Trump's China tariff ceasefire buys time for talks

Subject China-US trade talks. Significance On June 29, US President Donald Trump and Chinese President Xi Jinping met on the margins of the G20 meeting in Osaka, primarily to discuss the ongoing bilateral trade disputes. The results of the meeting can be considered progress in that they averted a further escalation of tariffs and agreed to resume trade negotiations, the latest round of which broke down seven weeks ago. Impacts South-east Asia, which benefits from firms redirecting investment, can probably count on US tariffs remaining in place during negotiations. US pressure on other states to choose 5G hardware from Western companies rather than from Huawei has not been addressed. Trump will face bipartisan anger from Congress if he eases restrictions on Huawei.

Subject A possible second Trump-Kim summit. Significance Vietnam last week said it had not been told about the timing or location of a possible second summit between US President Donald Trump and North Korean leader Kim Jong-un but that it was confident it could host such an event. Washington earlier in January announced that a summit would be held in February, following landmark talks between Trump and Kim in Singapore last year. Impacts A summit in Vietnam would provide Trump with a distraction from investigations into his alleged links with Russia. The summit would bolster ASEAN’s claims to be crucial to promoting peace and security in the ‘Indo-Pacific’. A successful Trump-Kim meeting would be welcomed by Beijing but would not influence US-China trade talks. Trump would be unlikely to travel to South-east Asia for a second time this year to attend the East Asia Summit in Thailand in November.


Subject Taiwan's trade policy. Significance Washington's abandonment of the Trans-Pacific Partnership (TPP), a comprehensive free trade agreement between economies on both sides of the Pacific Ocean, is prompting Taiwan to seek a new direction in trade policy. Taiwan’s president, Tsai Ing-wen, is seeking to increase trade and investment with partners other than China -- particularly with India and South-east Asia -- and pursue a bilateral trade agreement with the United States. Tsai's Presidential Office has already established a special office to promote trade links with India and South-east Asia. Impacts Taiwan will be subject to intense China-US rivalry, with both seeking to draw the island away from the other. Beijing will put pressure on Taipei to resume cross-Strait economic expansion efforts. Trade with India will expand, but will still be dwarfed by exports to China. Tsai's 'New Southbound Policy' initiative is unlikely to reduce Taiwan’s reliance on the China market significantly.


Significance Japan is viewed by ASEAN states as the most constructive player among the major powers. China is seen as aggressive and the United States as unreliable under President Donald Trump. Impacts Suga is unlikely to remain in office for more than a year. Post-pandemic economic recovery in Japan will be slow due to weak demand for its manufactured goods at home and abroad. China’s stance over the disputed Senkaku/Diaoyu Islands and the missile threat from North Korea will be Tokyo’s top security concerns.


Significance The region’s states try to avoid being drawn in, individually and under the aegis of ASEAN. If tensions between Washington and Beijing were to get out of hand, they could come under greater pressure to take sides. Impacts Washington is unlikely to press the region’s states to allow it to establish military bases in their territories. If Donald Trump is re-elected US president next month, he will continue to take a hard line on Huawei and other Chinese tech companies. China and the United States will struggle to increase their soft power in South-east Asia.


Subject Outlook for US policy towards South-east Asia under the Trump administration. Significance Donald Trump becomes US president on January 20. South-east Asian governments are assessing the outlook for relations with Washington during his administration. Their region drew scant attention during the US election campaign, and regional leaders have little reason to think South-east Asia will be an early Trump administration priority. However, they fear the effects of possible early frictions between Washington and Beijing, and increased regional rivalries if Washington and Moscow strengthen relations to China’s detriment. Impacts Thai-US relations are likely to warm under Trump. Myanmar’s leaders will look to the US Senate to protect the gains in Myanmar-US ties under Obama. Trump-owned or branded businesses in South-east Asia could face protests or terrorist attacks.


Significance Regional leaders had been anxious that Washington under US President Donald Trump seemed relatively uninterested in the region. Tillerson was also preparing the way for Trump’s visit in November to the APEC meeting in Vietnam and East Asia Summit in the Philippines. Impacts If Washington is too bullish towards bellicose Pyongyang, ASEAN governments may become concerned, undermining US-ASEAN ties. ASEAN governments will fear any deterioration in US-China ties that could spark a trade war, with negative regional effects. ASEAN leaders are not yet reassured that Trump’s administration will give equivalent attention to South-east Asia as under his predecessor.


Subject Singapore-US relations. Significance On April 30, Prime Minister Lee Hsien Loong spoke with US President Donald Trump. For Trump, the call was an initial move to strengthen ties with Washington’s partners in South-east Asia amid the North Korean crisis. Lee accepted an invitation to Washington. For Singapore, the call was about gauging a new, thus far mercurial US administration which, to Singapore’s concern, has expressed protectionist trade sentiments and relatively limited detail about its foreign policy aims in East and South-east Asia. Impacts The current lack of a US ambassador to Singapore is not unprecedented and will not greatly affect bilateral relations. China-Singapore ties are warmer, but any overly assertive Chinese efforts to gain South-east Asian influence could change this. Singapore will push for a reworked version of the TPP to be devised, with Japanese leadership.


Subject US-ASEAN relations. Significance A US-ASEAN summit, proposed late last year by US President Donald Trump, is tentatively scheduled to be held in March in Las Vegas. After an ASEAN Foreign Ministers’ Retreat in Vietnam earlier this month, the South-east Asian regional bloc issued a statement welcoming the summit. However, only a few member states have formally signalled their intention to participate. Impacts For ASEAN leaders that attend, the summit may compensate for Trump’s likely absence from the 2020 East Asia Summit in Vietnam. The United States is unlikely to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership. Any violence in South-east Asia sponsored by Iran or its proxies will strengthen US cooperation with the region on counterterrorism.


Significance She addressed two key issues during her trip: tensions in post-coup Myanmar and China’s growing regional footprint. Shortly after she left the region, the United States announced that it would donate unused COVID-19 vaccines abroad, including to South-east Asia. Impacts Washington will tighten its sanctions on the Myanmar military while supporting ASEAN’s five-point plan to ease the country’s crisis. The National Unity Government, a parallel administration to Myanmar’s junta set up by its opponents, will try to attract greater US backing. Manila and Washington may extend negotiations over renewing their Visiting Forces Agreement to prevent the pact expiring in August.


Significance It is the only country in South-east Asia with a large-scale nuclear plant, although this was never loaded with fuel. Other countries in the region have tentative plans to develop nuclear power programmes. Impacts The current absence of nuclear power programmes will help avert the diversion of capital from renewable energy development in the region. South-east Asian countries with small, non-power reactors, built for research, will try to maintain these facilities. Across the region, the need for electricity grid investment will increase as more decentralised generation sources are deployed.


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