Welcome, ladies and gentlemen, to the show where we dissect international trade with the finesse of a master surgeon and the charm of a used-car salesman! Grab your popcorn, as Asia is bracing for the return of a familiar face—Donald Trump! That’s right, folks! If the polls are anything to go by, we might just witness the uncanny spectacle of the “America First” approach getting a sequel. Spoiler alert: It’s going to involve tariffs—lots of them!
Now, let’s talk tariffs! Trump has promised to slap a whopping 60% tariffs on Chinese imports and a sneaky 10 to 20% on everything else from abroad. Anyone else feel that collective shiver running down the spines of export-driven economies in Asia? It’s like watching a slow-motion car crash, but instead of cars, it’s economies barreling to an inevitable collision!
According to the sharp minds at the Brookings Institution, East Asia has a trade-to-GDP ratio of 105%. That’s right—it’s like trying to make ends meet while also buying your neighbor’s lawnmower. With these proposed tariffs, Asian economies could suffer dearly—exports are expected to drop by a tidy 8% and imports by 3%. Talk about a fiscal diet!
And let’s not forget our friends over in Southeast Asia, home to the Association of Southeast Asian Nations (ASEAN). With their trade-to-GDP ratio resting comfortably at a staggering 90%, they might feel like they’ve just been told to give up their favorite dessert while on a strict diet. Nick Marro from the Economist Intelligence Unit put it best when he stated that a shift towards protectionism is “bad for Asia.” You can almost hear the collective groan across the continent!
As if that wasn’t enough to keep the trade analysts up at night, there’s a chance that the upcoming tariffs from Trump could result in “non-China Asia” emerging as a net loser in this whole trade kerfuffle. And analysts aren’t just being dramatic here for effect—they’ve crunched the numbers, and they’re predicting a truth even more daunting than the plot twists in a season finale of a reality show.
And just when you thought we might witness some good old-fashioned negotiation, in comes Singapore’s sovereign wealth fund boss Rohit Sipahimalani acting like the sensible adult in the room. He’s already warned that these tariffs could “create uncertainty” faster than you can say “Make America Great Again.” If I were him, I’d be holding a crystal ball, because that sounds like a prophecy worthy of any modern economic seer!
But let’s not put all the blame on Donald! Current President Joe Biden is still playing a part too. His tariffs aren’t exactly innocent either. He kept Trump’s tariffs and added more of his own—because why not? It’s not like anyone asked for a trade war! And Harris? Well, it’s presumed she would continue this lovely game of economic tug-of-war. Sounds like they’re playing Monopoly but collectively just keep going to jail… in this case, they’re all bankrupt!
Now, what does this mean for Taiwan? Oh, hang on to your tea! Trump has accused them of “stealing” the global chip industry, walking down the avenue of trade competition like a kid with a shiny new toy. Deborah Elms from the Hinrich Foundation explains that Trump’s obsession with trade deficits means that, if you’re on the wrong side of his equations, you might as well prepare for some serious economic pushback!
Ah, but let’s not assume that a Harris administration would be smooth sailing! Observers suggest she may continue with a protectionist approach, albeit with less dramatic flair. It’s more like a subdued opera—still emotional, just with fewer high notes! The troubling question remains: how deep will the cooperation with Asian allies sink when it’s all popping and fizzing like a cheap soda? One thing’s for sure—trade relations could look a lot like trying to juggle knives… blindfolded!
And there we have it, dear readers! Buckle your seatbelts as we prepare for what might be an economic rollercoaster of a lifetime! Whether it’s Trump’s tariffs or Harris’ calculated moves, we all know one thing: it’s going to be a wild ride, full of twists, turns, and perhaps a few unexpected drops. Maybe next time we’ll bring some popcorn… oh wait, tariffs!
Taipei, Taiwan – Asia is preparing for potential upheaval should American voters choose to reinstate Donald Trump in the 2024 presidential election. His proposed sweeping tariffs might significantly impair the region’s export-driven economies, which are vital for their growth.
Recent polling indicated that Trump was in a tight race with Vice President Kamala Harris before Tuesday’s election, highlighting the unprecedented stakes attached to this electoral decision. Should he win, Trump has committed to imposing substantial tariffs, predicting rates of 60 percent or more on Chinese products, alongside a targeted 10 to 20 percent duty on nearly all other imported goods.
These new trade measures would exacerbate the existing tariffs on a staggering $380 billion worth of Chinese imports, a legacy of Trump’s first administration which the current President Joe Biden has opted to maintain. Should Trump be elected again, the potential economic repercussions for Asia are alarming, as the region comprises some of the world’s most export-reliant economies.
According to the Hinrich Foundation, which examines trade dynamics in Singapore, the 10 member nations of the Association of Southeast Asian Nations (ASEAN) register an astonishing trade-to-GDP ratio averaging 90 percent—double the global figure. Furthermore, the estimate for emerging East Asia’s trade-to-GDP ratio is even more striking at 105 percent, as highlighted by the Brookings Institution’s research.
Nick Marro, principal economist for Asia at the Economist Intelligence Unit, articulated concerns that a shift toward more protectionist US trade policies could have detrimental effects across the entirety of Asia’s economies, which depend heavily on US consumer demand. “We can expect that there will be some type of move to turn US policy more protectionist, and that’s bad for Asia,” he stated.
Analysts argue that while some regions in Asia initially saw gains during the previous US-China trade war—thanks to businesses relocating supply chains away from China—the comprehensive tariffs mandated by Trump this time would likely inflict severe economic damage throughout the continent. For example, Oxford Economics remarks that “non-China Asia” is expected to face considerable declines in trade, predicting an 8 percent drop in exports and a 3 percent dip in imports.
Last week, concern over Trump’s proposed tariffs sparked an unusual caution from Rohit Sipahimalani, head of Singapore’s sovereign wealth fund, who warned they could “create uncertainty” on an international scale and potentially jeopardize global economic growth.
“He’ll do what he said he’s going to do. He’ll impose tariffs, and he’ll impose them quickly,” Steve Okun, CEO of APAC Advisors based in Singapore, asserted in an interview. “This is not going to be like the first term, where it’s going to be a year or two before he does anything.”
As Chinese companies may seek to sidestep these elevated tariffs by moving production to Southeast Asian countries like Vietnam, Malaysia, and Thailand, there is a strong likelihood that Trump could escalate measures targeting such exports, warned economist Marro.
“These all point to a pretty worrisome outlook when it comes to the wider region,” he noted, emphasizing the interconnected nature of trade dynamics in Asia.
Amid these looming threats, Asian countries could feel compelled to impose their own tariffs in response to Chinese companies flooding their markets to escape US duties. This potential retaliation was evidenced last month when Malaysia enacted a 10 percent tariff on specific low-value goods, while Indonesia restricted access to the ultra-cheap Chinese e-commerce platform Temu to shield local enterprises.
Trump has frequently singled out certain nations over allegations of unfair trade tactics, notably accusing Taiwan of “stealing” the global chip industry from the United States. Given Taiwan’s significant trade surplus with the US—similar to China and Vietnam—it has become an area of frustration for Trump, according to Deborah Elms, head of trade policy at the Hinrich Foundation.
“Not only is Trump obsessed with goods, but the metric that he uses for assessing whether the United States is winning or losing is a trade deficit in goods,” Elms explained. “If you are on the wrong side of that metric, … you’re going to be in trouble.”
Despite the concerns raised by a potential Trump presidency, some analysts suggest that Harris might not significantly differ in her trade approach, especially when drawing parallels with President Biden’s protectionist policies. Biden’s administration not only retained Trump’s tariffs but also implemented additional duties on $18 billion worth of imports, such as steel and semiconductors.
While Biden’s demeanor could appear less capricious than Trump’s, he has nonetheless taken steps to impose protectionist measures through legislation like the CHIPS Act, aimed at bolstering the American semiconductor industry while restraining China’s access to critical technology. Observers anticipate that Harris would likely follow a similar trade trajectory, maintaining continuity in these approaches without elaborating much during her campaign.
“At the moment, it looks like from a purely protectionist stance Harris will be more protectionist, but there’s not that element of uncertainty and anti-globalization that comes with Trump that can get out of control,” Menon remarked.
Julien Chaisse, a specialist in international economic law, pointed out that while Harris may be more inclined to cooperate with allied Asian nations regarding economic issues, she too would likely adhere to many of the same protectionist principles that have characterized recent US trade policies. “Harris may also pursue deeper cooperation with Asian allies on AI and cybersecurity to protect supply chains and counter Chinese influence in tech,” he noted.
Liew Chin Tong, Malaysia’s deputy minister of investment, shared sentiments echoed by others in the region, suggesting the divergences between Trump and Harris might be more a matter of intensity rather than a fundamental shift in direction. “Trump will definitely take a far more isolationist and America First approach, but it doesn’t mean Harris will be able to take the world back to 1995 when the WTO [World Trade Organization] was formed,” he stated.
Another potential distinction between a Trump and Harris administration may be the speed with which trade policies are enacted. Experts suggest that Trump would likely utilize his executive authority swiftly to enact tariffs, whereas Harris might become preoccupied with domestic policy challenges upon taking office.
“The first challenge is that she’s not personally invested in [trade]. And her administration is going to have for a long period of time managing domestic relations,” Elms concluded, highlighting the complex dynamics Harris may face. “I suspect that will take all her time and energy for at least a year. That means on trade, which was never a priority for her, they’re going to be in a bit of a holding pattern as they focus on domestic issues for at least a year.”
Protectionism is failing to achieve its goals and threatens the future of critical industries
Ol,” said a trade analyst who wished to remain anonymous. The trade landscape under a potential Harris administration could, therefore, be more stable, yet still characterized by a focus on protectionism that continues to challenge Asian economies.
The stakes are exceedingly high for Asia, as the economic relationships forged over decades may hang in the balance with the outcomes of the upcoming election. Economies heavily reliant on exports to the US, such as those in Southeast Asia, could find themselves navigating treacherous waters if tariffs escalate further.
whether it’s the incendiary proposals from Trump or the anticipated continuity of the Biden administration’s protectionism under Harris, the impending economic climate could shape the future of trade in Asia for years to come. With trade dynamics shifting like sand, Asian leaders might need to adopt agile strategies to mitigate potential fallout while navigating this uncertain future. Buckle up indeed; it’s going to be an eventful ride ahead in the world of global trade!
