US tariffs on Asian economies are entering a new phase following the expiration of the 10% global surcharge under Section 122. This is being replaced with country-specific Section 301 duties, but broadly at similar rates. Tariffs could rise later in the year once investigations into excess manufacturing capacity are completed, potentially hitting Asia harder than other regions. That said, tariffs are unlikely to be the main determinant of Asia’s export performance over the coming year, with the AI investment boom likely to offset any drag.
In Sri Lanka, the central bank left its policy rate unchanged at 8.75% at its meeting this week. However, with inflation well above target and the worsening Iran conflict adding to the upside risks, we expect the CBSL to resume its tightening cycle soon.
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