As the world braces for the return of Trump’s assertive trade policies, nations everywhere are preparing for potential disruptions. The Organisation for Economic Co-operation and Development (OECD) has already issued warnings about the ripple effects of a trade war, predicting slower global growth and higher-than-expected inflation. Governments are being urged to coordinate within the global trading system to prevent a harmful escalation of protectionist measures.
The Impending Trade Shift
Trump’s belief that tariffs will rejuvenate American manufacturing puts countries with large trade surpluses with the US at risk. India, a major trade partner of the US, finds itself in a precarious position due to its relatively high tariff rates on goods like agriculture, textiles, automobiles, and pharmaceuticals. Negotiations for a Bilateral Trade Agreement (BTA) are ongoing, with India taking steps to reduce tensions by lowering tariffs on US-made products such as Bourbon whiskey and Harley-Davidson motorcycles.
Meanwhile, Southeast Asian countries, deeply integrated into global supply chains, are anxiously watching how these policies unfold. Vietnam, with a high trade surplus with the US, appears especially vulnerable. But with risk comes opportunity. Regional strategies now emphasize strengthening intra-ASEAN cooperation and expanding partnerships with other nations to navigate the unpredictable terrain of US foreign policy under Trump 2.0.
Strategic Adaptations
Experts suggest that Southeast Asian countries must adopt pragmatic, transactional diplomacy when dealing with the Trump administration. Instead of relying on shared values or appeals to a rules-based order, these nations must be prepared to offer tangible benefits in negotiations. Balancing relations between Washington and Beijing remains critical, particularly for countries not wishing to be overly reliant on either power.
Henrick Tsjeng, a research scholar from the S. Rajaratnam School of International Studies in Singapore, highlights the need for ASEAN to strengthen its partnerships with Indo-Pacific countries and other middle powers. Security engagement with defense partners such as Australia, India, Japan, and South Korea is also advised to maintain strategic flexibility.
India’s Balancing Act
India is actively working to address US concerns about high tariffs while enhancing trade relationships with key ASEAN nations and other global players. Ongoing trade negotiations with the United Kingdom and the European Union are part of India’s broader strategy to diversify its trade portfolio and reduce dependency on any single market.
Simultaneously, China is increasingly focused on boosting internal economic growth through enhanced domestic consumption, aiming to maintain growth rates of 4.8% in 2025 and 4.4% in 2026.
Conclusion
The Trump administration’s aggressive trade stance is a call for countries to re-evaluate their economic strategies and alliances. As nations seek to safeguard their economies from the turbulence of US policy shifts, adapting to the new reality of global trade will require both resilience and ingenuity.
Author: This news is edited by: Abhishek Verma, (Editor, CANON TIMES)
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