Asia’s export-driven economy faces faltering under Trump | International Trade

Taipei, Taiwan – Asia is facing disruption if US voters return Donald Trump to the White House, with his plans to raise tariffs threatening to dampen the region’s export-led growth.

Trump, who ran with Vice President Kamala Harris in the election before the presidential election on Tuesday in the United States, promised to impose tariffs of 60 percent or more on the sale of Chinese products from 10 to 20 percent of all other foreign goods. .

The trade measures will come on top of tariffs on $380bn worth of Chinese goods that Trump imposed during his first term and current President Joe Biden ended up in office.

Trump’s actions could trigger the worst economic downturn in Asia, home to many of the world’s most trade-dependent economies.

The 10 members of the Association of Southeast Asian Nations have a trade-to-gross domestic product (GDP) ratio of 90 percent, double the global average, according to the Hinrich Foundation, a Singapore-based trade think tank.

Emerging East Asia’s trade-to-GDP ratio is still high, at 105 percent, according to the Brookings Institution, a think tank based in Washington, DC.

“We can expect that there will be some movement to change US policy to be more protectionist, and that is bad for Asia because many of the regional economies, if not all economies, are incredibly dependent on foreign demand – especially demand from the US. ,” Nick Marro, an expert chief Asia economist at the Economist Intelligence Unit, told Al Jazeera.

While parts of Asia are benefiting from the first US-China trade war as companies shift production from China, the tariffs backed by Trump proposed this time will hurt economies across the region, analysts say.

Oxford Economics said “non-China Asia” will be a money loser as exports and imports are forecast to fall by 8 percent and 3 percent, respectively.

Last week, Trump’s plans drew a rare warning from Singapore’s chief economist, Rohit Sipahimalani, who said tariffs could “cause uncertainty” and “impact global growth”.

“He will do what he said he will do. He’s going to charge prices, and he’s going to impose them quickly,” Steve Okun, founder and CEO of Singapore-based APAC Advisors, told Al Jazeera.

“This will not be like the first term, where it will be a year or two before he does anything.”

With Chinese companies likely to divert more production to Southeast Asia to avoid higher tariffs, Trump could also pile on measures targeting exports from countries such as Vietnam, Malaysia and Thailand, Marro said.

“All of this points to a worrying outlook for the wider region,” he said.

Asia may continue to impose tariffs to combat dumping by Chinese companies seeking markets to replace the US.

Such concerns in January prompted Malaysia to impose a 10 percent tariff on certain low-value goods while Indonesia last month banned the cheapest Chinese e-commerce site Temu in a bid to protect local companies.

In many cases, Trump has singled out certain economies for what he says are unfair trade practices. Trump, for example, has repeatedly accused Taiwan of “stealing” the global chip industry from the US.

Like China and Vietnam, Taiwan has a large trade surplus with the US, which is the source of Trump’s irritation, said Deborah Elms, head of trade policy at the Hinrich Foundation.

“It’s not just that Trump is very focused on goods, but the metric he uses to assess whether the United States is winning or losing is the trade deficit in goods,” Elms told Al Jazeera. “If you’re on the wrong side of that metric, … you’re going to be in trouble.”

Despite many of these concerns, Trump may not be worse in the region than Harris if Biden’s defense policies are a guide to how his vice president might govern, said Jayant Menon, senior director at Singapore’s ISEAS-Yusof Ishak Institute.

Although Biden is seen as less unpredictable than Trump, he not only maintained his predecessor’s tariffs on Chinese goods but also imposed new tariffs on imports worth $18bn including steel, semiconductors and electric vehicles.

Biden has also implemented protectionist policies such as the CHIPS Act, which aims to increase semiconductor production in the US and keep advanced chips out of Chinese hands.

Harris is expected to continue or expand Biden’s policies on trade and industry, although he did not go into specifics during the presidential campaign.

“Right now, it looks like instead of being defensive, Harris is going to be more defensive, but there’s none of that uncertainty and anti-globalization that comes with Trump that can get out of hand,” Menon told Al Jazeera.

Julien Chaisse, an international economic law expert at the City University of Hong Kong, said that while Harris may be more of a team player than Trump on economic issues, he is likely to follow many of the same protectionist principles.

“Harris may also pursue deeper cooperation with Asian partners in AI and cybersecurity to protect supply chains and counter China’s influence in technology. While less at odds with Trump, Harris’ policy is likely to continue the scrutiny of Chinese investment in critical infrastructure across Asia, ” Chaisse told Al Jazeera.

Other regional observers, such as Liew Chin Tong, Malaysia’s deputy minister of investment, trade and industry, echoed similar sentiments.

In an interview with The Straits Times this week, Liew said the difference between Trump and Harris was a matter of “firmness” rather than “directedness”.

“Trump will take the path of distancing himself more from America First, but it does not mean that Harris will be able to return the world to 1995 when the WTO. [World Trade Organization] was established,” Liew told the newspaper.

Another difference between Trump and Harris would be the ease of timing.

While Trump may use his executive powers to impose tariffs immediately, Harris may be preoccupied with policy issues at home, Elms said.

“The first challenge is for him to plant himself [trade]. “But the second challenge, which I think we will not mention, is the difficulty that his administration will have for a long time as he enters the position of managing domestic relations,” said Elms.

“I suspect that will take all his time and energy for at least a year. That means trade, which has never been a priority for him, will be on hold as they focus on domestic issues for at least a year.