Can Trump Tariffs Deliver a Significant ‘Moment' for Asia?

While there isn’t much else that anyone anywhere in the world is talking about currently other than Donald Trump’s ‘reciprocal’ tariffs, something else significant transpired in Asia this week in the days before the US president waved about his board of levies on the White House lawn.

Four countries, with decades of bitter histories amongst them, appeared to make overtures for peace and bonhomie.

On Tuesday, as India and China marked the 75th anniversary of the start of their diplomatic ties, Chinese president Xi Jinping called on his neighbour to engage in a "Dragon-Elephant tango" and be “partners of mutual achievement.”

Xi’s message was an extraordinary one, considering the two countries have at least six decades of tense border disputes behind them. Their most recent tensions, sparked off in 2020 and hashed out only late last year, saw India clamp down on everything from Chinese investments to flights between the two countries and even phone apps such as TikTok and Alibaba.

But in the looming shadow of an unprecedented American tariff war, that past was perhaps the least of Xi’s problems.

And India was not the only neighbour China extended a hand of friendship to this week. On Sunday, it announced it was eager for greater trade with South Korea and Japan — two of America’s closest Asian allies. The three countries met in Seoul for their first ever economic talks in five years and on the agenda was an issue crucial to each of their economies: regional trade.

The significance of a meeting between these three countries cannot be understated. China has had past territorial disputes with both Japan and South Korea, and its relations with the two countries have also been marred by its past support for North Korea, plus an aggressive opposition to the release of wastewater from Japan’s doomed Fukushima nuclear power plant.

Meanwhile, South Korea and Japan have their own bitter baggage, dating all the way back to the Second World War. People in the two countries are still so divided on nationalistic lines that something even as seemingly trivial as Kimchi — a fermented dish — has triggered diplomatic disputes between the two.

It’s no surprise then, that a coming together of these three economies has, in an Asian context, turned Trump’s past promise of being “a peacemaker and unifier” into a prophetic joke.

Beyond the histories and laughs, however, lie fundamental facts that these four biggest economies of Asia will have to reckon with. One – unless they hold exceedingly successful negotiations with Trump their GDP growth will be the first victim of these new tariffs. Two – Trump has not even completed three months in power.. And three – together these four countries account for more than 70% of Asia’s total GDP.

That economic might could be just enough for these four countries to re-think their export and trade strategies and focus more on Asia, a region home to more than half of the world’s population — which effectively also means, more than half of the world’s consumers. And while the purchasing power of Asia may leave a lot to be desired when compared to the US, it still could help shave off some of the damage that the current – and upcoming – unpredictability will bring.

A slice of Asia 🍉 

It’s not just these four Asian economic giants that are re-thinking their trade ties. Asia is a bright prospect for America’s Western allies such as Canada and the European Union too.

For instance, Trump’s tariffs have prompted the European Union, and separately, Germany to push for finalising a free trade agreement with India. Canada, which has over the past two years seen much diplomatic upheaval in ties with India, is also looking to reset ties with New Delhi under Mark Carney.

The global focus on India makes sense, considering the world’s most populous country is currently also the world’s fastest growing major economy. A recent Internet boom has bolstered consumption in its previously untapped rural markets, and despite persistent inequality, the country has seen strong growth in its purchasing power.

Then there are economies like Vietnam, which has seen a recent boom in foreign investment, thanks to a global push to diversify supply chains out of China. While Trump’s tariffs will hamper that strategy, experts say foreign investment into the country will remain unaffected. It’s no surprise then, that Hanoi is set to host Xi Jinping and leaders from the EU in the next few weeks.

And it’s also important to remember that Asia is home to some of the world’s biggest tech innovators. China is already giving the America’s tech bros a run for their money in artificial intelligence, and Japan and South Korea are also investing billions to rev up their AI capabilities.

All-together, one could be forgiven to dream that Trump’s tariffs will be all the impetus that Asia needs to rise up as a fierce competitor to the US.

• Chinese tech giants Alibaba, ByteDance and Tencent have ordered at least $16 billion worth of Nvidia’s H20 chips in the first quarter of the year.

• Concern is growing in a US university about the firing of a top Chinese-born scientist following raids on his two homes last week.

• Thai officials are investigating a Chinese company linked to the collapse of a 30-storey tower in Bangkok during last week’s massive earthquake.
  

• And Trump fan Marc Andreessen has joined the race to get a slice of TikTok, after an ‘invite’ from the White House.