Asia Braces for Strenuous Trade Relations After Donald Trump’s Victory

TEMPO.CO, Jakarta – Asia is bracing for uncertainties during Donald Trump’s reign in the United States. Trump’s reelection will cast doubt on longstanding alliances and threaten to disrupt trillions of dollars worth of trade.

During his first four-year term from 2016 to 2020, Trump broke many longstanding U.S. foreign policy rules. He launched a trade war with China in 2018 and engaged with two of the most diplomatically isolated Asian leaders, Kim Jong Un of North Korea and the then-President of Taiwan, Tsai Ing-wen.

In his second term, Trump has vowed to implement an even more aggressive version of his ‘America First’ vision, including a protectionist economic agenda that will raise tariffs to levels not seen since the Great Depression of 1929-1939.

“A second Trump term would move beyond the targeted tariffs of his first to a much broader target base, both within China and globally,” said Steve Okun, founder and CEO of Singapore-based APAC Advisors, to Al Jazeera. 

Indian Prime Minister Narendra Modi was one of the first leaders in the region to congratulate Donald Trump on his victory on Wednesday. Modi hopes to renew collaboration with the U.S.

Meanwhile, China’s Foreign Minister previously expressed hope for peaceful coexistence with the U.S. “We will continue to approach and handle China-US relations based on principles of mutual respect, peaceful coexistence, and win-win cooperation,” said Foreign Ministry spokesperson Mao Ning.

The US-China relations are expected to deteriote further if Trump follows through on his plans to impose at least 60 percent tariffs on Chinese imports. “Turbulence between the US and China is going to be one of the stories to watch, and of course, this could have ripple effects for the wider region and wider regional China-linked supply chains,” said Nick Marro, principal economist for Asia at the Economist Intelligence Unit.

Behind the scenes, leaders across Asia are likely concerned about Trump’s economic agenda. Apart from China, Asia is home to many countries with the world’s most trade-dependent economies.

Southeast Asia, for example, has an average trade-to-GDP ratio of 90 percent, twice the global average, according to the Hinrich Foundation, a Singapore-based trade-focused philanthropic organization. In addition to tariffs on China, Trump has also proposed comprehensive tariffs of 10-20 percent on all foreign goods.

These measures will affect export-driven economies across the region, including friendly and allied countries such as South Korea, Japan, Taiwan, and Vietnam.

Oxford Economics, a consultancy firm, has projected that countries in Asia other than China will experience an 8 percent drop in exports and a 3 percent drop in imports, based on the most conservative version of Trump’s plans.

Indonesia Struggles to Enter U.S. Market

Researcher at the Centre for Strategic and International Studies (CSIS), Muhammad Waffa Kharisma, also acknowledged that Asia’s economy will face harder challenges under Trump’s U.S. leadership. Trump is likely to engage in a protectionist economy, and Waffa recalled some drastic erosion in open economies, globalization, and multilateralism during Trump’s first term.

“For countries like Indonesia, the fate of our agreements with America will be a major question, for example, Indonesia’s product facilities agreement in the U.S. in the form of tariff preferences,” he said.

Waffa also believes that Indonesia won’t immediately catch the U.S.’ attention and that larger trade agreements are unlikely. America views Indonesia skeptically as the country gets closer to China and the industries yet to pass U.S.’ green and labor standards.

Waffa also noted that the U.S. Congress pays little attention to Indonesia, but improvement is possible if Prabowo is successful in forging good relations with Trump’s America. 

“So, it’s difficult to expect significant differences, unless Prabowo can build a personal relationship with Trump. But this is hard to predict,” he said.

AL JAZEERA

Savero Aristia Wienanto contributed to the writing of this article.

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