Trump 2.0 and the Asean dilemma

US trade policy may compel Asean economies towards deeper ties with China, despite the heightened vulnerabilities

- AMITA BATRA

There has been much speculation about the consequences of Donald Trump's return as President of the US. Among the most talked about issues is the US trade policy and the likely imposition of higher tariffs (potentially up to 60 percent) on China. Bilateralism and the violation of multilateral norms in the conduct of US trade policy with its partners are no longer new. However, a steep and selective increase in protective tariffs and an inherent disdain for institutions under Trump 2.0 is likely to create particularly difficult circumstances for Asean economies.

Containment of China has long been a centerpiece of US foreign policy. However, the economic aspects have been more pronounced in the last two decades relative to the dominance of strategic aspects in the preceding decades. Propelled by the spillover implications of the global financial crisis, global trade imbalances, and a growing realization of the shift in the center of gravity of the world economy to the East, Barack Obama adopted the US "pivot to Asia" strategy in 2011. The Trans-Pacific Partnership (TPP) was its key economic pillar.

The TPP was envisioned as a high-standard, ambitious trade agreement in accordance with the US liberal trade policy at the time. Contributing almost 40 percent of global gross domestic product (GDP) and a third of global trade, the agreement had significant potential benefits of economic integration for the 12 member economies in the wider Asia-Pacific region. Furthermore, the TPP, with its focus on "behind the border" policies, was designed to ensure transparency and protection of intellectual property rights, labor rights, and the environment in trade and investment.