Asia on Edge as Trump’s Tariff Threats Loomin
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trump’s potential return to power casts a shadow of uncertainty over the Asian economies

Taipei, Taiwan – Asia is bracing for significant economic disruption should Donald Trump win the 2024 US presidential election. Trump’s campaign promises of sweeping tariffs on Chinese and foreign imports threaten to damage the region’s export-driven growth engine.

Trump’s Tariff Plans: A Warning for Asia

Trump, who polls indicate is in a tight race against Vice President Kamala Harris, has pledged to impose tariffs of 60 percent or more on goods from China and 10 to 20 percent on products from all other countries. Adding insult to injury, these tariffs would build upon the $380 billion worth of Chinese goods currently subject to duties imposed by Trump during his first term and maintained by President Joe Biden.

The economic consequences of Trump’s proposed tariffs are expected to be particularly severe for Asia, a region home to several of the world’s most trade-dependent economies. Southeast Asian nations, for instance, have an average trade-to-GDP ratio of 90 percent, double the global average, according to the Hinrich Foundation, a Singapore-based trade-focused philanthropic organization. This dependence could turn into vulnerability if Trump’s tariffs become a reality.

Beyond the First Trade War: A More Widespread Impact

While some Asian businesses benefited from the initial US-China trade war as companies shifted production away from China, Trump’s new, broader-based tariffs would inflict economic damage across the region, economists warn. Oxford Economics predicts that “non-China Asia” would be a net loser, with the region’s exports and imports expected to fall by 8 percent and 3 percent, respectively.

This has alarmed some Asian countries. Last week, Rohit Sipahimalani, chief executive of Singapore’s sovereign wealth fund, issued a rare warning that Trump’s tariffs could “create uncertainty” and “impact global growth.” As Sipahimalani noted, Asian economies are highly vulnerable to shifts in global trade patterns which are precisely what Trump’s tariffs threaten to do.

Trump’s Unpredictability and Asian Strategies

Steve Okun, founder and CEO of Singapore-based APAC Advisors, noted that Trump’s actions are likely to be swift, “This is not going to be like the first term, where it’s going to be a year or two before he does anything.”

Trump may also pressure Asian countries to limit trade with China in response to his company’s threatening protectionist measures. Adamant about blocking China’s technological and economic advancements, Trump could target exports from countries like Vietnam, Malaysia, and Thailand that act as manufacturing hubs for Chinese goods. This could lead to a regional trade war with retaliatory tariffs as Asian countries seek to protect their own businesses from being caught in the middle.

Facing Uncertainty: Trump vs. Harris

Despite the potential turmoil a second Trump presidency might unleash, analysts suggest that Kamala Harris might not offer much relief. While seen as less volatile than Trump, Harris, should she become president, is expected to continue Biden’s protectionist policies which include tariffs on Chinese goods and initiatives like the CHIPS Act aimed at boosting US semiconductor manufacturing. Many believe Harris would pursue deeper cooperation with Asian allies on issues like cybersecurity and artificial intelligence (AI) – efforts potentially aimed at countering China’s growing influence in these sectors.

A Difference of Intensity, Not Direction

Experts argue that while Harris may adopt a less confrontational approach than Trump, the overall direction of US trade policy is likely to remain protectionist under her leadership. Malaysia’s Deputy Minister of Investment, Trade and Industry, Liew Chin Tong, stated that the difference between a Trump and Harris presidency would be one of “intensity”, not “direction”.

Even without taking aggressive action, Harris’s focus on domestic issues could slow down the implementation of any new trade policies. Her administration may prioritize grappling with domestic challenges, delaying any major trade initiatives. This period of ambiguity could leave Asia in a state of flux, unsure of what to expect as the new US administration settles in.

What Does This Mean for Asia’s Future?

The potential for either a Trump or Harris presidency presents a significant challenge for Asian economies. Should Trump win, the region should prepare for immediate and potentially chaotic disruption. If Harris wins, a slower, more methodical, but still protectionist approach could still have long-term implications. The pressing question for Asian businesses and policymakers is how to navigate this uncertain trade landscape and protect their interests in the face of mounting protectionist pressures emanating from the United States.