PHILIPPINES: The International Monetary Fund (IMF) issued a stark warning on Tuesday, cautioning that escalating “tit-for-tat” tariffs could jeopardize Asia’s economic prospects, disrupt global supply chains, and increase costs for consumers and businesses alike. The IMF highlighted these risks even as the region is expected to remain a key driver of global economic growth in the coming years.

Krishna Srinivasan, the IMF’s Asia-Pacific Director, made the remarks at a forum in Cebu focused on systemic risk. He stated that retaliatory tariffs imposed by major economies could cause significant disruptions to the region’s growth trajectory, leading to less efficient and more costly supply chains. “The tit-for-tat retaliatory tariffs threaten to disrupt growth prospects across the region, leading to longer and less efficient supply chains,” Srinivasan warned. Srinivasan’s comments come amid heightened global trade tensions, particularly concerning the policies of the United States under President-elect Donald Trump, who had previously proposed a 60% tariff on Chinese imports and a 10% levy on all other foreign goods.

These tariff policies are expected to impede global trade, slow down the growth of countries reliant on exports, and potentially spur inflation in the United States, which could prompt the U.S. Federal Reserve to tighten monetary policy despite a weak global growth outlook.