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The Trump Impact on East Asia After Two Years
Region: Asia
Theme: Economics
Published July 29, 2019
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Trade ties between the United States and many East Asian countries have faced a high degree of uncertainty since Donald Trump took office in early 2017. The world is now accustomed to an atmosphere of sanctions, tariffs, ultimatums, and negotiations under pressure with little left off the table. The centerpiece in this drama is, of course, Sino-U.S. relations. Much is written on that, and the saga of tense talks, occasional breakdowns, and upbeat statements continued as we were proceeding with our analyses of the East Asian region. Instead of trying to unravel where that might end, we concentrate on countries in the region neighboring China. We begin with the Trump economic impact on South Korea, turn then to Japan, switch next to Southeast Asia, and conclude with North Korea. In the first three cases, we identify various similarities as well as some differences, and with North Korea, burdened with “maximum pressure,” we find an outlier. South Korea has already cut a trade deal, Japan is now beginning negotiations for an agreement with the U.S., and the states of Southeast Asia, after Trump’s pullout from TPP and Japan’s leadership in keeping the momentum alive, are striving to hold onto multilateralism.

Trump’s thinking is steeped in narrow notions of manufacturing trade deficits subsumed under the slogan “America First,” as well as updated alarm about unfair practices to coerce or steal intellectual property rights. He has rallied Americans with considerable international support behind the need to curb China’s predatory trade practices, while alienating virtually the entire world, including U.S. allies, with overcharged claims of “national security” in imposing tariffs to control imports of selected products, starting with steel and aluminum but threatening to make the sale of foreign-made cars and trucks the ultimate target for reducing the U.S. trade deficit.

Concern prevails over what further damage Trump may do to the trade environment in East Asia. In Seoul, despite relief that what was most feared when Trump railed against the KORUS FTA did not come to pass, one hears warnings that Trump may extend barriers already imposed on washing machines and solar panels to automobiles—a large part of exports to the U.S. Just on the precipice of bilateral talks demanded by the U.S., Japan also nervously awaits pressure against its even more massive automobile exports. For Southeast Asian states, the prospect of bilateral negotiations with the U.S .is frightening as well, since it is understood that smaller economies have little leverage in such negotiations. The spillover for all of these countries from hefty U.S. tariffs on China is also feared, since they are deeply integrated into production chains.

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