Asia braces for Trump comeback and major U.S. policy reversal

TOKYO — Many Asian leaders must be watching the race for the U.S. Republican presidential nomination with trepidation, trying to figure out what impact Donald Trump’s possible return to power will have on their countries.

If the former U.S. president secures a big win on Super Tuesday in early March, he could lock up the nomination, paving the way for a rematch against Democratic President Joe Biden in November.

A majority of the world’s leading think tanks cited political turmoil in the U.S. as this year’s biggest source of uncertainty in New Year’s lists of top 10 risks.

Only Grover Cleveland, a Democrat at the end of the 19th century, made a comeback after a four-year hiatus. If Trump returns to the White House, what kind of effect will it have on Asia?

One country likely to be affected by his return will be India. Indian Prime Minister Narendra Modi visited the U.S. last year as a state guest, agreeing with Biden to deepen ties on a wide range of issues, including military, but he will have to build relations from scratch should Trump be elected president.

“India’s policies broadly converge with a Trump administration’s likely priorities in the Indo-Pacific and the Middle East, and I would expect considerable continuity under the Quad and I2U2,” said Dhruva Jaishankar, executive director of India’s Observer Research Foundation. The I2U2 refers to India, Israel, the United Arab Emirates and the U.S.

“Trump will place less emphasis on some of the social issues that have occasionally complicated U.S.-India relations and might ease the severity of tensions between the West and Russia,” Dhruva said, implying that the election of Trump, who has shown little interest in human rights issues, will not necessarily work against the Modi government, which is often criticized for its strong-arm tactics to muzzle dissent.

India, which has positioned itself as the leader of the Global South, will hold a general election by May, and Modi is widely expected to win a third term.

Former U.S. President Donald Trump, second from left, attends an ASEAN summit dinner in Manila in November 2017.  

“If Trump returns to the White House, Southeast Asian countries may face an increase in pressure to take sides in geopolitical contestations,” said Abdul Razak, founding director of Bait Al Amanah, a Malaysian think tank. “There is no middle path for ASEAN and its member states.”

“The real challenge is to see an authoritarian U.S. president governing the most influential democracy that has gradually seen its decline. Worryingly, this phenomenon may give ammunition to authoritarian regimes in Asia, further complicating ASEAN’s internal dynamics and external relationships,” Razak said.

“While Biden has attempted to reinvigorate U.S. influence in this region, albeit inconsistently, a second Trump administration will only exacerbate the relationship.”

For ASEAN, Trump’s four-year presidency must have been a nightmare. The former president paid little attention to the region, attending regular U.S.-ASEAN summits only once in 2017, the year he took office.

Biden quickly reversed the policy, calling ASEAN “central to the regional architecture” in his Indo-Pacific strategy released in February 2022. In May the same year, Biden invited ASEAN leaders to Washington for a special summit.

Soon after the summit, Biden visited Japan, where he announced the creation of the Indo-Pacific Economic Framework for Prosperity (IPEF), a new economic initiative. He invited seven ASEAN members to join the deal, excluding Myanmar, which had been under military control since a 2021 coup, and Cambodia and Laos, both seen as too close to China.

Under the administration of former U.S. President Barack Obama, the U.S. pushed the Trance-Pacific Partnership (TPP), but Trump pulled the country out of the trade pact as soon as he took office, saying it would pose a threat to U.S. industry and employment.

Meanwhile, China — which competes with the U.S. for supremacy in the region — took the lead in the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement it signed with 10 ASEAN countries, Japan, South Korea, Australia and New Zealand in November 2020. In September 2021, Beijing applied for membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the successor to the TPP. Separately, it has also been pushing its Belt and Road Initiative in Asia.

U.S. President Joe Biden, left, walks with ASEAN leaders before taking a group photo at the White House in Washington in May 2022.   

Feeling a sense of crisis about the lack of U.S. presence in regional trade frameworks, the Biden administration launched the IPEF to regain influence, calling for the creation of common rules for goods and services transactions in four fields — trade, supply chains, clean economy and fair economy.

Japan urged the U.S. to return to the trade pact, but Biden refused. He sees free trade the same way as Trump, saying it will only benefit China at the cost of the U.S. Still, Yusaku Tanaka, lead expert in trade affairs at Japanese chemical company Asahi Kasei, said, “Unlike Trump, who simply denied free trade, Biden has been trying to change its basic concept by introducing such factors as national security and environmental and human rights sustainability.”

Still, many experts are skeptical about the IPEF’s benefits to its participants. Unlike the TPP, RCEP and other free trade pacts, the framework does not require the U.S. to open its markets through tariff cuts. Some pundits said ASEAN countries had opted to join the initiative because they would not be pressured to liberalize market access, but there seems to be another reason.

“The IPEF agreements do have their merits,” said a senior Thai official. “Although it is true that the IPEF agreements do not contain market access, they contain provisions on contemporary trade-related issues, such as supply chains and climate change, that typical FTAs currently do not deal with.”

Negotiations on the IPEF have moved rapidly, as they do not involve talks on tariffs, an area where national interests often collide. One year and four months after the negotiations began, agreements have been reached in three of the four pillars, with trade still under negotiation.

Trade ministers of 14 countries in the IPEF talks agreed to make supply chains more resilient in May 2023 and signed the agreement in November, marking the first tangible results of the negotiations. Eager to reduce its dependence on Chinese semiconductors and mineral resources, the U.S. had hastened the discussions.

“The U.S. wanted to produce notable results in a new field first,” said a Japanese official involved in the negotiation. “The nation’s Inflation Reduction Act, enacted in August 2022, just before the start of the IPEF negotiations, also spurred the talks. For electric vehicles to become eligible for tax cuts, the act requires certain percentages of battery minerals processing to be done in the U.S. or its FTA partners.”

“IPEF is not an FTA, but its participants had been made aware of the urgency the U.S. attaches to the issue,” the official said.

The U.S. showed its might and “resourcefulness” as a superpower at a summit with Indonesia last November. At a meeting with Indonesian President Joko “Jokowi” Widodo, who was in the U.S. to attend an Asia-Pacific Economic Cooperation summit and an IPEF forum, Biden agreed to cooperate in developing minerals supply chains. As if on cue, U.S. oil major ExxonMobil on the same day announced a plan to mine lithium, a material Indonesia does not produce, in Arkansas.

Australia, Chile and China together account for 90% of global output of lithium, a mineral essential for EV batteries. Indonesia, the world’s top producer of nickel, another key battery material, has tapped Chinese investment to boost the capacity of nickel ore processing while partnering with Australia to procure lithium. The U.S. is now set to insert itself into the picture.

Many pundits assume that the IPEF has been designed to help the U.S. secure a stable supply from resource-rich emerging countries. But the Arkansas project shows that the U.S. can itself become a major resource power capable of providing money, technology and markets. Biden reminded Jokowi the benefit of deepening ties with the U.S. as the Asian country pursues its resource nationalism.

A lithium mine at Silver Peak in the U.S. state of Nevada.   © Reuters

If reelected, Trump might not oppose the IPEF, as it does not involve opening U.S. markets and has an element of dealmaking. Yet, Kent Calder, a professor at Johns Hopkins University, said that if Trump wins, he will likely reject or revise the initiative for the sole reason that it has been Biden’s project.

While the CPTPP has only four ASEAN countries as members, the IPEF has seven. Should the U.S. break from the IPEF, that could hurt its credibility far more than did its departure from the initial TPP.

Yet Biden’s victory might not be all good for ASEAN. A Japanese negotiator involved in the IPEF talks criticized the current U.S. administration’s high-handedness in dealing with other parties in the negotiation. “The U.S. picked participants without the consent of other members and often tried to change the wording of agreements to suit its convenience,” said the official. “I often worried that enraged ASEAN members might just walk away.”

Referring to Trump and Biden, U.S. consultancy Eurasia Group said, “The two major parties’ likely presidential candidates are uniquely unfit for office.” Meanwhile, the Stimson Center, another U.S. think tank, expressed concern that Trump’s reelection would “further destabilize the world system.”

Whichever wins the November election, the superpower that has led the postwar order in Asia will remain a major disruptive factor.

“It is natural for any country to put its interest first, but the U.S. has gone too far,” said Siriporn Wajjwalku, a professor at Thammasat University in Thailand, expressing a view shared by many pundits in the region.

“ASEAN countries will never trust the U.S. anymore.”