US President Donald Trump’s bid to rekindle the kind of economic supremacy that saw the 1900s dubbed “America’s Century” risks isolating it from the region that is laying claim to the 2000s — Asia.
Trade ties forged over decades are running up against the steepest US tariff wall since the 1940s. People-to-people interactions are fraying as Chinese students are turned off by visa roadblocks and Singaporean tourists prefer Asian getaways.
Where Trump has notched wins — including US$900 billion in investment pledges from Tokyo and Seoul — incidents such as a shock immigration raid that led to the detention of more than 300 South Korean workers in September have shaken trust.
Illustration: Louise Ting
From the corridors of the sandstone Secretariat Building in New Delhi to the halls of Beijing’s Zhongnanhai (中南海) compound, leaders across a region that remains the world’s main growth engine are rewiring their economies to work around Trump’s “America First” policies.
India and China are seeking to put aside a decades-long border dispute to deepen cooperation. North Asia’s biggest economies are pledging to boost trade ties, although rivalries such as the latest China-Japan spat make it a bumpy process. Southeast Asian countries are trying to chart a neutral course, even as they are increasingly entwined economically with China.
Ten months into his second term, it is too early to make a definitive judgment on Trump’s efforts to realign the global economy in the US’ favor, bringing shuttered factories — and the jobs they create — humming back to life.
Investment pledges from the likes of Taiwan Semiconductor Manufacturing Co into new chip fabrication plants and HD Hyundai Heavy Industries Co into long-neglected ship yards may yet revitalize strategic industries on US shores. The tariff shock to US inflation, growth and markets that economists warned of has yet to materialize.
The risk is clear: The US is cutting itself off from a region set to comprise about 60 percent of the global economy by 2050 versus just 11 percent for the US, Bloomberg Economics said.
For China, Trump’s tariffs and retaliation from Beijing threaten to slash trade by half, even after the two sides hit pause on some export restrictions late last month.
China remains the world’s manufacturing powerhouse, even if a property slump means growth is running slower than the pre-COVID-19 years. Its leaders have just mapped out an ambitious plan to keep closing the gap on strategic technologies such as semiconductors and artificial intelligence (AI), and support future industries including quantum computing and nuclear fusion.
China’s high-tech sector now accounts for more than 15 percent of GDP, up from less than 11 percent in 2017, Bloomberg Economics estimated. When it comes to AI, China is rapidly closing the gap with the US thanks to lower cost models such as DeepSeek, whose R1 stunned Silicon Valley with its sophistication this year.
Trump during his meeting on Oct. 30 with Chinese President Xi Jinping (習近平) in Busan, South Korea, secured the resumption of soybean sales and rare earths flows, while the US agreed to suspend a rule expanding restrictions on blacklisted Chinese firms.
The US president also announced his 20 percent fentanyl tariff would be halved, shaving the average rate on Chinese goods to 31 percent, Bloomberg Economics said. However, that is still too high for China’s factories — operating on razor thin profit margins — to turn a profit on US sales. And on semiconductors, progress continues to be measured in nanometers, with a rumored shift to allow Nvidia Corp to sell its advanced Blackwell chips to China failing to materialize.
Washington’s Quad partner New Delhi has been shocked by the punitive 50 percent tariffs and bellicose rhetoric directed its way for oil purchases that Trump said is helping fuel Russia’s war in Ukraine. In his quest for lower levies, Indian Prime Minister Narendra Modi continues to describe Trump as a “friend.” However, the political mood has swung against the US, with Modi’s main political rival Rahul Gandhi describing Trump as a “bully” and his tariffs as “economic blackmail.”
Trump’s approach to India helped accelerate a rapprochement between New Delhi and Beijing. The two sides are now trying to put a deadly 2020 border clash in the past and deepen commercial links — a dance that Xi has dubbed the “Dragon-Elephant Tango.”
Behind closed doors, Indian officials are realizing they need Chinese investment to further their plans to boost manufacturing. For China, which is facing an aging population and battling industrial overcapacity, improved relations with India offer access to a rapidly growing market.
Indeed, by the end of this decade, India would have picked up the global growth baton with its contribution swelling in following decades, Bloomberg Economics forecasts showed.
As Trump throws up the trade barriers, intra-Asian trade is becoming freer. Just a day after Trump wrapped up a trip to Malaysia, Chinese Premier Li Qiang (李強) and Malaysian Prime Minister Anwar Ibrahim oversaw the signing of an agreement in Kuala Lumpur to expand the China-ASEAN Free Trade Area. During a speech, Li sought to project his nation as a champion of free trade and called for unity with the 11-nation grouping.
“Interference by external forces in our region is rising, and many countries are being unreasonably subjected to high tariffs,” Li said. “Faced with strong political and economic bullying, disunity and confrontation will not only bring no benefits, but will lead to division and rule by external forces.”
The expanding BRICS group — which now includes Indonesia — is an additional avenue for China to build ties, as capitals across the region fret about unraveling relations with Washington.
And it is not just fewer goods headed to the US. Student arrivals to the US dropped 19 percent in August year-on-year to just more than 313,000 — the fifth consecutive month of declines, International Trade Administration data showed. That is the lowest number of students entering the US for August — a peak month ahead of the start of the academic semester — since 2021 amid the COVID-19 pandemic. Indian academics decreased by 45 percent, while those from China dropped 12 percent.
Trump’s move to slap a US$100,000 fee on new H-1B applications for skilled workers would disproportionately hurt Indians, who account for two-thirds of the visas. Indian outsourcers led by Tata Consultancy Services Ltd and Infosys Ltd had been heavy users of the program to deploy tens of thousands of engineers across US clients, from Citigroup Inc to Walmart Inc.
Trump’s US has also become less appealing to tourists from places such as Singapore, whose high-spending travelers are instead vacationing within Asia.
About 80 percent of travelers in Southeast Asia said the US is losing appeal as a destination due to concerns over discrimination, Trump’s policies and gun violence, a CNBC Travel survey showed.
In a noodle bowl of trade, investment and people-to-people interactions, not all ties have been severed — or even frayed — and some new connections are evolving. At the business-to-business level, companies such as Apple Inc have secured carve outs from Trump’s sweeping tariff campaign, and Chinese firms have leveraged their market dominance to maintain sales worth about US$1 billion a day to US importers.
Investment pledges from Asian nations and companies now run into the hundreds of billions of US dollars. Even if much of that is smoke and mirrors, there could be a lot of Asian money — and manufacturing — heading toward the US.
For US power in the Asia-Pacific region, there is also a kind of automatic stabilizer built in: The more China’s might rises, the more its neighbors would seek US support as a counter balance.
For one of the world’s most China-dependent developed economies, Australia, that means locking into a multi-decade nuclear submarine agreement with Washington to counter any expansionist moves from Beijing. South Korea and the US are in private negotiations to jointly build nuclear-powered subs, too. For China’s historic rival Japan, it means increasing defense spending, and committing to a vast and vague US$550 billion US investment pledge to win Trump’s favor.
For Trump and his supporters, the benefits of breaking ties might be worth the cost of doing so. Why carry on free trade with China when it is using the proceeds to accelerate its challenge to US economic and geopolitical supremacy? Why allow hundreds of thousands of Indian engineers into the country when investing in US workers would pay higher dividends?
Free trade or national security? Comparative advantage or America First? Offshoring to boost profits or onshoring to boost wages? The argument from Trump and his team is that past administrations paid too much attention to the first half of those pairings, and that their job is to restore balance by paying more attention to the second.
It is an argument that finds some support in the data: China’s rise as an export powerhouse coincides with an accelerated decline in US factory jobs and stagnant incomes for the US’ middle class. More importantly, it is an argument that has won support at the ballot box, catapulting Trump into two terms as president.
However, as a policy package, it is hardly cost free. The US has already transitioned from friend and ally to something some capitals regard as a rival and others as a bully. In the years ahead, if tariffs sever trade ties, people-to-people connections cool and investments fail to materialize, the US might end up as little more than a bystander in the Asian 21st century.
“Si ambulat loquitur tetrissitatque sicut anas, anas est” is, in customary international law, the three-part test of anatine ambulation, articulation and tetrissitation. And it is essential to Taiwan’s existence. Apocryphally, it can be traced as far back as Suetonius (蘇埃托尼烏斯) in late first-century Rome. Alas, Suetonius was only talking about ducks (anas). But this self-evident principle was codified as a four-part test at the Montevideo Convention in 1934, to which the United States is a party. Article One: “The state as a person of international law should possess the following qualifications: a) a permanent population; b) a defined territory; c) government;
The central bank and the US Department of the Treasury on Friday issued a joint statement that both sides agreed to avoid currency manipulation and the use of exchange rates to gain a competitive advantage, and would only intervene in foreign-exchange markets to combat excess volatility and disorderly movements. The central bank also agreed to disclose its foreign-exchange intervention amounts quarterly rather than every six months, starting from next month. It emphasized that the joint statement is unrelated to tariff negotiations between Taipei and Washington, and that the US never requested the appreciation of the New Taiwan dollar during the
Since leaving office last year, former president Tsai Ing-wen (蔡英文) has been journeying across continents. Her ability to connect with international audiences and foster goodwill toward her country continues to enhance understanding of Taiwan. It is possible because she can now walk through doors in Europe that are closed to President William Lai (賴清德). Tsai last week gave a speech at the Berlin Freedom Conference, where, standing in front of civil society leaders, human rights advocates and political and business figures, she highlighted Taiwan’s indispensable global role and shared its experience as a model for democratic resilience against cognitive warfare and
The diplomatic spat between China and Japan over comments Japanese Prime Minister Sanae Takaichi made on Nov. 7 continues to worsen. Beijing is angry about Takaichi’s remarks that military force used against Taiwan by the Chinese People’s Liberation Army (PLA) could constitute a “survival-threatening situation” necessitating the involvement of the Japanese Self-Defense Forces. Rather than trying to reduce tensions, Beijing is looking to leverage the situation to its advantage in action and rhetoric. On Saturday last week, four armed China Coast Guard vessels sailed around the Japanese-controlled Diaoyutai Islands (釣魚台), known to Japan as the Senkakus. On Friday, in what
RSS