As countries around the world confront the economic fallout from the Iran conflict, Asian economies have been particularly hard hit. Energy prices have skyrocketed, economic growth forecasts have been slashed, food insecurity is back in the spotlight, and access to critical chemicals, aluminum and other products has been curtailed.
Despite this, Washington’s trade requests appear unwavering. With Indian officials continuing to negotiate elements of a bilateral trade deal, New Delhi’s ability to show flexibility on key U.S. asks — such as increased agricultural market access — will likely narrow as its population faces rising food costs and input-price pressures mount for farmers and manufacturers. Malaysia and Indonesia may be finding it increasingly difficult to move forward the implementation of their bilateral trade deals given the necessary focus on addressing the immediate economic impacts from the conflict.
In addition, as businesses prioritize securing energy and other critical inputs, identifying prospective investments in the U.S., required as part of certain recent trade deals, is likely being pushed off to a future date.
U.S. policymakers would be well served to acknowledge the limited bandwidth Asian partners have for Washington’s trade priorities right now — and to adjust accordingly. Moreover, Washington could take a page from Japan’s playbook and provide support to those economies particularly hard hit by the conflict. By doing so, the U.S. could build valuable trust and confidence at a time when relationships between our partners and the U.S. need a boost.
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