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Higher tariffs. Geopolitical flare-ups. Inflammatory comments. All across Asia, countries are bracing for the return of Donald Trump.
On today’s Big Take Asia Podcast, we unpack what a second Trump term means for China, India and other Asian economies, who are the potential winners and losers and what’s ahead. Host K. Oanh Ha is joined by Daniel Ten Kate, Bloomberg’s executive editor for Asia economy and government, Chan Heng Chee, the ambassador-at-large with the Singapore Foreign Ministry and Erin Murphy, deputy director of Chair on India and Emerging Asia Economics at the Center for Strategic and International Studies.
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Below is a lightly edited transcript of the conversation:
K. Oanh Ha: Last week, Donald Trump was once again elected president of the United States.
Donald Trump: And every citizen I will fight for you, for your family and your future, every single day I will be fighting for you…Ha: In his victory speech last week, President-elect Donald Trump talked big on what his second term in the White House is going to look like — and leaders around the world were listening carefully.Trump: I will govern by a simple motto: Promises made, promises kept. We're going to keep our promises.
Ha: Many of those “promises” take aim at Asia — home to some of the world’s biggest and most powerful economies. And if Trump’s first term in office is any indication, it’s no surprise that countries in Asia are bracing for a bumpy ride ahead. In his first term as president, Trump imposed a raft of tariffs on goods imported from China, he met with Kim Jong Un, the leader of North Korea and called the coronavirus the “Chinese virus.” But is Trump’s second term going to be as dramatic for Asian economies as the first? And how are leaders in the region preparing for what’s to come? We’ll dig into these questions in a roundtable discussion.
Welcome to the Big Take Asia from Bloomberg News. I’m Oanh Ha. Today on the show: Trump part II. What will his second term mean for China, India and other Asian economies? And how countries are bracing for a bumpy ride ahead — from higher tariffs to potential geopolitical flare-ups.
Trump: Thank you very much. Wow.
Audience: USA. USA. USA.
Ha: Trump’s presidency and his economic plans will affect countries all over the world. But one of the most impacted countries will almost certainly be China, the world’s second-largest economy. During Trump’s first term, China was hammered with tariffs — taxes the Trump administration put on Chinese imports to the US — on everything from salad spinners to computer chips. Trump has talked about tariffs a lot on the campaign trail, saying taxing Chinese imports will help protect American manufacturers, farmers and entrepreneurs from lower-priced competitors.
Trump: You're going to have protection from them coming in because we're going to put on from 50 to 200% tariffs.
Ha: Trump began putting tariffs on more than $360 billion of Chinese goods in 2018, but now China’s economy is in a much more fragile state than it was back then. It’s been struggling to recover from major setbacks, from a property sector crisis to paralyzing Covid lockdowns. So I invited Daniel Ten Kate, Bloomberg’s executive editor for Asia economy and government, to the studio.
Ha: Dan, if you were President Xi Jinping, you wake up the day after the US election and you see that Trump’s won, what’s the first thing that goes through your mind?
Daniel Ten Kate: Here we go again. China prefers stability. And I think, for a lot of officials in Beijing, that's the one thing that they don't like about Trump — unpredictability. With Biden, they didn't necessarily like his policies. It wasn't great but it was at least stable. With Trump, that's all out the window.
Ha: Well, Trump is full of surprises — he’s also spoken highly of Xi himself and has even called him a friend. How might that relationship play out now?
Ten Kate: You know, Trump likes to be friends with a lot of leaders around the world, particularly leaders that are considered strongmen or more authoritarian. Kim Jong Un was in that category, Vladimir Putin was in that category. Xi Jinping is in that category. Trump talks glowingly about how this one guy can control more than a billion people and expressing admiration there. He has a respect for Xi in a way. Calling him a friend is a bit — he's a friend when he needs something or he wants to, use it for his own benefit. And then of course, if there's something like Covid comes along, then he's happy to just throw him under the bus.
Ha: Well, the first thing China needs to navigate is probably the prospect of more tariffs, right? Trump has threatened to impose additional tariffs of 60% or more on Chinese goods. If he does follow through, how badly would that hurt China’s economy?
Ten Kate: There's varying estimates on that, and certainly it would knock at least a couple points off annual growth. China's got a few things going for it. It has taken some steps to insulate itself. It has diversified its export base since Trump came to power. So it's not selling as many goods to the US value wise, as it did earlier. So there's some people who think that it won't be that bad.
Ha: And of course, raising tariffs on Chinese goods also means prices are likely going to rise for American consumers too.
Ten Kate: Yeah. And that's where the Chinese policymakers are saying like, okay, is he serious here? Because if you did something like that and not only the 60% tariff, but also the universal tariff of 10 to 20% around the world, that’s 10 to 20% at least that everything's going to cost more. And the question is, okay, what does Trump want this time around? That's a bit unclear right now.
Ha: That's right. And what about the question of, you know, will China fight back? I mean, will China find a way to get back at the US if it raises tariffs that high?
Ten Kate: Yeah, if you see during the first trade war, China was very reluctant to fight back in a way that might blow back at them. They were very careful to make sure that it didn't really hurt the overall investment environment and everything else. China has since gotten a lot more tools in its toolkit. They have an easier legal process to go after particular companies. So certain American companies that could be targets. There's also export controls that they have. China still controls the trade of key, critical minerals that are used in advanced technology. So we could see China do more on trying to fight fire with fire there. But essentially everything China would do to fight back is, is like, when you're in a fight and someone tries to kneecap you and you try and kneecap them back, but it basically hurts both sides. So they're trying to make it so, okay, we can show the US that if you hit us here, we're also going to hit you there. And then we're both going to suffer. And therefore let's just not hit each other and find a way forward. I think that's a preferred option for Xi.
Ha: Well, tension still is inevitable. There are questions whether we would see conflicts between China and Taiwan under a Trump administration, right? The US said that China is on track to be ready to invade Taiwan by 2027. Trump has said that Taiwan should pay for US protection. Should we then expect to see a more emboldened China ahead?
Ten Kate: I mean, I think China has a very clear policy, which is, we want to tighten the noose around Taiwan. And so I think they'll continue to do that on the military side. If Trump were to lean toward encouraging the current Taiwanese President Lai in power, that would probably encourage China to get tougher on Taiwan. That's just the pattern that we've seen in the past. If Trump is a little bit hostile towards Taiwan, then there wouldn't actually be as much reason for China to do anything. So it's a bit paradoxical in that sense.
Ha: Is there anything potentially good for China from Trump being back in the White House?
Ten Kate: Yeah for China, you could cut a deal with Trump that kind of breaks through a lot of the stalemate in this spiraling that we've seen in the US-China relationship. Trump sort of broke ties, but he can also put them back again. And Trump doesn't mind flipping. So for China, that could potentially be a very good thing in changing the way US-China relations works for good. So, yeah, big downside, but also potentially a big upside for China.
Ha: Trump’s policies and economic plans will have a massive impact throughout Asia — far beyond just China. After the break, we look at some of the other Asian countries that can expect big changes under a new Trump administration.
Ha: Under a second Trump administration, a more intense US-China rivalry could create pockets of opportunities — and risks — for other Asian nations. To explore what it means on the ground here in Asia, we spoke to two experts on the region’s diplomacy and economics.
Chan Heng Chee: My name is Chan Heng Chee, and I'm an ambassador-at-large in Singapore and a professor at the Singapore University of Technology and Design.
Erin Murphy: My name is Erin Murphy and I am currently the deputy director and senior fellow for the Chair on India and Emerging Asia Economics at the Center for Strategic and International Studies. I’m based in Washington DC.
Ha: Professor Chan, let’s start with you. Are there any clear winners or losers in Asia with Trump returning?
Chan: Asia has worked with a Trump administration before. We know that with President Trump's second administration, we will have higher tariffs, and I think we're bracing ourselves for that. I think the Trump administration has a very clear proposal. He is for reversing the flows of trade so that the US is not a clear loser, as he would say. Now other countries, of course, are very anxious, especially developing countries, we would not like to see the model change, but clearly, it's got to be tweaked. The question is how? I think our concern is that with tariffs, extreme tariffs being imposed, it can create a contagious influence and you have contagious protectionism. Big countries can be protectionist and it’s fine. The middle and small countries will really have to look around. We have done many things. For instance, regions have formed regional subgroupings of trade partners, diversified supply chain away from China. Some of the trade and the investments in those two areas have come into Southeast Asia. Vietnam, Thailand, Malaysia is our winners. Many would say Southeast Asia is a clear winner here, but I guess for how long and how much?
Murphy: I think the professor makes a great point. But one country that I think will also continue to win is probably India. I think part of that is the strong relationship and the personal relationship between Modi and Trump. Modi was one of the first to congratulate Trump on his win. So I think India will continue to win and continue to be in the good graces of the United States.
Ha: So, Prime Minister Narendra Modi and Trump clearly share close ties and certainly a lot of parallels have been drawn between the two leaders. Does this all bode well for India with Trump back in the White House or are there also some points of contention?
Murphy: Where things might get challenging is that Modi has his own made in India policy that could run into made in America policies as well. So that will certainly have to be ironed out. There's certainly things that they can agree on, including diversifying the supply chains, trying to decouple from China. And if there's anything that Trump would appreciate is that it's India's stance on China.
Ha: So, looking forward, what do you think will be different about these next four years with Trump?
Chan: I think we should expect the unexpected. I think that's the simplest way of saying this. And we should not be surprised to see extremes of action. What he does with China is something everybody is, I think, waiting to see. Where that leads, I do not know. But I would say that, in my part of the world, Southeast Asia, we're really watching that relationship because what happens to the US-China relationship will really in fact set the tone for relationships in the region.
Ha: And is there a sense that we’re going to see a more fractured world for the next four years?
Chan: We are nervous of how the world would turn out, it could be more fractured. It's certainly going to be more noisy, and with everyone guessing the direction. We have been used to a certain predictability but with a Trump administration, it's less predictable, but that is also his advantage in dealing with other countries.
Murphy: I agree that we're getting into a more fractured world, but we're also in a period of transition, which makes everything a lot more chaotic and noisy. And already, the post-World War II, the so-called rules-based order, which created the World Bank, the International Monetary Fund, the World Trade Organization, these systems that were to promote growth and prevent world wars, are kind of creaking under the expansion of economies. But we're also going through another industrial revolution with critical technologies and emerging tech, AI, quantum computing, and that's going to have a huge effect on labor. And then you add to this the unpredictability, the crisis in the Middle East, the Ukraine war, and it just makes everything very nerve wracking. Again, it's not very fun to live in unprecedented times, but here we are and you know, there we go.
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