Tariffs and Turmoil: Negotiating the New World Order

Why It Matters

Understanding the interplay of uniform tariffs, geopolitical volatility, and AI competition helps Asian firms and governments prioritize technology investment and supply‑chain resilience, directly influencing future growth and competitive positioning.

Key Takeaways

• Uniform 15% tariffs reduce supply‑chain relocation incentives for companies
• AI investment race could create lasting technological gaps in Asia
• Tariff uncertainty remains high; policy shifts may be reversible
• India must accelerate AI integration and regulatory reforms quickly
• Indonesia should move up nickel value chain to avoid resource curse

Summary

The INSEAD Perspectives podcast episode "Tariffs and Turmoil: Negotiating the New World Order" examines how shifting trade policies, geopolitical tensions, and the rapid rise of artificial intelligence are reshaping business strategy across Asia. Host Samir Hassa and Professor Pushandat identify three core challenges—tariffs, investment flows, and geopolitics—while emphasizing that AI represents a potentially permanent technological divide.

Pushandat explains that the United States has moved from discriminatory, country‑specific tariffs to a uniform 15% levy applied across the region, limiting firms’ ability to relocate production for short‑term cost savings. He also outlines the various tariff mechanisms—Section 301, Section 232, and the yet‑unseen Section 338—highlighting the lingering uncertainty and the paradox of “self‑hurting” tariffs that advantage foreign competitors. Simultaneously, the AI arms race between the U.S. and China is described as an exponential force that could outpace policy adjustments.

The conversation references Dan Wang’s forthcoming book *Breakneck*, which contrasts the U.S.’s litigious legal culture with China’s engineering‑driven approach, illustrating how legal frameworks shape tariff volatility. Concrete country examples follow: India’s missed “China‑plus‑one” gains, its need to fast‑track AI adoption and regulatory reforms, and Indonesia’s ambition to climb the nickel value chain to avoid a resource‑curse scenario.

For executives, the takeaway is clear: adopt a cautious “wait‑and‑see” stance on tariff shocks while aggressively investing in AI capabilities and supply‑chain upgrades. Policymakers in India and Indonesia must streamline bureaucracy to accelerate technology integration and move beyond raw‑material exports, ensuring resilience in a world where trade rules may shift but technological advantage is likely permanent.

Original Description

As traditional business strategies are being upended by unpredictable political and technological shocks, building slack and adopting a just-in-case approach can help Asian firms address economic uncertainty, says Pushan Dutt, Professor of Economics and Political Science.

In the latest episode of “The INSEAD Perspective: Spotlight on Asia” podcast series, Sameer Hasija, Dean of Asia at INSEAD, sat down with Pushan Dutt to discuss how the new world order is creating a complex economic environment. The veteran in international trade offers his insights on the impact of the fast-changing United States tariff policies and warns that rash operational moves to counter temporary political swings could end up being a costly, and ultimately unnecessary, mistake.

Organisations are historically slow to adapt, but firms in Asia need to fully understand the speed of exponential technological growth and the urgency of being prepared for the "gale of creative destruction" AI will bring. In the same vein, countries like India and Indonesia need to overcome the slow pace of their bureaucratic democracies to become more agile and responsive.

Featuring:

Sameer Hasija — Dean of Asia, INSEAD

Pushan Dutt — Professor of Economics and Political Science, INSEAD

More on INSEAD Knowledge: https://knowledge.insead.edu/economics-finance/tariffs-and-turmoil-negotiating-new-world-order