Apec warns of stalling trade due to tariffs as China, US officials meet

SEOGWIPO, South Korea - The Asia-Pacific Economic Cooperation (Apec) grouping warned on May 15 that exports from a region that accounts for around half of world trade will slow sharply in 2025, and barely grow at all, in the wake of US tariff announcements.

The 21-member bloc convened an annual session of trade representatives ahead of a leaders’ summit in 2025, with top US and Chinese trade envoys meeting on the sidelines following high-stakes talks earlier in May in Geneva that sought to de-escalate a bitter trade war.

Apec projected that exports in the region would rise by only 0.4 per cent in 2025, compared with 5.7 per cent growth in 2024, in an analysis report released at its 2025 meeting of ministers responsible for trade on South Korea’s resort island of Jeju.

The bloc also cut its regional economic growth forecast for 2025 to 2.6 per cent from 3.3 per cent previously.

“Trade growth is set to decline sharply across Apec due to lower external demand, particularly in manufacturing and consumer goods, while rising uncertainty over goods-related measures weighs on services trade,” said Apec in a statement.

The Trump administration’s sweeping tariffs have targeted more than half of the Apec grouping, where regional average tariff rates fell to 5.3 per cent by 2021, from 17 per cent in 1989, when the non-binding economic forum was established.

This period saw merchandise trade increase more than ninefold.

Still, in a sign of potential further progress to address trade friction between the world’s biggest economies, US Trade Representative Jamieson Greer met Chinese trade envoy Li Chenggang on the sidelines of the gathering, said South Korea’s Industry and Trade Ministry, without elaborating.

The ministry confirmed the meeting after clarifying an earlier comment by Trade Minister Cheong In-kyo, who said the talks had taken place several hours earlier

The talks come after Mr Greer and Mr Li agreed to slash steep tariffs at their first face-to-face talks in Geneva from May 10 to May 11.

Over two days, trade representatives of the member economies will discuss multilateral trade and other cooperation agendas, including reform of the World Trade Organisation (WTO) amid current challenges.

The Trump administration views the WTO as a body that has enabled China to gain an unfair export advantage and has recently moved to pause US funding to the institution.

Ripple effects of the tariffs

Opening the annual conference as host, Mr Cheong highlighted how the global economy and trade face added strain from uncertainties and urged the bloc to foster dialogue to tackle political and economic challenges.

Ahead of the main sessions, Apec policy director Carlos Kuriyama attributed the downgrading of the regional export outlook to the impact of US tariffs and warned that the reach of their ripple effects is still greater.

“We notice US tariffs are affecting not just goods trade, it’s also affecting services trade and financial markets. That’s why governments are having trade talks, but they are still not back to before early April,” Mr Kuriyama told reporters.

Mr Greer is also scheduled to hold a bilateral meeting with his South Korean counterpart, three weeks after their opening round of trade talks in Washington.

He will also have his first face-to-face meeting with New Zealand and meet representatives from other Asian countries.

“We’re moving as quickly as we possibly can with folks who want to be ambitious,” Mr Greer told CNBC television before he departed for Jeju on May 13.

Mr Greer was also expected to meet the heads of South Korean shipbuilders HD Hyundai Heavy Industries and Hanwha Ocean as part of ongoing talks on potential US-South Korea cooperation in the sector, Yonhap news agency reported.

The Apec gathering is being attended by trade ministers and envoys from member countries including Japan, Canada, Mexico and Russia.

Mr Cheong said he held a meeting with China’s Mr Li, who explained Beijing’s commitment to supporting the multilateral trade regime and global supply chain.

The trade ministers’ meeting is being held as part of a second round of senior officials’ meetings ahead of an Apec leaders’ summit later in 2025 in Gyeongju, South Korea.

Apec accounts for about half of global trade and 60 per cent of global gross domestic product. REUTERS