For more than a decade, security and economic dynamics in the Asia-Pacific have been pulling in opposite directions. Geopolitical tensions and competing nationalisms have reinforced the U.S. role as a security guarantor, while China’s economic rise has integrated regional economies more closely with one another and China and pulled them away from the United States, as Evan Feigenbaum and I argued in these pages 13 years ago.
Yet U.S. policy toward the region has been mostly one of continuity. Is this sustainable—or is the combination of U.S. President Donald Trump’s tariffs, disparaging of allies, retreat from the values and institutions of the post-World War II order, and decoupling from China forcing the region to make the dreaded either-or choice?
So far, U.S. security policy seems insulated from the Trump revolution. A leaked interim defense strategy memo says the region remains a strategic priority for the United States. And Defense Secretary Pete Hegseth’s March trip to Asia appeared to offer further reassurance to allies. Hegseth’s trip included a speech in Honolulu pledging to “work with our allies and our partners” to counter China; in Japan, an effort to advance a Biden-era initiative to create a joint military headquarters in Tokyo; and in the Philippines, revealing new U.S. weapons systems to be deployed to deter China.
It may be that the inertia of military-centric cooperation in response to Chinese coercive behavior—such as the China Coast Guard blocking Filipino fishers and the Philippine Navy from operating in the country’s own exclusive economic zone and intimidating Vietnam from developing offshore gas fields in its own waters—sustains its momentum. But economic trends and both the words and deeds of the Trump administration point to a unilateral “America First” agenda so riddled with contradictions and competing goals that a coherent policy is unlikely to emerge.
Why? For the past 70 years, the Asian peace, like the European peace, has been underpinned by the United States as the guarantor of security and by the prosperity of the U.S.-led financial system, with inclusive and relatively open markets. Washington has been a development catalyst and consumer of last resort, facilitating the Asian miracle.
This symbiotic arrangement has been slowly eroding in direct proportion to China’s rapid emergence and the diffusion of wealth and power from West to East generated by globalization. The United States accounts for a declining share of Asia-Pacific trade and is not in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or the Regional Comprehensive Economic Partnership, the region’s key free trade agreements, despite having spent years trying to negotiate the CPTPP’s predecessor, which Trump withdrew from in 2017. In the new geometry of trade, the United States is self-marginalizing, and China has become the top trading partner to most countries in the region. Intraregional trade has now reached nearly 60 percent of the total.
The U.S. role was already becoming marginalized, and now Trump is blowing up an already fragile system. The decoupling of the United States and China—43 percent of world GDP between them—is disrupting businesses across Asia. In a matter of weeks, sweeping tariffs, imposed and lifted again at seemingly the whim of the president, are read as an economic declaration of war. Trump is undermining free trade agreements with Australia, South Korea, and Singapore. The dismantling of the U.S. Agency for International Development and Voice of America—tools of soft power projecting American values and presence—also sent a signal.
Though China’s political-military coercive behavior has reinforced the U.S.-led security system, Trump’s heavy-handed defense demands on allies may accelerate hedging. As Japanese negotiators arrived in Washington on April 16 for trade talks, Trump made clear that he sees defense as linked to trade in rebalancing ties, writing on his Truth Social platform: “Japan is coming in today to negotiate Tariffs, the cost of military support, and ‘TRADE FAIRNESS.’”
Trump has complained that “Japan doesn’t have to defend us” and that the United States spends hundreds of billions of dollars to defend it and therefore Tokyo should spend 3 percent of GDP on defense. In his previous term, Trump considered withdrawing U.S. troops from South Korea and wants Seoul to pay more protection money, and on Taiwan, he is demanding that the island quadruple defense spending to 10 percent, which Taipei says is “impossible.”
The fusion of U.S. trade and geopolitical shifts is fast corroding trust and raising existential questions in the region about U.S. reliability as a partner, let alone a security guarantor. This is mitigated by pragmatism, as the efforts at tariff reduction deals highlight, but the psychological shock has been profound.
But don’t take it from me. The canary in the coal mine was a Feb. 14 speech by the defense minister of Singapore, a close U.S. partner, lamenting that the image of the United States has suddenly “changed from liberator to great disruptor to a landlord seeking rent.” And conservative former Prime Minister Malcolm Turnbull expressed Australians’ anguish, saying in an April interview with the New York Times: “We’re dealing with an America whose values no longer align with ours.”
Tariffs coming down hard on regional manufacturing hubs—Vietnam, Thailand, Indonesia, and Malaysia, which since Trump’s first term have become “China+1” reshoring destinations—may wreak havoc. South Korean and Japanese auto and electronics investment (both face, at a minimum, 10 percent tariffs, plus auto, steel, and aluminum tariffs) is a key part of the Asian economic operating system.
The White House has been clear that one goal of the tariffs is to destroy regional manufacturing hubs using and transshipping Chinese components. As the Wall Street Journal reported, the administration’s tariff strategy is to force a choice to curb trade with China for lower tariffs. When White House trade advisor Peter Navarro said Vietnam’s cutting of U.S. tariffs to zero “means nothing,” he explained that “it’s the nontariff cheating that matter.” Ending these value chains would rip the region’s economic fabric.
Asian states are lining up to make deals to reduce their U.S. tariffs—buying more U.S. liquefied natural gas, buying more military equipment, and aiding U.S. shipbuilding. But they are unlikely to eliminate their trade deficit with the United States: With a nearly $30 trillion economy, the United States inevitably buys more than it sells to smaller, low- and medium-income nations such as Vietnam and Cambodia, even if tariffs are cut.
So how do these Asian states, for which export-led growth is the coin of the realm, respond? Trump may be inadvertently pushing them toward China, which is waging a charm offensive. The United States may be separating itself from the world, but much of the world is doubling down on new patterns of globalization, as Singaporean Prime Minister Lawrence Wong pledged in a major speech on April 8.
That U.S. allies South Korea and Japan met with China to renew efforts at a trilateral trade agreement and talked, according to Chinese reports, of coordinating responses to the United States is a sign of the times. Europe is exploring new economic ties to China, such as licensing electric vehicle and battery factories, as Spain and Hungary are doing. One indicator of such trends in Asia would be if China’s bid to join the CPTPP is accepted by Japan and Australia or if the European Union moves toward trade arrangements with the CPTPP. Such scenarios could sustain a post-U.S. rules-based system and shape new rules and tech standards.
Another risk from Asia’s loss of confidence in the United States is de-dollarization. Asian countries may see the United States under Trump as less of a safe haven for some $3 trillion in U.S. Treasurys recycled from their trade surpluses, which help fund the $37 trillion U.S. budget deficit.
But to fully capitalize on U.S. economic self-marginalization, Beijing would need to revise its policies. Beijing can’t shift its $439 billion in U.S. exports to the global south, already so alarmed about Chinese overcapacity that they’ve filed dozens of complaints against China to the World Trade Organization. Could Trump lead Chinese President Xi Jinping to revise predatory trade policies and beef up domestic consumption to compensate for lost U.S. markets?
How this all plays out will depend much on the fate of U.S.-China relations. There are competing factions seeking to shape Trump’s still uncertain China policy: China hawks such as National Security Advisor Mike Waltz, who favor weakening, decoupling, and preparing for war with Beijing; business types such as Elon Musk and finance firms that have interests in the China market; and Trump himself, always wanting a deal.
But what U.S.-China deal is possible in the toxic environment in both capitals? Trump’s disappointing deal in his first term casts a shadow over current efforts. One analogy is the 1985 Plaza Accord with Japan, which redressed similar trade tensions. Tokyo revalued the yen against the dollar, built auto factories in the United States, and agreed to voluntary export restraints. Despite frequent U.S. complaints about a weak yuan, currency is less of a problem in the U.S.-China case. In theory, they could agree to a range of fluctuation, and China might just be willing to voluntarily curb exports—but reshoring manufacturing is Trump’s goal.
During last year’s election campaign, Trump said he was fine with China building EV and battery plants in the United States and hiring U.S. workers, and joint ventures licensing Chinese technology would boost U.S. manufacturing. But it is difficult to see Congress accepting Chinese investment amid a bipartisan anti-China climate, with its efforts to remove China’s most-favored-nation status, delist Chinese firms from U.S. stock exchanges, ban China from buying land, and remove all Huawei technology, just for starters.
In the current game of chicken, China, as economist Adam Posen argues, has escalation dominance: The United States needs irreplaceable stuff from China (i.e., rare earths) more than China needs U.S. goods. Asymmetric interdependence may ultimately temper the trade war. But both sides are decoupling the two intertwined economies, with $582 billion in trade in 2024. Business, the ballast of the U.S.-China relationship over the past four decades, is now spurring separation. Strategic competition in all domains—land, sea, air, and space—is not abating. Tensions over Taiwan are already on the razor’s edge.
For the Asia-Pacific, full-spectrum U.S.-China competition will at a minimum fuel hedging on both economics and security. It may mean bandwagoning with China on trade while deepening already thickening intra-Asian security cooperation now driven by not just Chinese coercion but U.S. unreliability, if not imperiousness.
Which Asian states will elide Chinese investments in their value chains, ban Chinese digital networks, or shun its artificial intelligence or weapons? Who can put their trust in a Washington willing to shred agreements without even a moment’s notice? The specter of Chinese ambitions will prolong the viability of the U.S.-led latticework of allies and partners as a counterweight, even as trust in the United States becomes wobblier and more uncertain. Who will show up—or allow the United States access to ports and airfields—in a China-Taiwan contingency?
Will America First politics sustain the U.S. role as the region’s top cop or ebb as it is marginalized economically in Asia? Whatever Taiwan’s fate, for East Asia, the United States may stay or go, but China is forever. More than ever, U.S. determination to stay on top in the Asia-Pacific is fighting both geography and economics.
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