US President Bashes His Way Through East Asia

The perils were never greater of standing alone

Image from The Trevor Project

Assessing the damage from Typhoon Trump, which blew through East Asia last week, is difficult as some of the agreements with regional states were hastily cobbled together and may prove of scant consequence or durability. However, one thing stands out for small and middling powers.

Faced with the US President’s wrecking ball for free trade, multilateralism, and insistence on individual country deals, the only constructive response is greater cooperation among themselves. Picked off one at a time, they were bullied into allowing US goods into their respective countries tariff-free while agreeing to onerous increases of varying sizes on their exports into the US.

The frameworks for expanding trade within and between regions mostly exist, but the Trump visit showed how little commitment there was to them. Intra-Asean trade, for instance, has languished at around 26 percent for decades, compared with 60 percent in the EU despite annual lip service and well-meaning seminars. Asean’s capacity to implement urgent decisions and innovate quickly has been undermined by a weak, underfunded, and understaffed secretariat.

For a start, the very fact that Trump could come to an Asean summit to conduct bilateral deals showed how little sense of its own worth the organization has. Not a gesture of common interest was on display. Asean chairman, Malaysia’s Prime Minister Anwar Ibrahim, led the way, desperate for a superficially “successful” encounter with Trump that ended with smiles and a US-Malaysia declaration that has critics at home seething.

But some of the clauses were humiliating. In return for a tariff of “only” 19 percent, Malaysia would give preferential access to US goods of all sorts and accept US standards on items such as food and vehicles while Malaysia – which has followed British standards from its colonial days and the metric system – will be required to address environmental issues and give the US some sort of oversight of Malaysian rare earths production and processing.

Malaysia commits to the purchase of 30 aircraft, US$3.5 billion of LNG, spend US$150 billion on semiconductors and data centers, and invest US$30 billion in the US.

Maybe the dependence of the Malaysian electronics industry on the US market, and now the siren allure of AI data centers, which are already overburdening the Malaysian grid, could justify such an apparent surrender of other national interests. Perhaps it is a signal too that Malaysia wants to insinuate a warm and deep relationship with the US without seemingly taking sides on the US-China rivalry.

Agreements with Thailand, Vietnam, and Cambodia were rather less onerous but included requirements to buy Boeing aircraft and US energy, and give preferential access for rare earths. Where all these deals leave regional trade pacts and relations with countries from the EU to Brazil and China is not clear. But given the size of its trade surplus with the US, and given suspicion that it has been a back door for Chinese products, Vietnam appeared to get off lightly with a 20 percent tariff and not much else apart from buying Boeing aircraft and US agricultural products. US strategic interests were clearly in play.

In another sign of regional weakness, Indonesian President Prabowo Subianto didn’t stay for the whole meeting. He wants Indonesia to play a larger role in world affairs, but being a bit player on the Gaza discussion is scant compensation for failure to be a leader for the region of which Indonesia is by far the largest and most populous nation. Instead, he focused on the Korean summit of APEC, an unwieldy body whose main function was to provide an approximate occasion for Trump to meet President Xi.

In the event, Trump’s economic truce with Beijing was in effect largely a win for China, showing that the contrast between his demands from Asean member states who are supposed to be friends but have limited bargaining power, and a China which has largely stood up to him and is now able to proclaim itself as a bastion of free trade and multilateralism. Unlike Trump, Xi also stayed for APEC which, offering Xi another opportunity to display the difference between their public postures and to push ideas such as greater use of the yuan and other non-dollar currencies in trade.

Yet in contrast to his impact on Southeast Asia, Trump’s meetings with the leaders of Japan and South Korea may have actually strengthened their relations to China’s strategic disadvantage. Both now face a relatively modest 15 percent tariff barrier. Expectations that Korea invest hundreds of billions of dollars in US projects, including power grids and shipbuilding, are clearly beyond reach and have caused offense. Yet talk of cooperation on nuclear-powered submarines underlined the military relationship between the two.

Likewise, new Japanese prime minister Sanae Takaichi’s own hawkish desire for increased defense spending fits the Trump agenda – and the hopes of the US military. Trump had earlier reaffirmed the US commitment to AUKUS, the submarine deal with Australia and the UK, which had earned criticism from some in his administration. Japan may also feel thankful that it was not pressured into massive revaluation as with the 1985 Plaza Accord, intended to reduce a massive US trade deficit, which saw the yen rise from 240 to the dollar, to 128 by 1987, and to 80 in 1995. Japan still suffers 35 years later from the consequent boom and bust in asset values.

Trump and Xi avoided the vexed subject of Taiwan. There is nothing to agree about. But meanwhile, the direction of policy in Korea and Japan, combined with US activities in the Philippines overlooking the Bashi channel, suggests a military solution remains out of the question for now, despite the ever-growing power of China.

Of course, Trump can turn on a dime, and has according to whom he last met with or felt insulted by. Likewise, the bilateral deals with Southeast Asian countries may never be ratified and eventually be replaced by simpler and common arrangements. But it leaves one major lesson for Asean members: in the face of a superpower, divided you fall, a theme for the next Asean host, the Philippines. In respect of the South China Sea, a matter which concerns most of the members. China has divided the region by insisting on bilateral dealings and applying varying levels of pressure to the different countries.

A step forward would be for an agreement between Vietnam, the Philippines, Malaysia, Brunei, Indonesia, and Thailand that they will settle their sea disputes with each other and without any need for China’s participation. Overlapping claims, such as between the Philippines and Malaysia, and Vietnam, would be held in abeyance, and all would accept the principles set out in the 2016 ruling of the Court of Arbitration.