In the US, tariffs are currently being wrapped in the flag and championed as bold moves to defend national interests and revive local industry. But, as many commentators are pointing out, behind the patriotic packaging, lies a dangerous illusion. Far from strengthening an economy, tariffs will likely erode its very foundations by distorting supply chains, inflating costs and shielding inefficiency behind a wall of political convenience.

For dynamic, trade-driven regions like ASEAN, the impact of heavy tariffs does not just represent a policy shift. It represents a major disruption to the finely tuned architecture of open markets and investment flows that has underpinned the region’s success in recent years.

ASEAN now accounts for over 7.5% of global exports and is home to more than 680 million people with a combined GDP exceeding $3.9 trillion. The region has been one of the biggest beneficiaries of the post-war liberal economic order with intra-ASEAN trade reaching $850 billion in 2023 and foreign direct investment inflows surpassing $220 billion.

Nobel laureate economist Paul Krugman once observed, “Productivity isn't everything but, in the long run, it's almost everything.”

Yet, in every disruption lies opportunity. With traditional trade corridors under strain, ASEAN stands well placed to deepen ties with other growth-oriented regions particularly the GCC whose combined GDP now exceeds $2.5 trillion and whose sovereign wealth funds hold assets worth more than $4 trillion. Both regions share an interest in diversifying economic partnerships and reducing dependence on geopolitically exposed markets.

Much work is already being undertaken. Ably supported by Hong Kong and Singapore as global financial hubs, the rapidly strengthening ASEAN–GCC trade and investment axis will serve as an important counterweight to the emerging global trade fragmentation unlocking fresh flows of capital, technology and strategic collaboration.

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