Economic security

US border tax threatens Asian growth

A border tax in the US could upend the export-based economic model that has brought prosperity to millions of people in Asia, say analysts, as the region wakes up to reforms proposed by Republicans in Congress.

Although most attention is still focused on whether president-elect Donald Trump will slap tariffs on China or target companies that move production offshore, proposals for a US tax regime that penalises imports could have a more permanent and far-reaching effect. “I think it would be a huge issue for Asia,” said Frederic Neumann, co-head of economic research at HSBC in Hong Kong. “It would also raise the spectre of retaliatory measures by other countries.” Depending on how far a stronger dollar offset the change, a border tax could pull up the ladder climbed by developing countries from Japan to China and now Vietnam as they built industries based on exports to the US, forcing the region to seek a new economic model.