Is S-E Asia ready for Trump 2.0? Brace for much bigger economic impact

No matter who wins the US election, the policy shifts could rewrite the rules for ASEAN. But the potential return of Donald Trump could compound this disruption.

- Deborah Kay Elms

In the past, the contest to determine who sits in the White House was less relevant to policymakers or companies in ASEAN. Although the two American political parties – the Democrats and the Republicans – had policy differences, the overall approach to foreign and economic policymaking had been broadly consistent for decades.

In general, both sides looked to free markets and open trade. Both encouraged the spread of US business interests around the globe as another mechanism for supporting US policy objectives.

However, the upcoming US presidential election on Nov 5 is set to usher in a markedly different landscape, one that will impact economic and fiscal policy across South-east Asia. Regardless of who wins, the consequences will leave a lasting mark on this region, although the impact will be stronger and sharper under a potential return of Donald Trump to the White House than under a President Kamala Harris.

One has to go back to the 2016 election of Trump which changed the position of the US in important ways. The US became much more concerned about its own status than about ensuring that the economic and financial systems worked well for everyone. The Americans allowed a key part of the global trade regime at the World Trade Organisation, the system for handling disputes over trade rules, to wither away. Once the system for maintaining global trade rules was damaged, it became much easier to implement protectionist policies.

Trump then used a variety of domestic trade laws for managing national security and unfair trade practices against a wide array of countries, including against friends and allies. Many of these rules, drafted to manage trade during the Cold War, lay dormant for decades. Trump famously hiked US tariff rates, particularly against imports from China, by up to 25 per cent. The net result was a radically altered trade landscape by the time he left office.