Trump’s ‘America First’ policy will impact global trade in Asia, say analysts

Donald Trump’s victory in the United States presidential election on Wednesday (Nov 6) is set to have implications far beyond the global superpower’s borders. 
In Asia, countries that have large trade deficits with the US – like Malaysia and Vietnam – can expect to be treated differently this time, compared with Trump’s first term as president between 2017 and 2021, analysts told CNA. 
“What you’re going to see is an ‘America First’ policy that is going to be much more distilled than it was last time, much more powerful,” said Steven Okun, senior advisor at public affairs consultancy APAC Advisors.
“The people who are going to be in his administration this time … are going to be people who believe that the US is stronger when it works alone.”
The “America First” agenda has involved applying punitive tariffs on specific products such as steel and aluminium, and on whole nations – most notably China – at a scale not seen in decades. 
While on the campaign trail, Trump vowed to impose blanket tariffs of up to 20 per cent on imports from all countries.
He also proposed tariffs on Chinese imports in excess of 60 per cent and ending China’s most-favoured-nation trading status. 
The world’s largest economies have been locked in a trade war since 2018, during Trump’s first term. 
US allies in the region – notably Japan, South Korea and the Philippines – will be on the lookout for knock-on effects from US tariffs on their neighbour and largest trading partner China, said political scientist Chong Ja Ian from the National University of Singapore.
He added that Trump, who has shown scepticism of international institutions and laws, could also put pressure on trade organisations that will lead to ramifications in Asia.
Alex Holmes, regional director for Asia Pacific at Economist Intelligence, noted that most markets and policymakers are working under the assumption that Trump will not impose the full tariffs he put forth.
However, with Trump’s track record of being unpredictable, he added that Asian countries could look to pre-empt a tariff shock and think of ways to minimise the impact. 
“Obviously, Asia is very dependent on global trade … Apart from China … Singapore (is) really exposed … and Malaysia and Vietnam, among others,” Holmes told CNA’s Asia First.
There are also concerns that Trump’s hawkish stance on China could mean that countries and businesses with large Chinese investments could come under similar treatment and face trade restrictions as well. 
This comes amid worries that Chinese products may be rerouted via other nations in the region to avoid higher US levies.
Vietnam, for example, found itself at the centre of illegal transfers by companies trying to sidestep Trump’s tariffs in 2019 by slapping “Made in Vietnam” labels on Chinese goods. 
Separately, Vietnam was labelled a “currency manipulator” by the Trump administration in 2020. 
This stemmed from the US Trade Representative’s conclusion that Vietnam was undervaluing its currency to achieve an economic advantage, which contributed to a trade imbalance with the US and other nations.
America had a trade deficit of almost US$70 billion with Vietnam by the end of Trump’s first term.
Okun said that compared with the previous US presidents, “countries that have large trade surpluses with the US … they are going to be treated very differently this time by Trump.”
“So ‘America First’ is going to be much different this time around than it was last time around … They are ready and they are going to hit the ground running.”
This process will be much smoother given that the Republicans have taken the Senate and potentially the House of Representatives, said Tina Datta, who chairs the Republicans Overseas Singapore group – the party’s official association for Americans living outside the country.
Control of the House still hung in the balance as of Wednesday as votes in several races continued to be tallied, but the Republicans were leading. 
“At least for the first two years of his presidency, he’s going to be able to put policies and procedures in place that he thinks will benefit the Americans,” she added. 
Aside from trade, Holmes pointed to two main avenues where Trump would affect Asia: Security alliances and how America’s domestic monetary policy will spill over to the rest of the world.
Holmes said that Japan, South Korea and Taiwan are most exposed on the security front.
Assoc Prof Chong noted how late former Japanese prime minister Shinzo Abe reached out to Trump early on during his first term and “established a pretty good personal rapport”.
“That was useful for getting Trump to be engaged in Asia in a way that was perhaps less disruptive than might have otherwise been. So, I guess we’re also looking to see whether there are people who can sort of replicate that role (of) Abe’s in Asia today,” he added.
In terms of monetary policy, Holmes said Trump’s policies will create a strong dollar and may lead the US Federal Reserve to stop cutting rates or at least slow down its easing cycle.
“That’s going to hurt countries where they’re particularly concerned about their currency – Indonesia, for example. (In) Japan, the yen has sold off amongst a strong dollar,” he said.
In South Asia, countries like Bangladesh, Pakistan, Sri Lanka and the Maldives will be affected, but India will likely be spared, he added.
“India seems to be relatively isolated. It doesn’t depend on external trade a lot for its GDP (gross domestic product), and it seems to have relatively good relations with Trump.”
As for US-China relations, Assoc Prof Chong said it depends on what Beijing meant when it called for a “peaceful co-existence” following Trump’s victory.
“Previously, they’ve articulated an idea that the US influence goes up to the middle of the Pacific – Guam and so on – and everything two points west should come under some sort of sphere of influence by Beijing,” he noted.
“So it comes down to a question of whether Trump is willing to accept that, and also the other actors in the region – how they wish to live with, or contend or respond to such a potential situation.”
Assoc Prof Chong also pointed out that the world is a lot more protectionist today than during Trump’s first term, with China more concerned about protecting and boosting its own economy.
He added: “(In) 2016, there was a lot more hope that China – and also Europe – would be more open to trade, to economic liberalisation. That has proven not to be the case (now).
“Asia is (now) perhaps far less comfortable …than it was in 2016.”