The Asian century rolls on as Trump risks freezing America out

President Trump's America First policies, including steep tariffs and visa restrictions, risk isolating the US from Asia, the world's primary growth engine. While some investment pledges exist, trade ties are fraying, and regional economies are reorienting to bypass US policies, potentially leaving America as a bystander in the Asian 21st Century.

President Donald Trump's bid to rekindle the kind of economic supremacy that saw the 1900s dubbed “America's Century” risks isolating it from the region that's laying claim to the 2000s — Asia.

Trade ties forged over decades are running up against the steepest US tariff wall since the 1940s. People-to-people interactions are fraying as Chinese students are turned off by visa roadblocks and Singaporean tourists prefer Asian getaways.

Where Trump has notched wins — including $900 billion in investment pledges from Tokyo and Seoul — incidents such as a shock immigration raid that led to the detention of over 300 South Korean workers in September have shaken trust.

From the corridors of the sandstone Secretariat Building in New Delhi to the halls of Beijing's Zhongnanhai compound, leaders across a region that remains the world's main growth engine are rewiring their economies to work around Trump's America-First policies.

India and China are seeking to put aside a decades-long border dispute to deepen cooperation. North Asia's biggest economies are pledging to boost trade ties, though rivalries such as the latest China-Japan spat make it a bumpy process. Southeast Asian countries are trying to chart a neutral course, even as they're increasingly entwined economically with China.

Ten months into his second term, it's too early to make a definitive judgment on Trump's efforts to realign the global economy in America's favor, bringing shuttered factories — and the jobs they create — humming back to life.

Investment pledges from the likes of Taiwan Semiconductor Manufacturing Co. into new chip fabrication plants and HD Hyundai Heavy Industries Co. into long-neglected ship yards may yet revitalize strategic industries on US shores. The tariff shock to US inflation, growth and markets that economists warned of has yet to materialize.

But the risk is clear: America is cutting itself off from a region set to comprise almost 60% of the global economy by 2050 versus just 11% for the US, according to Bloomberg Economics. For China, Trump's tariffs and retaliation from Beijing threaten to slash trade by half, even after the two sides hit pause on some export restrictions in late October.

Bloomberg
China remains the world's manufacturing powerhouse, even if a property slump means growth is running slower than the pre-Covid years. Its leaders have just mapped out an ambitious plan to keep closing the gap on strategic technologies like semiconductors and AI and support future industries like quantum computing and nuclear fusion.

Bloomberg Economics estimates that China's high-tech sector now accounts for more than 15% of GDP, up from less than 11% in 2017. And when it comes to AI, China is rapidly closing the gap with the US thanks to lower cost models such as DeepSeek, whose R1 stunned Silicon Valley with its sophistication this year.

Bloomberg In his meeting with Xi in Busan, South Korea, on Oct. 30, Trump secured the resumption of soybean sales and rare-earths flows, while the US agreed to suspend a rule expanding restrictions on blacklisted Chinese firms. Trump also announced his 20% fentanyl tariff would be halved, shaving the average rate on Chinese goods to 31%, according to Bloomberg Economics.

But that's still too high for China's factories — operating on razor thin profit margins — to turn a profit on US sales. And on semiconductors, progress continues to be measured in nanometers, with a rumored shift to allow Nvidia Corp. to sell its advanced Blackwell chips to China failing to materialize.

America's Quad-partner New Delhi has been shocked by the punitive 50% tariffs and bellicose rhetoric directed its way for oil purchases that Trump says is helping fuel Russia's war in Ukraine. In his quest for lower levies, Modi continues to describe Trump as a “friend.” But the political mood has swung against America, with Modi's main political rival Rahul Gandhi describing the US president as a “bully” and his tariffs as “economic blackmail.”

Trump's approach to India helped to accelerate a rapprochement between New Delhi and Beijing. The two sides are now trying to put a deadly 2020 border clash in the past and deepen commercial links — a dance that Xi has dubbed the “Dragon-Elephant Tango.”

Behind closed doors, Indian officials are realizing they need Chinese investment to further their plans to boost manufacturing. For China, facing an aging population and battling industrial overcapacity, improved relations with India offer access to a rapidly growing market.

Indeed, by the end of this decade, India will have picked up the global growth baton with its contribution swelling in following decades, Bloomberg Economics' forecasts show.
Bloomberg As Trump throws up the trade barriers, intra-Asian trade is becoming freer.

Just a day after Trump wrapped up a trip to Malaysia, Chinese Premier Li Qiang and Malaysian Prime Minister Anwar Ibrahim oversaw the signing of an agreement in Kuala Lumpur to expand the China-Asean Free Trade Area. During a speech, Li sought to project his nation as a champion of free trade and called for unity with the 11-nation grouping known as the Association of Southeast Asian Nations.

“Interference by external forces in our region is rising, and many countries are being unreasonably subjected to high tariffs,” Li said. “Faced with strong political and economic bullying, disunity and confrontation will not only bring no benefits, but will lead to division and rule by external forces.”

The expanding BRICS group — which now includes Indonesia — is an additional avenue for China to build ties as capitals across the region fret about unraveling relations with Washington.
Bloomberg And it's not just fewer goods headed to America.

Student arrivals to the US dropped 19% in August year-on-year to just over 313,000 — a fifth consecutive month of declines, according to data from the International Trade Administration. That's the lowest number of students entering the US for August — a peak month ahead of the start of the academic semester — since 2021 amid the Covid pandemic. Indian scholars decreased 45%, while those from China dropped 12%.

Meantime, Trump's move to slap a $100,000 fee on new H-1B applications for skilled workers will disproportionately hurt Indians, who account for two-thirds of the visas. Indian outsourcers led by Tata Consultancy Services Ltd. and Infosys Ltd. had been heavy users of the program to deploy tens of thousands of engineers across American clients from Citigroup Inc. to Walmart Inc.

Bloomberg Trump's America has also become less appealing to tourists from places like Singapore, whose high-spending travelers are instead vacationing within Asia. Almost 80% of travelers in Southeast Asia said the US is losing appeal as a destination due to concerns over discrimination, Trump's policies and gun violence, a recent survey from CNBC Travel showed.

In a noodle bowl of trade, investment, and people-to-people interactions, not all ties have been severed — or even frayed - and some new connections are evolving.

At the business-to-business level, companies such as Apple Inc. have secured carve outs from Trump's sweeping tariff campaign, and Chinese firms have leveraged their market dominance to maintain sales worth around $1 billion a day to American importers. Investment pledges from Asian nations and companies now run into the hundreds of billions of dollars. Even if much of that is smoke and mirrors, there could be a lot of Asian money — and manufacturing — heading toward the US.

For American power in the Asia Pacific region, there's also a kind of automatic stabilizer built in: the more China's might rises, the more its neighbors will seek US support as a counter balance.

For one of the world's most China-dependent developed economies, Australia, that means locking into a multi-decade nuclear submarine agreement with Washington to counter any expansionist moves from Beijing. South Korea and the US are in private negotiations to jointly build nuclear-powered subs too. For China's historic rival Japan, it means increasing defense spending and committing to a vast and vague $550 billion US investment pledge to win Trump's favor.

For Trump and his supporters, the benefits of breaking ties might be worth the cost of doing so. Why carry on free trade with China when it's using the proceeds to accelerate its challenge to US economic and geopolitical supremacy? Why allow hundreds of thousands of Indian engineers into the country when investing in US workers would pay higher dividends?

Free trade or national security? Comparative advantage or America First? Offshoring to boost profits or onshoring to boost wages? The argument from Trump and his team is that past administrations paid too much attention to the first half of those pairings, and that their job is to restore balance by paying more attention to the second.

It's an argument that finds some support in the data: China's rise as an export powerhouse coincides with an accelerated decline in US factory jobs and stagnant incomes for America's middle class. More importantly, it's an argument that has won support at the ballot box, catapulting Trump into two terms as President.

As a policy package, though, it's hardly cost free. America has already transitioned from friend and ally to something some capitals regard as a rival and others as a bully. In the years ahead, if tariffs sever trade ties, people-to-people connections cool, and investments fail to materialize, America might end up as little more than a bystander in the Asian 21st Century.
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Source: EconomicTimes
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