By Jihoon Lee
SEOGWIPO, South Korea (Reuters) -The Asia-Pacific Economic Cooperation (APEC) grouping warned on Thursday that exports from a region that accounts for around half of world trade will slow sharply this year, and barely grow at all, in the wake of U.S. tariff announcements.
The 21-member bloc convened an annual session of trade representatives ahead of a leaders’ summit this year, with top U.S. and Chinese trade envoys meeting on the sidelines following high-stakes talks earlier this month in Geneva that sought to de-escalate a bitter trade war.
APEC projected exports in the region would rise by only 0.4% this year, compared with 5.7% growth last year, in an analysis report released at its 2025 meeting of ministers responsible for trade in South Korea’s resort island of Jeju.
The bloc also cut its regional economic growth forecast for this year to 2.6% from 3.3% 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,” APEC said 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% by 2021, from 17% in 1989, when the non-binding economic forum was established. This period saw merchandise trade increase more than nine-fold.
Still, in a sign of potential further progress to address trade friction between the world’s biggest economies, U.S. Trade Representative Jamieson Greer met Chinese trade envoy Li Chenggang on the sidelines of the gathering, South Korea’s Industry and Trade Ministry said, without elaborating.
The ministry confirmed the meeting after clarifying an earlier comment by Minister for Trade Cheong In-kyo, who said the talks had taken place several hours earlier
The talks come after Greer and Li agreed to slash steep tariffs at their first face-to-face talks in Geneva on May 10-11.
Over two days, trade representatives of the member economies were scheduled to discuss multilateral trade and other cooperation agendas, including reform of the World Trade Organization 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 U.S. funding to the institution.
RIPPLE EFFECTS OF TARIFFS
Opening the annual conference as host, South Korea Trade Minister 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 U.S. tariffs and warned the reach of their ripple effects is still greater.
“We notice U.S. 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,” Kuriyama told reporters.
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, D.C. He will also have his first face-to-face meeting with New Zealand and meet with representatives from other Asian countries.
“We’re moving as quickly as we possibly can with folks who want to be ambitious,” Greer told CNBC television before he departed for Jeju on Tuesday.
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 U.S.-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.
Cheong said he held a meeting with China’s 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 this year in Gyeongju, South Korea.
APEC accounts for about half of global trade and 60% of global GDP.
(Reporting by Jihoon Lee and Cynthia Kim; Additional Reporting by David Lawder in Washington, Kevin Yao in Beijing and Lucy Craymer in Wellington; Editing by Ed Davies, Jacqueline Wong and Tom Hogue)
