BGA Singapore Managing Director Nydia Ngiow wrote an update to clients on the impacts on trade with the Indo-Pacific region under Trump’s second administration.
Context

  • Donald Trump was elected president of the United States on November 5 in part due to voter discontent about the economy under his predecessor. To “fix” the economy, Trump is expected to use many of the same tactics he used in his first term.
  • Tariffs are going to be the centerpiece of his economic agenda. He is expected to target China’s efforts to export through subsidiaries in Southeast Asia and punish countries with huge trade surpluses. To be sure, he could also look to trade negotiations like he did with Mexico and Canada in his first term.

Significance

  • Countries in the region with which the United States has large trade deficits – such as Vietnam and Malaysia – should expect to see more disruption. Should the new administration choose to pursue primary sanctions, countries may need to be prepared to buy more U.S. products to silence critics. Even though the United States enjoys a trade surplus with Singapore, its dependency on global trade means that it could also see disruptions in trade activity, even if the punitive measures are not directed at them.
  • Given Trump’s evolving relationship with big tech companies, it is not clear what his position on digital economy, cross-border data flows or AI will be. It is likely that he will advocate a light touch when it comes to regulations and repeal Biden’s executive order on AI which emphasized to prioritize safety and security standards for innovation that will push the United States to win the AI race against China. In this regard, it is not impossible that he could impose countermeasures against European digital services taxes that implicitly go after U.S. technology champions.

Implications

  • Companies are likely to adopt more localized and regional supply chain strategies to mitigate the unpredictability while uncertainties remain over the extent to which Trump will impose tariffs and weaponize trade.
  • China, as the largest trading partner for several Asian economies, holds a critical position, and surveys indicate that many Southeast Asian countries prefer not to choose between China and the United States. However, if forced by circumstances potentially triggered by Trump’s actions, they would be inclined to lean toward China. Such increased uncertainty could further erode trust in the United States, inadvertently strengthening China’s economic influence and positioning it as the nucleus of an integrated Asian economy. This shift could have wider implications for both national and corporate relations with the United States.

We will continue to keep you updated on developments in the Indo-Pacific as they occur. If you have any comments or questions, please contact BGA Singapore Managing Director Nydia Ngiow at nngiow@bowergroupasia.com.

Best regards,

BGA Indo Pacific Team

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Managing Director, Singapore

Nydia brings over a decade of experience working at the forefront of international affairs and international trade issues in the Asia-Pacific, with the majority of her career prior to BGA spent working for the Singapore government. Nydia most recently managed the China Program at the American National Standards Institute (ANSI) in Washington, D.C., where she brought together technical, business and policy leaders to find solutions to issues affecting U.S.-China trading relations to strengthen U.S. market access in China. She provided member organizations with coverage of policy and reform issues, and furthered ANSI’s relationships with counterpart organizations in China. Positioned in ... Read More