Trump’s re-election sparks economic, geopolitical anxiety across Asia

Donald Trump’s re-election is raising major questions across Asia as countries brace for the impact of his renewed “America First” agenda and threats of high tariffs. At play are key economic relationships, shifting alliances and geopolitical tensions with China, where the stakes are getting higher for the U.S. and its regional partners.

Economic protectionism and trade tensions: Trump’s “America First” approach is set to upend trade dynamics across Asia, with threats of tariffs up to 60% on Chinese goods and 20% on all imports, mirroring his first term’s trade wars. The ongoing Asia-Pacific Economic Cooperation (APEC) summit in Lima is President Joe Biden’s last, marked by unease about Trump’s return. Taiwan and South Korea have heavily invested in U.S. semiconductor production to decrease U.S. reliance on Asia, but now fear Trump’s potential rollback of subsidy programs. Malaysia and Japan face uncertainties too; Malaysian Prime Minister Anwar Ibrahim stated that tariffs would devastate his nation’s crucial semiconductor exports, while Japan’s equity markets are bracing for export-heavy firms to be hit hard. Goldman Sachs warned of a “whack-a-mole” effect, as Trump could impose tariffs on various Asian economies, echoing Biden’s CHIPS Act tensions.
Supply chain shifts and investment adjustments: Companies across Asia are reevaluating their U.S. investments in light of looming tariffs and trade barriers. South Korean EV battery makers fear losing essential tax credits, while Japanese automakers brace for steep tariffs that could force production relocation. Trump’s hardline stance could also spur more aggressive export controls against China, affecting firms like Huawei and ByteDance. Meanwhile, Vietnam, benefiting from past supply chain realignments, may gain further investment but also become a tariff target. In Japan, investor interest is moving toward firms less dependent on the U.S., and fund managers are diversifying portfolios in anticipation of market upheaval.
Geopolitical shifts and alliance strains: The unpredictability of Trump’s second term raises concerns over U.S. alliances in East Asia. David Fields, associate director of the University of Wisconsin-Madison’s Center for East Asian Studies, noted that while American power remains strong, it is also fragile. “I don’t think American power is declining, but I think it could very rapidly because I think the core of American power in the world is allies. Without allies, the United States is just a hyper-capable regional power,” Fields said. Trump’s transactional diplomacy, as opposed to Biden’s collaborative support, could threaten stability in South Korea and Japan. Tensions with China are a looming backdrop, as President Xi Jinping’s assertive agenda, including the opening of Chinese-funded Chancay Port in Peru, continues to worry U.S. officials. The outcome of these shifting policies remains uncertain, hinging on future decisions from both Washington and Beijing, with potential implications that could reshape the regional balance.

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