—its ambassador to the WTO—as the country’s new chief trade negotiator, a signal that Beijing is preparing for a more assertive role in the unfolding tariff negotiations.
Against this backdrop, U.S. Trade Representative Jamieson Greer and Chinese trade envoy Li Chenggang met on the sidelines of the APEC gathering for the first time since their face-to-face talks in Geneva earlier this month. Those Geneva discussions yielded a tentative truce: both sides agreed to cut reciprocal tariffs by more than 100 percentage points for the next 90 days, pare back certain levies tied to controversies such as fentanyl precursor chemicals, and establish a joint mechanism for ongoing dialogue. Although specific tariff‐cut schedules remain to be finalized, the Geneva accord has injected a rare note of optimism into an otherwise gloomy trade outlook.
At Jeju, Greer scheduled bilateral meetings not only with Li but also with counterparts from South Korea and New Zealand, reflecting Washington’s eagerness to lock in side deals that could cushion the impact of its sweeping new tariffs. “We’re moving as quickly as we possibly can with folks who want to be ambitious,” Greer told CNBC just before departing for Jeju, underscoring the administration’s broader strategy of combining multilateral pressure with targeted bilateral concessions.
China’s negotiators have shown mutual interest in de-escalation—but they have been equally firm in defending Beijing’s strategic industries. In private sessions, Li Chenggang reiterated China’s commitment to preserving the integrity of global supply chains and its readiness to uphold a rules-based trading system, so long as discussions are conducted on the basis of equality and mutual respect. He has also floated the possibility of expanded Chinese purchases of U.S. agriculture and liquefied natural gas, echoing elements of the so-called Phase One deal concluded in 2019.
Yet many analysts caution that the Geneva truce is merely a temporary reprieve. Chinese factories have already reported a slowdown in export orders, prompting Beijing to roll out fresh monetary easing measures and credit lines for small and medium-sized enterprises. Domestic stimulus plans—ranging from targeted tax breaks to increased infrastructure spending—aim to offset weaker external demand, but they risk widening China’s fiscal deficit and adding to already-lofty debt levels.
Other APEC members are likewise bracing for a prolonged period of uncertainty. Japan and Vietnam, among the hardest-hit by U.S. tariffs on steel, aluminium and data-processing equipment, are racing to negotiate their own side agreements with Washington. Canada and Mexico are likewise seeking clarity on how their longstanding North American trade ties may be reshaped under the new U.S. tariff framework. Meanwhile, emerging economies such as Indonesia and Thailand are scrambling to diversify export markets to cushion the blow of shrinking U.S. orders.
In Jeju’s closed‐door sessions, trade envoys delved into a range of parallel initiatives intended to shore up the multilateral system. Reform of the WTO’s dispute settlement mechanism topped the agenda, with many APEC members lamenting that recent U.S. funding pauses and procedural blockades have hampered the body’s effectiveness. Delegates also discussed advancing the Free Trade Area of the Asia-Pacific, boosting digital commerce, preparing for an AI-driven economy, and embedding sustainability into regional value chains.
South Korea’s Trade Minister Cheong In-kyo, hosting the APEC meetings, framed the tariff-induced slowdown as a threat not only to GDP figures but to social stability across the region. “Our shared prosperity depends on open markets and predictable rules,” he told ministers. “We must collaborate—under APEC’s spirit of pragmatism and consensus—to overcome the political and economic headwinds.”
For China, the stakes are especially high. Exports still account for nearly 20 percent of the nation’s GDP, and a sustained export slump could exacerbate a domestic property downturn and rising unemployment among factory workers. In strategic sectors such as semiconductors, where China has set lofty self-reliance targets, U.S. export controls and tariffs have combined to slow technology transfers and raise costs for Chinese chipmakers.
Beijing’s leadership has thus tasked its newly empowered trade negotiator with balancing two goals: securing tariff relief that can quickly revive export orders, and preserving China’s autonomy in critical industries. In his comments to APEC delegates, Li Chenggang underscored that China will “vigorously support multilateralism and the integrity of global supply chains,” but warned that any agreement must respect China’s core interests and long-term development plans.
As APEC’s ministers prepare to translate their Jeju discussions into concrete action at a leaders’ summit later this year in Gyeongju, the question remains whether the region can reclaim the strong trade growth of the past decade. With protectionist measures still in place and mutual distrust lingering, many exporters are already re-routing supply chains to avoid steep levies—an expensive and time-consuming process that may permanently alter the commercial landscape of the Asia-Pacific.
APEC’s warning of a near standstill in regional exports is therefore more than just a gloomy forecast; it is a wake-up call to governments and businesses alike that the era of frictionless trade has given way to one of heightened geopolitical competition. Whether U.S. and Chinese negotiators can turn their 90-day truce into a lasting détente will largely determine the fate of hundreds of millions of jobs and the future shape of the global economy.
(Source:www.marketscreener.com)
“Trade growth is set to decline sharply across APEC due to weaker external demand, particularly in manufacturing and consumer goods, while rising uncertainty over goods-related measures also weighs on services trade,” APEC policy director Carlos Kuriyama told delegates on the opening day. Kuriyama highlighted that the fallout has already spilled over into financial markets, and that confidence among exporters and importers has slumped to levels unseen since the pandemic recovery period.
China, the region’s largest exporter and a founding APEC member, has been steadily reshaping its approach amid this tariff storm. In mid-April, Beijing formally denounced Washington’s “tariff numbers game,” declaring that it would ignore U.S. estimates of targeted duties and instead rely on World Trade Organization (WTO) rulings. Commerce Ministry spokesperson He Yadong emphasized that many of the recent Section 232 “national security” tariffs violate multilateral trade rules, and that China has lodged a formal complaint with the WTO’s dispute settlement body. Simultaneously, China surprised markets by appointing Li Chenggang—its ambassador to the WTO—as the country’s new chief trade negotiator, a signal that Beijing is preparing for a more assertive role in the unfolding tariff negotiations.
Against this backdrop, U.S. Trade Representative Jamieson Greer and Chinese trade envoy Li Chenggang met on the sidelines of the APEC gathering for the first time since their face-to-face talks in Geneva earlier this month. Those Geneva discussions yielded a tentative truce: both sides agreed to cut reciprocal tariffs by more than 100 percentage points for the next 90 days, pare back certain levies tied to controversies such as fentanyl precursor chemicals, and establish a joint mechanism for ongoing dialogue. Although specific tariff‐cut schedules remain to be finalized, the Geneva accord has injected a rare note of optimism into an otherwise gloomy trade outlook.
At Jeju, Greer scheduled bilateral meetings not only with Li but also with counterparts from South Korea and New Zealand, reflecting Washington’s eagerness to lock in side deals that could cushion the impact of its sweeping new tariffs. “We’re moving as quickly as we possibly can with folks who want to be ambitious,” Greer told CNBC just before departing for Jeju, underscoring the administration’s broader strategy of combining multilateral pressure with targeted bilateral concessions.
China’s negotiators have shown mutual interest in de-escalation—but they have been equally firm in defending Beijing’s strategic industries. In private sessions, Li Chenggang reiterated China’s commitment to preserving the integrity of global supply chains and its readiness to uphold a rules-based trading system, so long as discussions are conducted on the basis of equality and mutual respect. He has also floated the possibility of expanded Chinese purchases of U.S. agriculture and liquefied natural gas, echoing elements of the so-called Phase One deal concluded in 2019.
Yet many analysts caution that the Geneva truce is merely a temporary reprieve. Chinese factories have already reported a slowdown in export orders, prompting Beijing to roll out fresh monetary easing measures and credit lines for small and medium-sized enterprises. Domestic stimulus plans—ranging from targeted tax breaks to increased infrastructure spending—aim to offset weaker external demand, but they risk widening China’s fiscal deficit and adding to already-lofty debt levels.
Other APEC members are likewise bracing for a prolonged period of uncertainty. Japan and Vietnam, among the hardest-hit by U.S. tariffs on steel, aluminium and data-processing equipment, are racing to negotiate their own side agreements with Washington. Canada and Mexico are likewise seeking clarity on how their longstanding North American trade ties may be reshaped under the new U.S. tariff framework. Meanwhile, emerging economies such as Indonesia and Thailand are scrambling to diversify export markets to cushion the blow of shrinking U.S. orders.
In Jeju’s closed‐door sessions, trade envoys delved into a range of parallel initiatives intended to shore up the multilateral system. Reform of the WTO’s dispute settlement mechanism topped the agenda, with many APEC members lamenting that recent U.S. funding pauses and procedural blockades have hampered the body’s effectiveness. Delegates also discussed advancing the Free Trade Area of the Asia-Pacific, boosting digital commerce, preparing for an AI-driven economy, and embedding sustainability into regional value chains.
South Korea’s Trade Minister Cheong In-kyo, hosting the APEC meetings, framed the tariff-induced slowdown as a threat not only to GDP figures but to social stability across the region. “Our shared prosperity depends on open markets and predictable rules,” he told ministers. “We must collaborate—under APEC’s spirit of pragmatism and consensus—to overcome the political and economic headwinds.”
For China, the stakes are especially high. Exports still account for nearly 20 percent of the nation’s GDP, and a sustained export slump could exacerbate a domestic property downturn and rising unemployment among factory workers. In strategic sectors such as semiconductors, where China has set lofty self-reliance targets, U.S. export controls and tariffs have combined to slow technology transfers and raise costs for Chinese chipmakers.
Beijing’s leadership has thus tasked its newly empowered trade negotiator with balancing two goals: securing tariff relief that can quickly revive export orders, and preserving China’s autonomy in critical industries. In his comments to APEC delegates, Li Chenggang underscored that China will “vigorously support multilateralism and the integrity of global supply chains,” but warned that any agreement must respect China’s core interests and long-term development plans.
As APEC’s ministers prepare to translate their Jeju discussions into concrete action at a leaders’ summit later this year in Gyeongju, the question remains whether the region can reclaim the strong trade growth of the past decade. With protectionist measures still in place and mutual distrust lingering, many exporters are already re-routing supply chains to avoid steep levies—an expensive and time-consuming process that may permanently alter the commercial landscape of the Asia-Pacific.
APEC’s warning of a near standstill in regional exports is therefore more than just a gloomy forecast; it is a wake-up call to governments and businesses alike that the era of frictionless trade has given way to one of heightened geopolitical competition. Whether U.S. and Chinese negotiators can turn their 90-day truce into a lasting détente will largely determine the fate of hundreds of millions of jobs and the future shape of the global economy.
(Source:www.marketscreener.com)