EASTASIAFORUM

ECONOMICS, POLITICS AND PUBLIC POLICY IN EAST ASIA AND THE PACIFIC
Vol.17 No.3 July–September 2025 $9.50 Quarterly

Asia’s new trade politics

Simon J Evenett and Fernando Martin East Asian restraint on Chinese subsidies

Yixiao Zhou Reprogramming trade for an automated future

Sam Hardwick Asia and a leaderless trading system

Yves Tiberghien and Sun Ryung Park Green industrial policy race

Julia Tijaja Trade policy coordination post-Trump ... and more

ASIAN REVIEW: Andrew Levidis on Japan’s faltering LDP

 EASTASIAFORUM Quarterly
CONTENTS
3 SIMON J EVENETT
AND FERNANDO MARTIN
East Asian restraint tops rhetoric on
ISSN 1837-5081 (print)
ISSN 1837-509X (online)
Chinese subsidies
6 SAM HARDWICK
Asia responds to a leaderless trading
From the editors’ desk system
8 RIANDY LAKSONO
The politics of trade in Asia have been caught in the undertow of US AND DANDY RAFITRANDI
protectionism. In the past few months, high tariffs have been normalised Recalibrating Southeast Asian
and sweeping, unpredictable threats have heightened uncertainty, chilling trade policy in a world of economic
fragmentation
investment and upending supply chain and trade relationships.
Many Asian capitals have sought to accommodate Washington with side 11 SUSANNAH PATTON
deals. Some may be necessary to ease short-term pain. But as they proliferate, AND ROBERT WALKER
Trump tariffs drive Southeast Asia
they corrode the longstanding multilateral rules that protect small and towards China
middle powers. A necessary element of Asia’s response must be to deepen
cooperation among economies that rely on rules over raw power in the 13 YVES TIBERGHIEN AND
SUN RYUNG PARK
conduct of international trade. Green industrial policy race in Asia
Asia has better options than a transactional world order. The region has quickens despite US retreat
platforms that can hold the line—ASEAN-centred forums, including the
16 ANDREW LEVIDIS
Regional Comprehensive Economic Partnership and its cooperation agenda ASIAN REVIEW: Faltering LDP
and the Comprehensive and Progressive Agreement for Trans-Pacific’s high- unravels Japan’s postwar conservative
ambition rulebook. Deepening these arrangements can offset the costs of US hegemony
tariffs on the region, anchor resilience, keep markets open for most of global 21 VINDU MAI CHOTANI
trade and leave the door open for a future US return to economic cooperation. ASIAN REVIEW: Quad struggles to
This edition of East Asia Forum Quarterly maps the terrain on which find direction around divergent Indo-
these choices will be made. It examines how governments across the region Pacific visions
are juggling the shocks from Washington alongside domestic political and 26 YIXIAO ZHOU
economic pressures. It explores the rapidly changing trade policy landscape: Reprogramming trade in Asia for an
responses to Chinese subsidies, the ongoing race on green industrial policy automated future
and how automation and artificial intelligence are reshaping the path to 29 KA ZENG
industrialisation. It investigates how and why governments are stepping up China’s diplomatic influence on the
cooperation on economic security. line as it navigates the US tariff storm
The Asian Review section places the present upheaval in Japanese politics 32 VICTOR A FERGUSON,
in historical context and assesses the Quad’s struggle to reconcile divergent VIKING BOHMAN AND
visions of regional security. DARREN J LIM
Security begins to reshape Asia Pacific
The economies of Asia and the Pacific can’t wait for order to be restored
economic cooperation
from outside. The best defence against a zero-sum world or worse is to choose
rules over deals and integration over fragmentation. If the region uses its 35 JULIA TIJAJA
Southeast Asian policy coordination in
institutions to keep markets open, it can preserve the multilateral system
the post-Trump world
through this rough passage and be ready to take the lead in rebuilding it.
38 SHIRO ARMSTRONG AND
SAM HARDWICK
Sam Hardwick and Jason Tabarias Asia’s antidote to Trump’s tariffs

COVER PHOTO: A cargo ship is docked at the port

of Oakland, California (August 2025).
PICTURE: REUTERS / CARLOS BARRIA

2 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
TALK OR TRADE
PICTURE: CFOTO / SIPA USA

A worker inspects a production line at a pharmaceutical packaging company in Lianyungang, Jiangsu Province, China.

East Asian restraint tops rhetoric

on Chinese subsidies
SIMON J EVENETT
AND FERNANDO MARTIN

T HE debate surrounding Chinese

industrial policy has become
a defining feature of the debate
between rhetoric and government
action.
When Chinese firms receive
barriers against Chinese products,
deploying non-tariff measures or
subsidising local import-competing
about trade policy. Trading partners subsidies and their exports become firms.
routinely criticise China’s subsidies, available in overseas markets in greater In the United States, there is an
raising concerns about cross-border quantities and at lower prices, the extensive literature asserting there
spillover effects, price suppression, governments of importing countries has been a ‘China shock’, with some
the loss of jobs in import-competing can either capitalise on these lower- analysts attempting to link Chinese
industries and broader market priced goods—benefiting consumers firm subsidies to economic harm
disruption. But the actual policy and corporate customers alike—or abroad. Even the Chair of China’s
responses across East Asia and the implement defensive measures. The Ninth Trade Policy Review noted at
Pacific reveal a significant disconnect latter might include raising import the WTO in 2024 that ‘many Members

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 3
 believed that China’s subsidies goods, Indonesia imposed transparent

EASTASIAFORUM Quarterly
distorted global markets and promoted
overcapacity’.
import restrictions in merely 18 per
cent of cases.
The critical question is whether South Korea’s response was

EDITORIAL STAFF
Issue Editors
governments in East Asia are
implementing defensive measures
against the products that China has
the second largest in scope, with
defensive actions in 1227 codes where
China provided subsidies. South
Sam Hardwick, Research Fellow, East actually subsidised. Economists place Korea’s policy choices reflect a clear
Asian Bureau of Economic Research, considerable weight on revealed preference for non-tariff measures,
Crawford School of Public Policy, ANU. preference—the actions that decision- implementing transparent trade
Jason Tabarias, Research Team Lead, makers actually take, rather than the restrictions in only 93 codes where
East Asian Bureau of Economic
messages they communicate. After all, China provided subsidies. Taking
Research, Crawford School of Public
Policy, ANU. talk is cheap. high-profile measures against Chinese
Series Editors
Using the Global Trade Alert exports is not in vogue.
database, comprehensive data was Australia’s response covered 804
Peter Drysdale, Editor in Chief, East
Asia Forum and Head, East Asian extracted covering all products where product codes that received Chinese
Bureau of Economic Research, China provided subsidies to local firms subsidies, representing just under 20
Crawford School of Public Policy, ANU. from 1 January 2021 to 30 June 2025. per cent of all Chinese-subsidised
Shiro Armstrong, Director, Australia– Over the same timeframe, each East product categories. Japan followed
Japan Research Centre, and Editor, East Asian and Pacific trading partner’s with actions in 445 codes, meaning
Asia Forum, Crawford School of Public imposition of import restrictions was that Tokyo takes defensive measures
Policy, ANU.
also catalogued, including explicit in just one in nine products that China
Editorial Staff
measures such as tariffs, import subsidises.
Coordination: Hana Mori, quotas, unfair trade investigations and The remaining countries—New
Rhys Nickerson, ANU.
various non-tariff measures affecting Zealand, Vietnam, Thailand, Malaysia,
Editing: Emily Fursa, Grace King,
Chinese exports. The scope of Chinese Taiwan, the Philippines, Fiji and
Jett Aplin, Joseph Negrine, Kira Atkins,
Yige Xu, ANU. subsidisation was extensive, with Singapore—have taken defensive
Editorial Advisers: Max Suich, Peter
different forms of subsidies awarded to action in fewer than 300 codes that
Fuller. firms across 4220 Harmonized System China has subsidised. This translates
Production: Niki van den Heuvel, product codes—the standardised to around 7 per cent of all the product
Hill Editing. number system to classify traded categories that have received Chinese
products. subsidies since 2021.
Email [Link]@[Link],
[Link]@[Link]. The defensive responses by trading Breaking down the analysis by
partners reveal significant variation sector reveals considerable variation
across countries and a notable in response patterns across different
Views expressed are those of individual restraint in resorting to protective product categories. While there are
authors and do not represent the views of the measures. 20 harmonised system chapters where
Crawford School, ANU, EABER, EAF, or the Indonesia was the most expansive every Chinese-subsidised product
institutions to which the authors are attached. in its response to Chinese subsidies, faced some form of defensive measure
implementing measures covering 1329 in the region, only two chapters—
product codes. But this only represents chapters 61 and 62 covering apparel—
31 per cent of all subsidised Chinese involve product overlaps exceeding
product categories. Of these 1329 100 harmonised system codes.
product lines, Indonesia employed Pharmaceutical products present
Published by ANU Press
transparent import restrictions—such a particularly interesting case. China
The Australian National University as tariff increases, import quotas and subsidised 270 product codes while
Canberra ACT 2601, Australia unfair trade measures—in only 768 defensive measures were implemented
Email: anupress@[Link]
good types. This means that, of the in 260 cases across the rest of East
Web: [Link]
4220 codes where China subsidised Asia, yielding a 96 per cent overlap

4 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
rate. Base metals show a 93 per cent an incentive to bring such information posed by Chinese industrial policy.
overlap rate—copper reaches 92 per to the attention of their governments, Understanding which of these two
cent while the overlap rate for iron this may fail to translate into action. possibilities is closer to the truth
and steel falls to 80 per cent. Other None of this is to suggest that cross- would have a big impact on the future
manufactured goods demonstrate border harm caused by corporate discussions on the nexus between
progressively lower response rates of subsidies does not ever happen. trade, investment and industrial policy.
subsidy–defensive action overlap. Indeed, in recent years a small number EAFQ
of sectoral econometric studies claim

T HESE findings reveal a

fundamental mismatch between
the extensive public concern about
to have found evidence of trading
partner harm created by Chinese
industrial subsidies.
Simon J Evenett is Professor at IMD
Business School and Founder of the
St Gallen Endowment for Prosperity
Chinese subsidisation and the Our work suggests that either Through Trade.
willingness of importing governments China’s trading partners find such
to adopt defensive measures. The instances of harm are the exception Fernando Martin is Head of Analytics
revealed preference appears to be rather than the rule, or that the at the St Gallen Endowment and is
to enjoy the benefit from Chinese tools available to these governments affiliated to IMD.
subsidies with a limited number of are inadequate to the challenge
cases where costs are deemed to
exceed benefits. PICTURE: COSTFOTO / NURPHOTO

Even in the countries that have

responded most—Indonesia and South
Korea—defensive actions cover fewer
than one-third of Chinese-subsidised
products. The majority of East Asian
nations respond to less than 7 per cent
of Chinese-subsidised products with
any form of trade protection. China’s
trading partners in the region are
much more selective in their defensive
responses than their rhetoric often
suggests.
The revealed preferences of
East Asian governments indicate a
pragmatic approach that prioritises
buyers—including corporate buyers—
and benefits from subsidy-induced
market distortions. Only in a limited
number of sectors, particularly
apparel and certain metals, are more
comprehensive defensive responses
observable.
Another consideration is that,
though the Global Trade Alert
inventory of corporate subsidies is
free to access, some governments may
be unaware of Chinese subsidies in
certain product lines and so do not
take action. While local firms facing A worker processes high-end yarn on an intelligent production line in Zaozhuang City, Shandong
intensified Chinese competition have Province, China.

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 5
NAVIGATING UNCERTAINTY
PICTURE: COSTFOTO / NURPHOTO

A cargo ship loaded with foreign trade containers leaves the port of Qingdao, Shandong Province, China.

Asia responds to a leaderless

trading system
SAM HARDWICK

P OLICY uncertainty reshapes

trade both slowly and suddenly.
The investments that build trade
At the extreme end, when the
US ‘Liberation Day’ tariffs were
announced, some firms reportedly
Danny Quah calls a ‘two-shock system’.
On the demand side, a single Truth
Social post from the White House
relationships are long-term choices. abandoned their shipments mid- could upend US market access. On the
Supply contracts are often for 10 years Pacific rather than face the new duties. supply side, as Western trade barriers
or longer. Yet, while the consequences Others cancelled orders, then, when rise, Chinese exports into Southeast
of the second Trump administration the tariffs were paused, raced to Asia have surged, putting pressure on
will unfold over decades, the chaos ship as much as possible before the local producers.
is already palpable, and firms and deadline moved again. For the region to meet common
governments have to react now. Much of Asia faces what economist challenges, it needs cooperation

6 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
frameworks that can function without felt significant disruption. Some
a great-power leader. Despite the twin countries have adopted or extended For the region to
shocks, ASEAN governments have antidumping measures and calls from
done much to show leadership on industry for broader protection have meet common
multilateralism and can continue to grown.
build on that record. Most smaller countries have wisely challenges, it
US tariff rates will wax and wane, avoided retaliating against the United
but elevated uncertainty is the new States and have sought negotiations. needs cooperation
normal. The leading trade policy The ASEAN Economic Ministers’ joint
uncertainty index has never returned statement on 10 April 2025 pledged frameworks that can
to its pre-2016 median. Even under no retaliation, welcomed dialogue and
former US president Joe Biden, Trump reaffirmed support for the multilateral function without a
1.0’s 2018–19 tariffs generally stuck trading system—a timely and powerful
and new ones were added. Under affirmation of the region’s long-term great-power leader
Trump 2.0, US chief financial officers interests.
are postponing or cancelling long- China, combining retaliation
horizon investment because of trade with talks and concessions, is an
risks. While a future administration exception. Its size and the difficulty as its pressure on Vietnam and others
might stabilise Washington’s approach of substituting many Chinese exports to slash Chinese-origin content.
to trade, it will still take years, and give Beijing the means and incentive to Such demands are not just costly but
likely a major international accord or retaliate. The most constructive way is threaten the role of non-aligned bridge
congressional shift, for confidence and to use WTO processes and, as China economies, which are vital in avoiding
credibility in US trade policy to return. has done, to widen market access for a return to 1930s-style trade blocs.
Exposure to the tariff shock varies non-US partners. Whether Beijing Illicit trans-shipment is a real
but no economy is immune. Roughly has the desire or capacity to assume problem that governments want to
30 per cent of Cambodia’s and 25 a leadership role in rehabilitating the address, but US complaints extend
per cent of Vietnam’s GDP come multilateral trading system is less clear. beyond actual customs fraud. The
from exports to the United States. Some countries have pursued and, White House expects rules of
Even in less US-oriented economies in some cases, secured bilateral deals origin—the methods for determining
like Australia or Indonesia, sensitive with Washington. For some, like a product’s country of origin—to be
sectors remain at risk and leaders still Cambodia or Vietnam, doing so is up for negotiation. These rules can be
fret about Washington’s next move. an economic imperative. There is no highly subjective, and there is a major
Resilience should be a collective unified regional regime for governing risk that they could be weaponised to
project. these negotiations, which chafe against bifurcate supply chains.
Government responses demonstrate states’ multilateral commitments. The Economically, the best defence
the seriousness of the expected result has been a spate of hasty, non- is to use regional integration to
macroeconomic impact. Indonesia, binding announcements to appease hold the line against protectionism.
Malaysia and Thailand rolled out Trump, which officials must then Modelling from the East Asian
assistance packages ahead of the tariff present as steps towards legitimate Bureau of Economic Research and the
pause expiry. Vietnam extended a VAT agreements. Centre for Strategic and International
cut to 2026. Central banks around the Studies suggests that US tariffs like
region lowered policy rates.
Competition from rising Chinese
imports adds to this pressure. Since
R ESPONDING collectively, such
as through ASEAN-centred
groupings, does add weight but will
those announced in April 2025
would cut ASEAN real GDP by 2.3
per cent. If contagion pushed global
2023, more of China’s exports by value not always be possible. Washington tariffs to 15 per cent, the outlook
have gone to ASEAN than to the can refuse to be drawn into joint would be far bleaker still, reducing
United States or Europe. Industries negotiations. But quietly coordinated regional output by over 11 per cent.
like furniture, garments and steel pressure offers the best defence against But in another scenario—where
in several ASEAN economies have the most harmful US demands, such other countries retaliate but ASEAN

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 7
instead fully implements the Regional cooperation component. trade. Other economies can decide
Comprehensive Economic Partnership Most countries want cooperation to what extent rules or power will
(RCEP)—that loss turns into a 1.9 per that will drive green growth and govern the remaining 89 per cent. By
cent gain, driven by intraregional trade improve resilience to shocks. Ideally, reinforcing multilateral principles,
and production substitution from these agendas would advance within accelerating regional agreements and
China, Europe and India. WTO processes, but consensus advancing cooperation on resilience
Investing in RCEP and the obstacles mean progress there will be and the energy transition, Asia can
Comprehensive and Progressive slow and uneven. Practical gains will mitigate uncertainty while keeping
Agreement for Trans-Pacific need to come through issue-specific an open door should Washington
Partnership and improving the plurilateral initiatives, preferably reengage. EAFQ
processes for deepening and structured so that any country that
expanding them are the region’s demonstrates commitment can join. Sam Hardwick is Research Fellow in
most effective insurance policies. In The deeper challenge is to build the East Asian Bureau of Economic
RCEP, aligning tariff schedules among a multilateral trading system that Research at the Crawford School of
members and simplifying rules of functions with or without hegemonic Public Policy, The Australian National
origin are two important areas to start. sponsorship. University.
This will also add political heft to the The United States accounts for
agreement’s still-nascent economic about 11 per cent of global goods

UNITY & INTEGRATION

Recalibrating Southeast Asian

trade policy in a world of economic
fragmentation
RIANDY LAKSONO
AND DANDY RAFITRANDI

T HE US–China rivalry is reshaping

global supply chains, presenting
ASEAN with unprecedented
rates US President Donald Trump
announced on ‘Liberation Day’,
countries must agree to measures
year-on-year, even as exports to the
United States declined by almost one-
third. This decline was compensated
opportunities and existential threats to ostensibly designed to prevent trade by an 18 per cent rise in Chinese
the economic integration model that rerouting. But these trans-shipment exports to ASEAN, accounting for
has driven its remarkable growth. requirements risk unravelling regional almost half of China’s export growth.
A malign force reshaping global supply chains, effectively weaponising This shift has given birth to
trade is the US strategy of embedding trade policy to dis-integrate existing ‘connector countries’ as firms seek to
stringent trans-shipment provisions in production networks. relocate to lower-tariff locations with
bilateral deals with ASEAN countries During the first two months after sufficient manufacturing capabilities
running trade surpluses. In exchange ‘Liberation Day’, China’s total exports like Vietnam to replace Chinese
for lower tariffs than the blanket continued to grow at over 6 per cent production while the United States

8 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
 PICTURE: CFOTO / SIPA USA

Containers await trans-shipment at a terminal in Nanjing port, Jiangsu Province, China.

seeks alternative suppliers. In the tariff rate instead of 40 per cent, could have devastating effects on intra-
first four months of 2025, ASEAN Vietnam must prove that its exports ASEAN and Regional Comprehensive
countries exported more products are not transhipped from other Economic Partnership supply chains.
to the United States than China, countries. ASEAN economies, especially those
accounting for about 11 per cent of Defining the origin of goods is not that already or nearly have a deal with
total US imports. straightforward, especially considering the United States, would be forced to
While this export surge may the intricate nature of modern supply de-risk from China or pay a 40 per
signal supply chain realignment and chains. Materials undergo several steps cent additional import duty instead of
appear to favour ASEAN, redirecting before reaching their final destination, 19–20 per cent.
exports from China carries large risks. potentially involving processes ASEAN countries rely heavily
Goods are redirected across borders that US border authorities deem on competitive imported materials
more quickly than investment from ‘non-meaningful’, labelling them as from China as inputs into their
relocating companies, which takes transhipment. This means relocating global exports. On average, one-third
much longer to materialise. ASEAN China’s factories to ASEAN may of ASEAN economies’ imported
may first experience an influx of not be as economically profitable as materials are from China with
Chinese imports before seeing the before, particularly for firms that still Vietnam being the most dependent
benefits of any investment relocation. carry substantial Chinese content. at 40 per cent. Input dependency on
But the punitive US trans-shipment This is why defining trans-shipment China has also been rising and Chinese
measures may slow down production is the next most important game to content in ASEAN countries’ exports
relocation out of China. The US– watch. If applied too broadly to police has nearly tripled from 2005–20. Even
Vietnam deal illustrates the challenge high foreign content, the trans- for Indonesia, where the share remains
starkly. To qualify for a 20 per cent shipment clause in the US trade deal below 3 per cent, Chinese value-added

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 9
 an impetus for domestic reforms— Trade negotiations with the European
... ASEAN must resist improving import regulations, Union make strategic sense, but
attracting foreign investment and policymakers should move beyond
US protectionist diversifying export destinations bilateral approaches and pursue
towards the European Union and multilateral agreements to keep
pressures and China. While challenging politically, regional arrangements relevant and
this approach could build long-term avoid discriminatory deals.
extend efforts to economic resilience. ASEAN must also anticipate
Singapore, Malaysia and Thailand China’s gradual transition towards a
build coalitions have been quietly rerouting supply consumption-led growth model. If
chains while maintaining trade successful, this will create significant
with countries and neutrality and strengthening demand for exports and investment
engagement in regional and digital opportunities. To ensure ASEAN
regions facing similar trade frameworks. Their strategy becomes a competitive destination
aims to avoid direct confrontation for firms relocating from China,
pressures with major powers while positioning governments should maintain
themselves as stable nodes in a open and investor-friendly policies,
fragmented economy. keeping regional supply chains intact
Due to its large export share, the while enhancing local value-added
accounts for about one-fourth of its United States has successfully forced capabilities.
total foreign value-added in exports. its agenda on ASEAN countries. But Without domestic reforms
The departure from most-favoured- ASEAN must resist US protectionist that deliver tangible economic
nation principles creates incentives for pressures and extend efforts to build improvements to the local
tariff circumvention through export coalitions with countries and regions economy and people, international
redirection, driving trans-shipment facing similar pressures. commitments will be politically
provisions to serve US political difficult to sell.
objectives. But the US logic will
unravel the multilateral trading system
that has underpinned regional and
A UNIFIED negotiation strategy
and firm stance against
discriminatory US measures will far
By choosing unity over
fragmentation, principled resistance
over opportunistic capitulation and
global economic growth. outweigh the perceived advantages of regional integration over bilateral
ASEAN’s own negligence towards fragmented bilateral deals. Southeast dependency, ASEAN can navigate the
a multilateral trading system has Asia’s ad hoc approach reflects present challenges while preserving
contributed to ad hoc responses from policymakers’ short-sightedness, the openness and integration that
ASEAN countries, undermining the focused on securing US market access have made it one of the world’s most
collective stance needed to counter US without appreciating how damaging dynamic economic regions. EAFQ
pressure tactics effectively. bilateral deals could be if they shatter
Vietnam’s defensive compliance regional supply chains and shrink Riandy Laksono is a researcher in the
enabled a swift bilateral deal with global market share. Department of Economics at Centre
the United States, conceding zero Existing supply chains are more for Strategic and International Studies
tariffs and stricter trans-shipment resilient than often perceived, (CSIS) Indonesia.
requirements in exchange for especially outside geopolitical
continued market access. This hotspots. Localisation does not Dandy Rafitrandi is a researcher in the
approach provides some short-term eliminate risk or guarantee more Department of Economics at Centre
certainty but creates long-term secure supply chains—it merely shifts for Strategic and International Studies
dependence on the United States and supply chain risk from foreign to local (CSIS) Indonesia, Editor-in-Chief of
destroys value chains. sources. the CSIS Editorial Team and Project
Strategic realignment, pursued by ASEAN countries should Director at the Decarbonization for
Indonesia and the Philippines, has coordinate to intensify domestic Development Lab.
tried to use the US tariff shock as reforms and promote diversification.

1 0 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
ECONOMIC PIVOT

Trump tariffs drive

Southeast Asia towards China
PICTURE: REUTERS / HASNOOR HUSSAIN
economic development has been
driven the export of manufactured
goods through their participation in
regional supply chains, it is hard to
imagine a more concerning scenario
than facing such barriers to the US
market. With Vietnam taking the lead,
Southeast Asian countries scrambled
to negotiate better deals with the
United States. Hanoi reportedly
offered to buy aircraft and liquefied
natural gas from the United States and
fast-tracked approval for a Trump-
family golf course in Vietnam.
The need to preserve access to
the US market is acute, especially
for countries like Vietnam and
Malaysia, which have benefited
from a post-pandemic push to build
more diversified supply chains. This
global trend drove strong foreign
direct investment into Southeast
Asia, leading to a surge in new
manufacturing projects across various
sectors. But much of that investment
rested on the assumption Southeast
Asia would maintain relatively
unrestricted access to the US market,
Malaysian Prime Minister Anwar Ibrahim delivers his speech as ASEAN Chair during the 58th Association especially compared to China—a
of Southeast Asian Nations Foreign Ministers’ Meeting at Kuala Lumpur (9 July 2025). premise that is now in doubt.
The uncertainty created
by Washington’s abrupt and
SUSANNAH PATTON unpredictable tariff changes will
AND ROBERT WALKER exacerbate financial market stability,
delay consumption and investment

U NTIL the 2 April 2025 ‘reciprocal

tariffs’ announcement, Southeast
Asian countries appeared more
the region had warmed to Trump,
with more participants preferring the
United States over China if forced to
decisions and may create recessionary
conditions. Even if Southeast Asian
countries reach bilateral deals with
sanguine than others about Donald choose. the United States or the Trump
Trump’s return to US presidency. The Trump’s announcement of steep administration unilaterally halves
2025 ISEAS–Yusof Ishak Institute tariffs has shaken the region from this its ‘Liberation Day’ tariffs—in line
State of Southeast Asia survey showed complacency. For countries whose with the July US–Vietnam bilateral

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 1 1
 administration will set goalposts and been laggeding as domestic demand
Trump’s tariffs change them at the last minute. We continues to stagnate.
should think about the long term and Instead, Southeast Asia will top
mark yet another rewire the way we think about trade.’ the list for Chinese firms redirecting
This interest in diversification is one excess goods supply from the
such milestone that reason why Malaysia convened a United States—in 2023 ASEAN
special summit involving ASEAN, the was already China’s largest export
accelerates the Gulf Cooperation Council and China. market. Many of these exports are
What will be the long-term impact capital or intermediate goods crucial
sense of disconnect of Southeast Asia’s efforts to reduce for Southeast Asia’s own export
US exposure? The region’s post-Cold industries, feeding into exports to
between the United War geopolitics have been marked the United States and the rest of the
by inflection points: the 1997 Asian world. But increasingly, China is
States and Southeast Financial Crisis, when China was seen exporting final goods for consumption.
as providing stability and assistance; Southeast Asian countries have been
Asia the 2008 Global Financial Crisis, when slow to raise trade barriers against
China capitalised on the perception China compared to the rest of the
of US decline; and the COVID-19 world, making its producers more
pandemic, when China was quicker vulnerable to an export surge from
deal—the region’s supply chains will on the ground to support a health China.
be less lucrative. The Vietnam deal response. In isolation, these episodes China’s ability to reap the
already appears to be fraying, and the appear as ad hoc fluctuations in geopolitical rewards of US tariffs may
threat of future abrupt changes weighs relations with the United States. In also be limited by the decline in its
heavily. Investment and growth will retrospect, they may prove to be development finance to the region and
undoubtedly take a hit. milestones in the region’s long-term by uncertainty that risks dampening
While pursuing bilateral deals drift towards China. private investment.
with the Trump administration is the Trump’s tariffs mark yet another While China is a central presence
region’s main game, Malaysian Prime such milestone that accelerates in Southeast Asia, the United States
Minister and current ASEAN Chair the sense of disconnect between is now demonstrating not only its
Anwar Ibrahim has also sought to lead the United States and Southeast perennially underdone engagement
a unified regional response. At the Asia. Chinese President Xi Jinping strategy that predates Trump, but also
May 2025 summit, ASEAN leaders has already begun to capitalise on its chaotic and unpredictable approach
issued a statement, relatively strong concerns about US protectionism, that diminishes the attractiveness
by ASEAN standards, committing the positioning China as the bastion of of the United States as a long-term
region to avoid retaliatory or unilateral free trade and urging unity among economic partner.
action and calling for deeper economic an ‘Asian family’ during his April Trumps tariffs thus represent
integration within ASEAN. Anwar has 2025 tour of Vietnam, Malaysia and another inflection point reinforcing
also written to Trump requesting a Cambodia. the shift towards China. Just how far
special US–ASEAN summit—though The perception that US trade policy will depend on how well China and
Anwar is in a weak position to act as is destabilising and unpredictable Southeast Asia navigate the new tariff
convenor of such a meeting, having advantages China. But Beijing’s era. EAFQ
not even had an introductory phone ability to profit directly from the
call with Trump. situation is constrained by economic Susannah Patton is Director of the
Southeast Asian countries have circumstances. China does not offer a Southeast Asia Program at Lowy
also identified trade diversification as ready substitute markets for exports Institute.
their other main response to the risk of to the US consumer market. While
high US tariffs. In June 2025, Deputy Southeast Asia and China are each Robert Walker is Research Fellow at the
Minister for Trade and Investment other’s largest trading partners, Lowy Institute.
Liew Chin Tong said: ‘The Trump China’s imports from the region have

1 2 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
CLEAN ENERGY CONTEST

Green industrial policy race

in Asia quickens despite
US retreat
YVES TIBERGHIEN AND
SUN RYUNG PARK

O VER the past few years,

the combination of intense
US–China competition over green
from the heavy subsidies for green
energy and electric vehicles (EVs)
contained in the Inflation Reduction
Trump’s policy remains
unpredictable, but most countries in
Asia and the Pacific are continuing to
technology and an energy security Act. The US U-turn is unlikely to invest in green industrial policy for
crisis induced by Russia’s invasion change the fundamental dynamics of three main reasons.
of Ukraine triggered a global green the global green race, though impacts The green transition is a
industrial policy race. In 2025, US can be expected in the United States transformative industrial revolution
President Donald Trump walked away and Canada and Mexico’s EV sector. occurring alongside the artificial

PICTURE: COSTFOTO / NURPHOTO

An aerial view shows arrays at an integrated photovoltaic solar farm and fishery in Ma'anshan, Anhui Province, China.

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 1 3
 intelligence and digital industrial security concerns. Countries in
Most governments revolutions. Most economic players the region recognise the need to
and states are aware that solar and strengthen the resilience of their
in the region see wind-generated electricity are cheaper energy mix. Green energy offers a
to produce in most geographies. They solution, as it is both decentralised
green technology also know that the core energy model and less dependent on foreign sources.
at the heart of the global economy This is why China is building solar
and artificial must transition over the next few and wind farms around its sun and
decades to green technology because mountain belt on a huge scale. A July
intelligence as of the accelerating climate crisis. 2025 report estimated that China
Policymakers are anticipating these is building almost three-quarters of
strategic imperatives long-term trends in their strategic the world’s solar farms with a total
calculations, even though domestic capacity of 510 gigawatts. When
in their economic obstacles and a complex array of EVs are plugged into a solar-driven
stakeholders can hinder progress. grid, pressure is also released on oil
development The 2022 Russian invasion of imports. For countries in Southeast
Ukraine—followed by wars in the Asia, India or Africa, affordable solar
Middle East—heightened energy panels support sustainable access to

PICTURE: REUTERS / CHALINEE THIRASUPA

Workers assemble a car at inside BYD's first EV factory in Southeast Asia, Rayong, Thailand.

1 4 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
electricity. market restrictions, competition transparency, reciprocity and a degree
Finally, the green technology policy, export support and a range of of forbearance—must be established
revolution has transformed industrial other instruments. The problem is to avoid spiralling fragmentation of
models and spurred new industries that these mechanisms are inherently global markets.
and firms. It has become a race for distortive and have indirect negative Governments understandably wish
industrial competitiveness. And most effects on trade partners. to be present in such a high-stakes
countries don’t want to fall behind. The Global Trade Alert reports a industrial revolution that embeds
China has become the frontrunner in global rise in industrial policy since many strategic priorities. But it is
the global market for electric vehicles, 2015. The New Industrial Policy crucial to mutually disclose data
while non-Chinese, traditional Observatory’s database indicates on measures of industrial policy,
carmakers have begun to stumble and that the value of new international adhere to some degree of reciprocal
firms—including US and Japanese subsidies in force between January balance and accept certain limits
carmakers—have seen their market 2023 and May 2025 reached US$1.5 and rules, such as voluntary export
share fall. The accelerating race for trillion, with US$64 billion of new restraint. ASEAN has a particular
electric vehicle markets in Southeast green subsidies in 2023 and US$109 interest in leading this process
Asia follows this logic. billion in 2024, including in the United directly through forums like the
States, Canada, Australia, Europe, Regional Comprehensive Economic

E XPONENTIAL global growth

of the green technology sector is
continuing despite the US decision to
China, India and Brazil. All are likely
to have a distortive effect. Despite the
US retreat from green subsidies, data
Partnership. APEC should also play
a role. By leading this process, East
Asian countries would be at the
step back. In 2024, global renewable shows big-ticket items continuing in forefront of standard-setting—in
capacity increased by 585 gigawatts—a Europe, China, India, Canada and coordination with Europe, North
15 per cent increase in total stock— Brazil. America and beyond. EAFQ
representing 92 per cent of new power There is no doubt that industrial
generation capacity. By the end of policy on such a scale will often Yves Tiberghien is Professor of Political
2024, renewables already represented fail. Designing successful industrial Science and Konwakai Chair in
46 per cent of global power capacity. policy is challenging, since it Japanese Research at the University of
There remains huge pent-up demand requires carefully balancing strategic British Columbia, and Distinguished
across the developing world. And 17 government objectives, private sector Fellow at the Asia Pacific Foundation
million electric vehicles were sold in needs and innovation, and overall of Canada.
2024, representing 20 per cent of all market dynamics. In China, companies
new car sales. like BYD started as ambitious private Sun Ryung Park is Lecturer at the
Most governments in the region firms that developed their own University of British Columbia, and
see green technology and artificial innovation ecosystems. Only later did Senior Research Scholar at the Asia
intelligence as strategic imperatives the state intervene with subsidies. Pacific Foundation of Canada.
in their economic development. They This sequencing—when and how
seek access to cheap green energy and to intervene, how much support

EASTASIAFORUM
a position in its global supply chain. to provide and when to phase it
This is due to associated concerns out—matters. The Chinese market
about jobs and economic security. faces massive overcapacity and many Quarterly
For example, Japan is making a large companies may not survive. The OUR NEXT ISSUE . . .
bet on a new type of ultra-thin solar Global Trade Alert also shows that
panel technology unveiled at the Expo industrial policy tends to generate a SUBSIDISING
2025 in Osaka in an attempt to regain ‘vortex of tit-for-tat retaliation’. There
industry leadership from China. is a 74 per cent probability that a INDUSTRIALISATION
Multi-dimensional goals are major power’s subsidy will be met by a
capable of being achieved through counter-subsidy from another power [Link]
some industrial policy tools, including within one year.
subsidies, tax breaks, research support, Three principles of policymaking—

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 1 5
 ASIAN REVIEW: THE PAST AGAINST THE PRESENT

Faltering LDP unravels Japan’s

postwar conservative hegemony
ANDREW LEVIDIS

A S WE approach the 100th

anniversary of the Shōwa
monarchical era and the 80th
the LDP—and its coalition partners—
lack a majority in both houses of the
Japanese parliament.
of the modern Japanese state. Without
risk of exaggeration, one might say that
the history of the party is inseparable
anniversary of the end of the Second By dint of its longevity, the LDP from that of modern Japanese
World War, Japan’s Liberal Democratic and the political order it established, conservatism. For 70 years, the LDP
Party (LDP) stands at a crossroads. For the so-called 1955 system, have had has displayed a remarkable sensitivity
the first time since its creation in 1955, far-reaching effects on the trajectory to opportunities to amass power and

PICTURE: FRANCK ROBICHON / POOL VIA REUTERS

Caption. White text over image.

Shigeru Ishiba, Japan’s Prime Minister and president of the ruling LDP, walks in front of a board with red paper roses showing elected candidates at the LDP
headquarters on the day of Upper House election, Tokyo (20 July 2025).

1 6 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
 ASIAN REVIEW: THE PAST AGAINST THE PRESENT

fend off challenges to its control of the of the second Shinzō Abe cabinet
cabinet and premiership. in 2012, we are a long way from It would be a mistake
But the once dominant LDP is the halcyon days of conservative
in retreat, its strength sapped by dominance. The decline of the to assume that the
consecutive electoral defeats in 2024 conservative hegemony is the
and 2025. Thus, it is the right time to culmination of broad-based trends same strategies that
think historically about the LDP as that arc back to the 1990s and 2000s
a starting point for an assessment of and which are redrawing battlelines of allowed the LDP
the present and future possibilities of Japanese party politics.
Japanese party politics. to recover its pre-
Superficially, there is much about
the LDP’s current predicament
that bears a resemblance to the
T HREE major changes in Japanese
conservative politics since the
1990s will serve as a guidepost to
eminence in the 1990s

circumstances of August 1993 navigate the past and the future of and 2000s will again
when an eight-party coalition led the LDP. The first is institutional. The
by Morihiro Hosokawa, scion of quest for strong national leadership be successful
an ancient noble house, forced the that resulted in the concentration of
LDP from power for the first time in authority and specialist administrative
nearly four decades. Then, as now, the expertise in the Prime Minister’s
party faced interlocking crises—the Office (Kantei) has eroded the ruling Kōmeitō’s ability to deliver votes for
Recruit scandal, party dissension and party as an extra-cabinet forum. the ruling coalition. Likewise, in the
internecine personal rivalries—that Connected to this change is aftermath of the political murder of
fatally undermined confidence in the the weakening of the political former prime minister Shinzō Abe in
LDP’s ability to govern. Even after factions, which structured the LDP’s 2022, public anger at revelations of the
losing control of the cabinet however, governance approach since 1955. LDP’s electoral alliance with the South
the LDP remained a significant force The consequences have been plain to Korea-based Unification Church,
with deep ties to business circles, see—a breakdown in party discipline, which stretched from the Cold War
bureaucratic elites and the United problems harmonising parliamentary to the 2000s, has further weakened
States, all of which doubted the and cabinet positions, as well as citizens’ identification and support for
opposition parties’ capacity to govern divisions over allocation of party the LDP.
and were dissatisfied with the new power. The decline of the factions has Third, the erosion in the party’s
direction in Japanese diplomacy and highlighted a new prominence for ability to formulate long-term policy
politics. ex-premiers in party decision making. is not simply a consequence of the
It would be a mistake to assume It is likely that in any post-election strengthening of the Prime Minister’s
that the same strategies that allowed coalition negotiations with opposition Office, but of the end of the alliance of
the LDP to recover its pre-eminence parties or breakaway factions, ex- higher bureaucrats and the political
in the 1990s and 2000s will again be premiers such as Tarō Asō and parties that existed for four decades
successful. The political characteristics Yoshihide Suga will play a central role. between the 1950s and 1990s.
that distinguish today’s LDP from Second, the weakening of the The prominence of higher
previous periods militate against LDP’s machinery of electoral bureaucrats in postwar Japanese
a rapid restoration of party power. mobilisation has mirrored changes politics represented a major departure
The alliances of party men and in the relationship between religion from prewar and wartime experience.
bureaucratic expertise that existed and public life in Japan. The 2023 As historian Yuichirō Shimizu has
until the 1990s are no longer operative. death of Daisaku Ikeda, international shown, bureaucrats first emerged as
To make matters worse, the postwar president of the religious movement a ‘special political force’ during the
international order on which the Sōka Gakkai and founder of Kōmeitō Allied Military Occupation in the late-
conservative hegemony rested is in (The Clean Government Party), 1940s when the wartime leadership
precipitous decline. combined with the absence of a was either purged or imprisoned in
Thirteen years after the formation charismatic successor has weakened Sugamo. Beginning under the long-

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 1 7
 ASIAN REVIEW: THE PAST AGAINST THE PRESENT

serving prime minister, Shigeru would give the coalition a deeply

Yoshida, elite bureaucrats were rapidly conservative cast. Similarly, an array It is still too early to
elevated to positions of postwar power, of moderates in the party support a
serving as intermediates between the reformist-conservative alliance with know whether the
Diet and the higher bureaucracy, a the Democratic Party of the People
historical moment that reached its along the lines of the coalition the expansion of the
terminus with the premiership of LDP struck with the Socialists in 1994
Kiichi Miyazawa in 1993. that led to the Tomiichi Murayama ruling coalition will be
In the place of bureaucratic government. It is difficult, however,
politicians, the ranks of the LDP are to see under what circumstances the a temporary marriage
now dominated by party politicians LDP would agree to hand control of
from dynastic backgrounds, a change the Prime Minister’s Office to the of convenience
that has undermined the party’s ambitious and charismatic Democratic
commitment to reform of the political Party for the People leader, Yuichirō or a permanent
system. Tamaki.
The LDP’s efforts to hold onto feature of Japanese

E VEN as the Liberal Democratic

Party’s pre-eminence has
been weakened by changes in
power are likely to be helped by the
opposition’s failure to capitalise on
their enhanced strength after the
parliamentary politics

the international and domestic October 2024 Lower House elections.

environments, the party remains There is no straightforward path for
prima inter pares and thus central the Constitutional Democrats (Rikken with unsentimental eyes, the new era
to any coalition government. As the minshutō) to form government. The of coalition politics might prove to be
ruling party backed by influential most likely option is a revival of a short-lived. It may be little more than
business circles, the LDP retains middle-of-the-road cabinet modelled an interregnum during which power
significant advantages as it negotiates on the ex-diplomatist Hitoshi Ashida’s is placed in the hands of experienced
to expand the governing coalition 1948 coalition of the centre-right leaders like ex-foreign minister
and share power. Hovering in the and the progressive left, uniting the Yoshimasa Hayashi, while LDP
background of party leaders’ minds is Democratic Party, Socialists and powerbrokers hammer out agreement
the failure in 1993 to convince New People’s Cooperative Party. There on elevating a younger generation of
Party Sakigake led by Masayoshi exist, however, onerous barriers to a leaders committed to political reform,
Takemura to throw his support power sharing arrangement among electoral purification, and stricter
behind the LDP thus resulting in the Constitutional Democrats, Japan controls on political fundraising and
the formation of the Hosokawa Communist Party and Socialist Party. involvement in wielding backroom
government. The opposition is divided: their influence.
One of the most straightforward electoral appeal rests on incompatible
paths to preserve the LDP’s control of
the cabinet and the Lower House is
to expand the ruling coalition beyond
promises while each party desires to
enhance its position at the expense
of the other. Perhaps most symbolic
T HERE is a ghost at the banquet
of the present upheavals in
Japanese politics which has echoes
the quasi-religious party, Kōmeitō, to of these divisions is the inability of to the prewar past. In response to
include the conservative Ishin-no-kai, opposition parties to coordinate a prolonged political emergency
or the Democratic Party for the People on a motion of no confidence, thus or rapidly changing international
(kokumin minshutō). However, it will prolonging the existence of the Shigeru situation, it is not unthinkable that
be difficult for party powerbrokers to Ishiba government. the idea of a national unity cabinet
reach agreement on which party to It is still too early to know whether (kyokoku itchi naikaku) involving
invite into the ruling coalition. Given the expansion of the ruling coalition the LDP, Kōmeitō, Ishin and the
its governing experience in Osaka, will be a temporary marriage of Constitutional Democrats might come
Japan’s second largest city, Ishin is convenience or a permanent feature of to be perceived as a means to restore
the obvious choice, though one that Japanese parliamentary politics. Seen stable government until the parties

1 8 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
 ASIAN REVIEW: THE PAST AGAINST THE PRESENT

regain their coherence and internal displacing the Social Democrats as the sword. The United States remains a
unity. This is an idea that retains second largest force in the German formidable great power at the head of
significant force within the governing parliament. Another variable in the a planetary-spanning military web of
elites as a way to unify the country equation is growing dissatisfaction regional hegemons and client states.
in response to foreign and domestic with Japan’s postwar position in the Cut loose from all red lines, the United
crises, such as an unanticipated war in American world system. States under President Donald Trump
East Asia. A decade of close Japanese is a more unpredictable great power
It is impossible to grasp the alignment with the United States adversary for the People’s Republic of
direction of Japanese politics in has been rewarded by the second China. Equally, the United States’ turn
the 2020s without relating them Trump administration with unilateral to a more transactional view of inter-
to the international environment, imposition of one of the highest state relations, where even sovereign
particularly the changing climate tariff rates, leaving Japanese leaders borders are subject to negotiation,
of party rule globally. Across the to question the cost of fidelity to the presents formidable problems to
developed world, political parties that American alliance. As the party most Japan’s commitment to the postwar
dominated the post-1945 period have closely associated in the public mind order.
lost power in the face of challenges with Japan’s postwar embrace of the We are witnessing the end of an
from the populist and nationalist United States, the LDP has much to anomalous period of diplomatic
right, symbolised by the success lose. harmony which characterised US–
of the Alternative for Germany in The problem is a double-edged Japan relations in the first two decades

PICTURE: REUTERS / KIM KYUNG-HOON

Japan's Sanseito party leader Sohei Kamiya delivers a speech during a party rally a day after the Upper House election, Tokyo (21 July 2025).

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 1 9
 ASIAN REVIEW: THE PAST AGAINST THE PRESENT

position, many Japanese policymakers immigration and foreign ownership of

While one should are embracing a more multidirectional critical infrastructure, is a reminder
foreign policy. The era of complacency that Japan is not immune from the
not overestimate over Tokyo’s strategic choices and populist waves that have swept the
military priorities in Western capitals developed world.
the extent and is over. It is not inconceivable that a Sanseitō’s electoral ascendence
new generation of decision-makers has been driven by the success of
character of the might embrace a vision of autonomous its political offensive against the
strength, with Japan as both a balancer consensus on internationalisation
changes in Japanese and bridge between great power blocs, (kokusaika) that has held since the
cultivating ties with multiple power 1980s. The party’s draft constitution
politics, the problems centres while maintaining maximum which envisions changes to the
sovereignty. Diplomatically, there is balance between imperial sovereignty
confronting the much opportunity for Japan to lead the and popular sovereignty, shows that
push for reform of global governance demands for constitutional revision
postwar conservative and a more equitable redistribution have not gone away. The abdication
of power to the developing world that of the Heisei Emperor and Empress
hegemony are bypasses the geopolitics of the BRICS. in 2019, and enthronement of the
Reiwa Emperor, whose own views on
formidable
I T IS fair to ask to what ends
the opposition, led by the
Constitutional Democrats, seeks
constitutional politics remain a blank
slate, have emboldened nationalist
forces that seek a reckoning with the
power. The answer is no longer 1947 constitution.
of the 21st century and a return to the a commitment to pacifism and While one should not overestimate
historical norm. Across the political democratic principles of the postwar the extent and character of the changes
spectrum, Japanese citizens are asking era, or even broad-based political in Japanese politics, the problems
new questions about the US–Japan and socioeconomic reform. Rather, confronting the postwar conservative
alliance and expressing new opposition it seems driven by a narrow focus on hegemony are formidable. To revitalise
to entanglement in American wars. returning to power at all costs. This party power, LDP leaders could do
To paraphrase historian John Dower, is a far cry from the reforming spirit worse than pursue a present-day
there is growing awareness that the and popular enthusiasm that swept equivalent of the research associations
American military presence’s primary the opposition parties to power in established by then-premier
mission in Japan is not the defence of the 1993 and 2009 elections. A hint, Masayoshi Ōhira in the late-1970s to
the country, but the projection of US perhaps, at the extent to which the modernise Japanese conservatism and
power. political parties’ public image has party politics. A new generation of
Trade relations are also resetting declined in the eyes of the Japanese Japanese leaders will need to recover
to the more turbulent settings of the citizenry. the fortitude and intellectual expertise
1980s and 1990s when US leaders The beneficiaries of the Liberal that marked the LDP’s ascendence
regularly sounded alarm over Japanese Democratic Party’s decline are the throughout the postwar era. Central to
protectionism and industrial practices. parties on the nationalist and populist this is the need to relearn the lessons
While there is no serious political or right—Sanseitō and the Conservative of compromise, party coordination
anti-American nationalist movement Party of Japan (Nippon hoshutō). With and even manipulation. One would
pushing to end Japan’s military and the likely entrance of the avowedly expect no less from the 21st-century
technological alliance with the United nationalist Ishin-no-kai into the heirs of ‘Machiavelli’s children’. EAFQ
States, the scope of political struggles ruling coalition, both Sanseitō and the
over foreign policy is intensifying. Conservative Party will acquire new Andrew Levidis is Lecturer and Research
What kind of international order influence over setting the political Fellow in modern Japanese history at the
could Japanese leaders live with? agenda. The 2025 campaign for Upper Australia–Japan Research Centre, The
Despite their avowedly pro-American House elections, with its focus on Australian National University.

2 0 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
 ASIAN REVIEW: FORM FOLLOWS FUNCTION

Quad struggles to find direction

around divergent Indo-Pacific
visions
VINDU MAI CHOTANI

W ITH US President Donald

Trump back in power, there was
increasing interest about whether the
While Trump’s second administration
has signalled its commitment to
deepen Quad cooperation to counter
India, Japan and the United States—is
obvious enough. The Quad states
are home to almost one-quarter
Quad is on the cusp of a ‘next phase’. China’s regional agenda, the other of the world’s population, have a
Would it prioritise an agenda more Quad members have not been on the combined GDP of US$34.8 trillion
focused on hard security, moving same page. and make up 18 per cent of global
beyond its current emphasis on non- The potential of the diplomatic trade. The grouping’s collective
traditional security and public goods? partnership of the Quad—Australia, ability to influence the Indo-Pacific is

PICTURE: REUTERS / ELIZABETH FRANTZ

US Secretary of State Marco Rubio meets with Indian External Affairs Minister Dr Subrahmanyam Jaishankar, Japanese Foreign Minister Iwaya Takeshi and
Australian Foreign Minister Penny Wong at the State Department in Washington DC (21 January 2025).

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 2 1
 ASIAN REVIEW: FORM FOLLOWS FUNCTION

substantial. Indo-Pacific, must ask why it has not potential to institutionalise or evolve
Yet after its 2017 revival as the been institutionalised and whether this into an alliance—rather than its
Quad 2.0, perspectives on the matters. characterisation as a partnership—
grouping have varied considerably. On Disparities persist in the Quad. generates excitement and translates
one hand, it is seen as an ‘embryonic Brendon Cannon and Ash Rossiter, into anti-China rhetoric. But a clearer
military alliance’. And though no writing for International Politics in sense of the direction the Quad might
Quad joint statement to date has 2022, characterised the Quad as a take underlines the need to examine
explicitly articulated this, it is also ‘halfway house’ between an informal the institutional challenges and
regularly characterised as an anti- intergovernmental organisation and barriers it faces.
China grouping. These adversarial a ‘talk-shop’. In a 2024 piece for the The four Quad states have differing
narratives diminish what are arguably Journal of Indo-Pacific Affairs, Rajesh national interests and visions of the
the Quad’s greatest assets—its focus Kumar and Aamir Khan observed that Indo-Pacific regional order, which
on international public goods, non- the Quad is yet to evolve into a deeply shape how each approaches the
traditional security cooperation and its institutionalised alliance despite partnership.
regional capacity-building ability. possessing the elements required to Washington’s Indo-Pacific
Any consideration of the future of do so. strategy is the most overarching,
the Quad and its implications for the It is evident that the Quad’s with its alliance architecture and the

PICTURE: REUTERS

Students carry a poster responding to a 25 per cent tariff imposed by US President Donald Trump on India, Mumbai.

2 2 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
 ASIAN REVIEW: FORM FOLLOWS FUNCTION

imperative it puts upon containing the creation of six leadership-level

China. For Japan, a proponent of working groups. Though an important The four Quad states
multilateralism, its 2016 Free and step, not all these working groups have
Open Indo-Pacific strategy evolved seen progress, as they are constrained have differing national
into the 2023 New Plan which focuses by the agendas of individual states. A
on inclusiveness and diversity. India, June 2025 report noted that the Trump interests and visions
on the other hand, seeks to maintain administration seeks to reduce the
its strategic autonomy, articulates the number of working groups and focus of the Indo-Pacific
need for inclusivity and emphasises on hard security issues and economic
the importance of the Indian Ocean resilience to streamline the Quad. regional order, which
region. Australia, an ANZUS Treaty Third, the Quad is to a large extent
signatory since 1951, views its role already focused on what it needs shape how each
in the Indo-Pacific as promoting a to be doing. It has developed two
rule-based order—and shared regional priority areas—security and public approaches the
interests—while also recognising the goods. Its security focus has been
importance of China to its economy. largely on non-traditional security, partnership
The second barrier facing the though it has expanded over time to
Quad’s institutionalisation is the address maritime security issues such
grouping’s limited military capacity as maritime domain awareness and
and ability to bear the costs of undersea cable security. The public existential issue, legitimising to an
retaliation from China. Addressing goods focus resulted in a COVID-19 audience—in this case the Indo-
this would require large institutional Vaccine Partnership and the Clean Pacific epistemic community or a
investments. The difficulty of doing so Energy Supply Chain Diversification domestic audience—the need to take
is clearly reflected in the timing and Program. The group also continues to extraordinary measures. Conversely,
format of Quad meetings, which vary work towards addressing issues related de-securitisation is the process
according to the priorities and needs to critical and emerging technologies, through which a threat is no longer
of each state. space, infrastructure coordination and perceived as such, or at least not as an
The limits to the group’s cybersecurity. existential threat.
coordination capacities are also seen in Among the Quad states, the United
its agenda setting. During two Leaders
Summits in 2021, the Quad announced I N DEVELOPING this functional
cooperation, the Quad has created
some habits of cooperation in the
States has the broadest agenda of
securitisation against China. Though
deeply divided on many issues, both
Indo-Pacific that can be drawn upon the Trump and Biden administrations
at sometime in the future. The Quad’s were bipartisan in depicting China as
with the peace and current achievements thus raise the an existential threat to international
question—why institutionalise the order. Issues that have been securitised
stability of the Indo- grouping and risk provoking China, include the South China Sea and
which has expressed its displeasure more broadly the Indo-Pacific region,
Pacific region the about the arrangement, when it is economic and trade issues, as well as
achieving what it needs to? China’s international infrastructure
declared priority, Beyond each Quad state’s individual development program through its Belt
relations with Beijing and how those and Road Initiative (BRI).
what policy areas relations affect collective foreign policy Trump declared in 2019 that,
formulation, divergent perceptions of ‘Obviously China is a threat to the
will be of critical the China threat present a challenge world in a sense, because they’re
for the Quad. building a military faster than
importance? In securitisation theory, once a anybody’, and in 2022 the Biden
threat is perceived, states and their administration’s National Security
elites use speech to frame it as an Strategy flagged that China was

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 2 3
 ASIAN REVIEW: FORM FOLLOWS FUNCTION

powered attack submarines, capable laws in 2018, many of which were

... containing China of launching missiles with nuclear perceived as being aimed at China.
warheads’, clearly identified the threat As China’s influence expands
will hinder the posed by China. southwards, the Pacific Islands have
Though well received by an Indo- become another area where the
progress of key policy Pacific audience, unlike the broader Australian government has securitised
scope of issues that the United States China. In June 2018, then-foreign
initiatives and detract securitises, Tokyo’s willingness to minister Julie Bishop made some of
securitise China has since remained Australia’s strongest remarks about
from the broader focused on East Asia and the Indo- China’s BRI inroads into the Pacific
Pacific maritime commons. But the region, stating, ‘We want to ensure
potential impact the continuing importance of China– that [the Pacific Islands] retain their
Japan economic ties leads Tokyo to sovereignty … and that they are not
group could make in remain circumspect. Japan’s National trapped into unsustainable debt
Security Strategy cautiously refers to outcomes’.
the Indo-Pacific China as a serious concern and not a In an extraordinary measure in
threat. November 2018, the Australian
In a 2023 commentary, Kei Koga government, under former prime
argued that Abe’s intention was ‘to minister Scott Morrison, increased
‘America’s most consequential gradually consolidate this grouping by its engagement in the region with the
geopolitical challenge’. The acceptance emphasising not the threat of China’s ‘Pacific Step-Up’—a policy response
of this securitisation narrative is rise but the importance of maintaining to China’s growing influence. This
reflected publicly in a 2023 Pew and enhancing the rules-based ‘permanent contest’ between Beijing
Research Center poll in which 50 per international order under the banner and Canberra in the region seems
cent of the respondents identified of the “Free and Open Indo-Pacific” likely to continue, with Beijing
China as the biggest threat to the concept’. signing a security agreement with the
United States. Subsequent administrations Solomon Islands in 2022 and later one
have followed suit, adopting a more with Papua New Guinea.

I T IS not surprising that as part of

Washington’s Indo-Pacific strategy,
the Quad is viewed as a vehicle to
‘supportive role’ to the Quad 3.0. The
2023 New Plan for a Free and Open
Indo-Pacific makes clear that the Quad
Canberra can be expected to
continue to approach the Quad more
as a strategy of ‘building towards’
manage and contain China’s rise. This is not one of its four central pillars, but rather than of containment of China.
is further demonstrated by bipartisan a mechanism to realise a free and open Australian Prime Minister Anthony
support from Congress, which passed Indo-Pacific by promoting cooperation Albanese captured this well in 2024,
the Strengthening the Quad Act in in other countries and regions. stating, ‘The Quad is about practical,
February 2024, as well as by the second Australia’s securitisation of China meaningful outcomes’ and that it
Trump administration’s continued targets concerns over domestic issues, is through ‘collective actions’ and
support. as well as what Australia considers to leveraging ‘significant resources and
For Japan, former prime minister be its sphere of influence—the South expertise’ that the Quad can ‘continue
Shinzo Abe’s 2012 essay, ‘Asia’s Pacific. In 2017, then-prime minister to respond to the Indo-Pacific’s
Democratic Security Diamond’, was a Malcolm Turnbull described the priorities and needs.’
clear act of securitising the East China domestic threat posed by ‘Chinese India has traditionally securitised
Sea territorial dispute that Tokyo has influence’, depicting the Chinese China in the continental sphere,
with Beijing over the Diaoyu/Senkaku Communist Party as working to including over longstanding border
Islands. The South China Sea was ‘covertly interfere with our media, our disputes. Shared transboundary
also securitised. Abe’s use of terms universities and even the decisions rivers have been another issue. New
such as ‘Lake Beijing’ and statements of elected representatives’. This was Delhi has also securitised the China–
alluding to how the People’s Liberation followed by the introduction of new Pakistan Economic Corridor—a part of
Army’s navy would ‘base their nuclear- foreign interference and espionage China’s BRI that, according to India’s

2 4 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
 ASIAN REVIEW: FORM FOLLOWS FUNCTION

Ministry of External Affairs, violates Asian countries need to invest US$1.7 Combating climate change in the
‘India’s sovereignty and territorial trillion per year through to 2030 to Asia Pacific is another key policy area.
integrity’ as it passes through meet the region’s infrastructure needs. In March 2021, the Quad launched
Pakistan-occupied Kashmir. While there have been two the Quad Climate Working Group,
New Delhi has started to securitise important infrastructure initiatives— which was supplemented by the Quad
China in the maritime sphere, voicing the 2022 Quad Partnership for Climate Change Adaptation and
concern over increasing Chinese Cable Connectivity and Resilience Mitigation Package in 2022. Given
naval activity in the Indian Ocean and 2025 Quad Ports of the Future the number of island nations in the
region in 2023. It until recently at Partnership—there are gaps in region and their vulnerability to the
least viewed China as its ‘primary infrastructure implementation and impacts of climate change, continued
adversary’ and ‘biggest security threat’. financial commitments. An additional development of these initiatives
The acceptance of this narrative by a priority for the Quad could also be to would generate significant impact. Yet
domestic audience is well-captured by support and develop transport and the chances of Quad leadership on
a 2023 Morning Consult poll, where 43 economic corridors in the region. climate change under the current US
per cent of respondents viewed China Given the importance of critical administration are slim.
as India’s greatest military threat. minerals to modern development, In 2024, Indian Minister of External
In the broader Indo-Pacific and the concentration and dominance Affairs Jaishankar stated at the Quad
international theatre, however, New of critical mineral supply chains by Foreign Ministers’ meeting that ‘the
Delhi’s quest for strategic autonomy China poses risks to development. In Quad is here to stay, here to do and
dominates. In 2018, India’s then- 2023, the Quad announced the private here to grow’. This can be realised
ambassador to Russia Pankaj Saran sector-led Quad Investors Network to if the Quad resolutely focuses and
declared, ‘The Quadrilateral format … take steps towards promoting stronger continues to build capacity in the areas
is not directed against any country. It cooperation on critical technologies of public goods and non-traditional
is not part of the Indo-Pacific region and supply chain resilience. Though security cooperation.
concept outlined by Prime Minister Trump’s second administration could While each member has evident
Modi in Shangri La’. In what was potentially to undermine the investors and reasonable concerns about
arguably the de-securitisation of network, the July 2025 announcement China, a Quad heavily focused on
the Quad, in 2022, India’s Minister of a Quad Critical Minerals Initiative is hard security and containing China
of External Affairs Subrahmanyam a step in the right direction. But where will hinder the progress of key policy
Jaishankar said, ‘I think you do the this will lead is still uncertain. initiatives and detract from the
Quad an injustice by suggesting that Deepening engagement with broader potential impact the group
the focus is going to be on countering ASEAN is important to the Quad’s could make in the Indo-Pacific.
China.’ future. To date, there is no formal This is even more important as the
‘ASEAN view’ or ASEAN position uncertainty posed by the current

G IVEN these differing national

perspectives and perceptions
of the Chinese threat and their likely
on the Quad. In addition to Quad
states re-affirming their commitment
to ASEAN centrality, developing an
Trump administration to Quad
members, including India and Japan,
has the potential to leave the region
longevity, what direction might the annual track 1.5 or track 2.0 dialogue even more vulnerable. EAFQ
Quad take going forward? And with would be beneficial as it would dispel
the peace and stability of the Indo- misperceptions about the Quad and Vindu Mai Chotani is Assistant
Pacific region the declared priority, build trust through communication. Professor at the Institute of Humanities
what policy areas will be of critical In 2022, the Quad announced the and Social Sciences, University of
importance? Indo-Pacific Partnership for Maritime Tsukuba. Her research is supported
Infrastructure development is one. Domain Awareness. It focuses on by the Japan Foundation Indo-Pacific
Between 2015 and 2021, Quad states humanitarian assistance, disaster Partnership Program.
collectively provided over US$48 relief and illicit maritime activities.
billion in infrastructure financing in This initiative could boost the Quad’s
the Indo-Pacific. Relatively speaking, regional standing if it increased its
this is a small amount, considering coverage in the Western Indian Ocean.

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 2 5
FUTURE PROOFING

Reprogramming trade in
Asia for an automated
future
YIXIAO ZHOU

T HE growing adoption of robotics

and artificial intelligence (AI)
is rapidly reshaping Asia’s industrial
not robotics leaders, must actively
invest in human capital, institutions
and innovation to future-proof the
robotics and AI with China, Japan
and South Korea leading industrial
robot adoption. China holds Asia’s
capacity and trade dynamics. Asian region for automation. largest robot stock, surpassing Japan
countries, in particular those that are Asia has seen rapid growth in and South Korea combined. India,

PICTURE: WANG CHUNLIANG / VCG

Robotic arms grasp glass sheets and stack them at a workshop in Qiandongnan Miao and Dong Autonomous Prefecture, Guizhou Province, China.

2 6 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
Turkey, Thailand and Vietnam have offshoring. A one per cent increase in emphasise inclusive, AI-enhanced
the highest growth rates in robot automation correlates with a 0.28 per education by 2030. Without education
delivery. In robot density, South Korea cent decrease in reshoring, especially and reskilling, workers may view
remains far ahead, followed by Japan in high- and lower-middle-income automation and AI as a threat,
and China. Among lower-income countries. This process supports increasing political demand for
economies, India leads in robot stock, continued regional trade and growing protectionist or anti-tech policies.
followed by Vietnam, the Philippines opportunities for lower-wage Asian Experimental evidence predicts that
and Pakistan. Given the high absolute economies within global value chains. domestic automation shocks lead
number of new deliveries in China, In contrast, the authors of a to support for redistribution, while
Japan and South Korea, there has 2023 MERIT Working Paper use a foreign automation shocks increase
been a widening gap in robot adoption theoretical model to demonstrate how support for regulations and tariffs
between these robotics leaders and longer-term large-scale automation which harms productivity growth in
other Asian countries. causes reshoring and harms lower- the long run.
Increasingly, robotics and AI are income Asian exporters. Their While some countries mention
intertwined in their development. simulation suggests that developing AI in national curricula, actual
According to McKinsey and economies face major risks unless they implementation is rare. As of late
Company’s 2024 firm survey, AI rapidly adopt automation or shift to 2024, only ten countries—including
adoption among firms rose in Asia and non-routine services. Australia, Japan, South Korea and the
the Pacific from 58 per cent in 2023 to United States—had issued specific
72 per cent in 2024.
During this period, AI adoption
dramatically increased in Greater
R OBOTICS development is also
changing global and regional
market competition landscapes.
guidance for AI in education.
For Asian economies that are not
yet leaders in robotics and AI, it is
China, from 48 to 75 per cent. North Robot adoption could strengthen the crucial to invest in human capital
America and Europe led AI adoption market power of firms with initially that is capable of adapting to and
at 82 and 80 per cent, respectively. high mark-ups, reinforcing existing thriving in new modes of production,
Since 2013, the United States has led market concentration. But if utilised innovation and business. Equally
private AI investments (US$470.9 effectively, it could also enable smaller important is the maintenance of
billion), followed by China (US$119.3 and younger firms to survive, compete open, resilient and robust policies and
billion) and the United Kingdom and grow their market power faster. market institutions.
(US$28.2 billion). In 2024, the most AI For example, Robots-as-a-Service
start ups emerged in the United States, is emerging as a flexible and scalable
followed by China, India, South Korea, model that reduces upfront costs and
Japan and Singapore. increases access to automation. Instead At this pivotal
Automation in robotics-leading of purchasing robots outright, firms
economies could raise domestic supply can subscribe to use them. Countries moment of rapid
and reduce demand for imports from that are not robotics leaders could
other economies. But it may also boost consider utilising this new business technological
import demand from other countries model to create innovative products
due to the increased need for imported and services that serve both local and transformation,
intermediate inputs in sectors global demand, thereby carving out
undergoing robotisation. new development pathways. countries in Asia
This offshoring-versus-reshoring Asian economies will need to invest
debate continues. in education and reskilling to help must act strategically
A 2023 World Bank Working workers adapt and seize new business
Paper uses empirical data collected opportunities arising from robotics and to prepare the region
between 2008 and 2019 from 60 AI. The aim is to empower workers to
countries to show how the short- use new technologies as productivity for automation
term effects of automation reduce tools. Global frameworks, like
reshoring and encourage continued UNESCO’s 2019 Beijing Consensus,

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 2 7
 PICTURE: CFOTO / SIPA USA

Staff at a robot training centre instruct a robot to provide service at a hotel front desk, Jiangsu Province, China.

South Korea has been leading in and clear legal frameworks for China, Japan or South Korea’s
these policies. Its national initiative, data governance. Other issues that industrialisation and development
the Digital New Deal, is a multi- could also hinder international AI paths but instead invest in human
year US$53.5 billion commitment collaboration and cloud services capital, institutions and innovation. To
from 2020 to 2025 focused on digital include strict data localisation rules balance out the reshoring risks, they
infrastructure, data and AI innovation. and inconsistent digital trade policies. could explore shifting comparative
The government is working closely At this pivotal moment of rapid advantage from labour-intensive
with chaebols including Samsung and technological transformation, to technology-intensive sectors.
Hyundai, start ups and institutions countries in Asia must act strategically In doing so, non-robotics leaders
like Korea Institute for Robot Industry to prepare the region for automation. could find ways to make smart use of
Advancement to drive innovation. Investment in education and reskilling automation in new modes of economic
Seoul is also focusing on data is essential to empower workers. It development. EAFQ
openness and cross-border digital would also be wise to invest more
trade agreements with countries like in infrastructure to bring the AI Yixiao Zhou is Associate Professor of
Singapore. ecosystem closer to home, so more Economics and Director of the China
Indonesia has ambitions for AI people could utilise AI and robotics to Economy Program in the Arndt-
development as well, but its policies build power plants, transmission lines Corden Department of Economics at
require strengthening. Indonesia’s AI and wiring data centres together. the Crawford School of Public Policy,
National Strategy 2045 lacks sufficient Countries that are not robotics The Australian National University.
budget, interministerial coordination leaders should avoid trying to replicate

2 8 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
TRADE WAR 2.0

China’s diplomatic influence

on the line as it navigates
the US tariff storm
KA ZENG

P RESIDENT Donald Trump’s

‘trade war 2.0’ with China
marks a significant escalation of
responded with countermeasures
including retaliatory tariffs, initiatives
to stimulate domestic investment and
How effective will Beijing’s
measures be in staving off
Washington’s tremendous decoupling
trade tensions, accelerating economic consumption and efforts to strengthen pressures which are increasingly
decoupling between the world’s bilateral partnerships and multilateral threatening China’s central position
two largest economies. Beijing has institutions. in global production networks? The

PICTURE: LUONG THAI LINH / POOL VIA REUTERS

Chinese President Xi Jinping and Vietnamese General Secretary of the Communist Party To Lam pose for a photo with children during a welcome ceremony at
the Presidential Palace in Hanoi (14 April 2025).

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 2 9
 from China, further undermining the US imposition of reciprocal tariffs,
Ultimately, the United its centrality in global production Beijing immediately initiated a WTO
networks. dispute. In framing the US tariffs
States and China’s To mitigate these adverse effects, as violations of WTO rules, Beijing
China has pursued trade and sought to garner international support
contest for regional investment diversification. Chinese in defence of the rules-based global
firms have long sought to reorient trading order that it presumes to
and global leadership exports towards non-US markets, in champion.
particular low-cost destinations like
is a battle for
diplomatic influence.
Mexico and Vietnam, while increasing
investment in countries with strong
political ties to offset diminished
A S BEIJING competes with
Washington for regional and
global influence, we may witness a
access to the US market. Beijing has gradual reconfiguration of China-
also pushed the ‘dual circulation’ centred global production networks
strategy which aims to boost domestic towards other regional centres. This
answer hinges on Beijing’s ability to investment and consumption and could generate a China-centred
engage in effective diplomacy and build trade resilience. supply chain system that is more
position itself as a responsive and Beijing is expected to continue regionally oriented and insulated
non-predatory actor compared with these long-term measures towards from US influence. Combined with
the United States, not only in the Asia economic rebalancing and strategic China’s dominance as a major supplier
Pacific but also globally. autonomy by offering more economic of intermediate goods in certain
US tariffs have negatively impacted sweeteners—tariff relief like zero- sectors, that shift may offset the
direct imports from China and pose tariff access for African countries, erosion of its competitive edge in final
broader risks to China’s economic financial incentives and infrastructure goods assembly or export-oriented
growth by eroding investor confidence development support—to deepen manufacturing, thereby preserving
and stifling its export growth. As ties with regional partners. Examples its strategic position within global
Chinese exporters subject to tariffs include President Xi Jinping’s April production networks—at least partly.
divert trade flows to other Asian 2025 Southeast Asia tour on which he Beijing’s strategy to cobble
markets, competition with domestic positioned China as a long-term and together a coalition to consolidate
manufacturers in those countries may reliable strategic partner. Efforts are
also be heightened. The tariffs could also under way to promote trilateral
also cause an economic slowdown or cooperation with Japan and South
generate incentives for countries to Korea and deepen engagement with Trump’s high-
impose their own tariffs against China, the EU despite bilateral tensions
reducing the demand for Chinese that were generated by China’s pressure bargaining
goods in non-US markets. antidumping duties on European
The US bilateral tariff agreements brandy. tactics not only
with trading partners aim to close These initiatives are likely to be
loopholes in US–China trade by complemented by broader efforts lack clear strategic
curbing trade rerouting through third towards regional and multilateral
markets and undercutting firms’ institution building through the direction but also risk
incentives and ability to pursue the Regional Comprehensive Economic
so-called China Plus One strategy. A Partnership, Belt and Road Initiative alienating friends,
prominent example is the US trade and WTO. China has also pursued
agreement with Vietnam, which membership in the Comprehensive fuelling nationalist
includes a 40 per cent tariff on trans- and Progressive Agreement for Trans-
shipped goods from China. These Pacific Partnership despite significant backlash abroad
developments risk accelerating the challenges stemming from its member
relocation of supply chains away countries’ various concerns. Following

3 0 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
its position in global production as a champion of global free trade, its and China’s contest for regional
networks still remains precarious. hybrid economic model which remains and global leadership is a battle for
A central challenge lies in its ability at odds with key WTO principles diplomatic influence. Washington
to assuage concerns about exposure and could stymie progress towards may be able to leverage its power to
to its dependency and coercion, multilateral trade liberalisation. score tactical gains vis-a-vis individual
navigate the complexities of strategic On the other hand, Washington partner countries. But it may falter
competition and earn the trust of is moving towards a fragmented, in enforcing long-term compliance
partner countries. Beijing’s rare- US-led bloc system where market if a broader coalition coalesces into
earth export restrictions have access is conditional on alignment opposition. Beijing may be able to
alarmed EU members, heightening with US strategic goals and negotiated secure ad hoc deals through economic
fears of economic disruption and through asymmetrical, power-based inducements, but it may struggle to
reinforcing calls to ‘China-proof ’ and transactional bargaining. The build sustainable coalitions unless it
supply chains and revitalise the broad and unilateral imposition of refrains from coercive measures that
domestic industrial base. Beijing’s tariffs is straining US relations with its antagonise potential partners.
weaponisation of interdependence close allies. While this strategy may China’s ability to behave in a
has prompted target states to forge extract short-term concessions from responsive, credible and reassuring
so-called collective resilience alliances smaller and more dependent partners, manner—especially in contrast to
aimed at deterring economic coercion it is uncertain whether it will compel the United States—will be critical
through coordinated retaliation and Beijing to undertake structural reform, in determining whether it can
countermeasures. revitalise US domestic manufacturing emerge from the trade war relatively
At the same time, developing or foster supply chain resilience. unscathed and assume an even more
countries increasingly face the Trump’s high-pressure bargaining prominent leadership role in the Asia
challenge of balancing their tactics not only lack clear strategic Pacific region. EAFQ
relationship with both Washington direction but also risk alienating
and Beijing to hedge against the friends, fuelling nationalist backlash Ka Zeng is Professor of Political
impact of potential import surges from abroad. Science at University of Massachusetts,
China. Though Beijing portrays itself Ultimately, the United States Amherst.

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 3 1
SECURITISING TRADE

Security begins to reshape Asia

Pacific economic cooperation
VICTOR A FERGUSON, VIKING BOHMAN
AND DARREN J LIM

P OLICYMAKERS across the

Asia Pacific were rattled by the
sweeping global tariffs announced
the fact that when officials met with
their US counterparts, they faced
demands that seldom featured in the
supply chain dependencies and
aligning export controls.
Such priorities were made clear
by US President Donald Trump in trade negotiations of the past. Not from Trump’s first deal with the
April 2025. The measures generated only did Washington seek traditional United Kingdom in May, which
significant trade uncertainty and dealt concessions—such as addressing the included a specific section on
another costly blow to the already balance of trade and improving market ‘Strengthening Alignment and
fragile rules-based multilateral trading access for US firms—it also pressed Collaboration on Economic Security’
system that has been instrumental to for commitments tied to security. and provisions widely interpreted as
the region’s prosperity. This included placing restrictions on targeting China. Similar issues were
Complicating things further was outbound investment, addressing also subsequently reported to have

PICTURE: KIYOSHI OTA / POOL VIA REUTERS

Japan’s Minister of Defence Gen Nakatani and US Secretary of Defense Pete Hegseth review an honour guard during a welcome ceremony at the Ministry of
Defense in Tokyo (30 March 2025).

3 2 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
been a factor in US negotiations with that were concluded between 2018
other trading partners, including and 2025 in which states have agreed As governments
Japan, South Korea and Vietnam. to cooperate on issues they describe
These dynamics reflect a wider as linked to security. Approximately increasingly prioritise
trend that predates Trump’s return to half of these involves states in Asia and
office. The negotiation and conclusion Oceania, with key actors like Japan, ‘economic security’
of traditional free trade agreements— South Korea, Australia and China
those focused on regional integration, occupying central positions in the and geopolitical
market liberalisation and reducing global network of agreements.
barriers to trade and investment— alignment over
have slowed globally, while the use
of protectionist measures has risen
sharply. As governments increasingly
T HE most prominent domain of
cooperation concerns supply
chains. Agreements centre on
openness and

prioritise ‘economic security’ and building entirely new networks or efficiency, the
geopolitical alignment over openness reinforcing the resilience, stability and
and efficiency, the modality of transparency of existing supply chains modality of economic
economic cooperation is changing to between economies for specific inputs
reflect new objectives. or final products—especially for raw cooperation is
US–China rivalry, the COVID-19 materials such as critical minerals.
pandemic, wars in Europe and Given its geological endowments changing to reflect
the Middle East and increasingly and strategic alignments, Australia
frequent natural disasters have all is an important player involved in a new objectives
served to highlight the potential number of bilateral arrangements—
perils of unmanaged economic including partnerships with India,
interdependence. There are Japan, South Korea and the United
growing concerns about issues States—and minilateral arrangements of shipbuilding cooperation in Asia
such as economic coercion, foreign such as the 2022 Mineral Security between the United States, South
ownership of critical infrastructure, Partnership and the Indo-Pacific Korea and Japan increased, following
the transfer of advanced technologies Economic Framework Supply Chain a 2024 agreement between the
to adversaries and the risks of supply Agreement. United States, Finland and Canada to
chain disruption. These have prompted A second domain relates to cooperate on producing icebreaker
an increasing number of governments countering economic coercion. G7 ships.
to introduce new laws, strategies and states attracted headlines when A fourth domain concerns the
policy frameworks for managing these they announced the creation of a development of critical infrastructure,
risks at home. Coordination Platform on Economic including via joint financing and
Few states seem to believe that Coercion at the 2023 Hiroshima construction. Many agreements
it is possible to build resilience in a Summit, and Asia Pacific states have concern undersea cables, on which
globalised economy without partners continued to reach other arrangements Australia has collaborated with Japan
abroad. Since 2015, governments on coercion. States targeted by and the United States in the Pacific.
have begun entering a wide range of Western sanctions, like China and A smaller set of arrangements has
bilateral and minilateral cooperative Russia, have developed a separate web emerged that deal with coordinating
arrangements, focusing on mutually of similar agreements. economic sanctions, enforcing export
adjusting economic policies to advance A third area involves cooperation controls and regulating foreign
security objectives. on industrial policy regarding investments. Most governments in
Nowhere are these dynamics economic activity linked to national Asia and the Pacific appear to be
stronger than in the Asia Pacific. In security. The bulk of this activity followers, rather than leaders, in
research to map global economic has involved agreements jointly these other domains, with initiatives
security cooperation, we identified to research or produce critical or largely emerging from Washington or
more than 250 separate arrangements dual-use technologies. Discussions Brussels.

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 3 3
 Unlike traditional trade agreements, on the United States, and the other in hard alignment and exclusive blocs.
one of the most striking features of on China. US allies including Japan, The eventual text and enforceability
these cooperation arrangements is the South Korea and Australia are more of Trump’s trade deals will help
almost complete absence of binding deeply integrated into the US network. determine the long-term direction of
rules. The Indo-Pacific Economic In contrast, many other economies international cooperation. EAFQ
Framework and other formal in South, Southeast and Central Asia
arrangements are explicitly framed as appear to be adopting a more cautious Victor A Ferguson is Assistant Professor
non-binding. posture, engaging both networks at the Graduate School of Law,
Substantively, most agreements but less substantively and with fewer Hitotsubashi University.
are either aspirational or primarily arrangements.
commit states to regular consultation While this bifurcation poses Viking Bohman is a PhD Candidate
on relevant issues. But a growing challenges to the ideal of a singular, at the Fletcher School of Law and
number do involve more meaningful open, rules-based regional economic Diplomacy, Tufts University, and
action, including active coordination order, some separation need not Associate Analyst at the Swedish
of policy implementation and joint necessarily mean instability. As National China Centre.
action—such as the financing of an these arrangements enable countries
increasing number of critical minerals to mitigate exposure to coercive Darren J Lim is Senior Lecturer at the
projects. dependencies through diversification School of Politics and International
Patterns of participation suggest the rather than outright decoupling, they Relations, The Australian National
emergence of two loosely organised may also help sustain openness on University, and host of the Australia in
and overlapping networks: one centred more resilient terms. But the risk lies the World podcast.

PICTURE: REUTERS / KIM KYUNG-HOON

A newspaper man in Tokyo distributes a special edition of the Yomiuri Shimbun reporting the tariff deal agreement with the United States (23 July 2025).

3 4 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
TRADE WAR BATTLE PLAN
PICTURE: MANDEL NGAN / POOL VIA REUTERS

US Secretary of State Marco Rubio gives a media briefing during the ASEAN Foreign Ministers’ Meeting in Kuala Lumpur, Malaysia (11 July 2025).

Southeast Asian policy coordination

in the post-Trump world
JULIA TIJAJA

S OUTHEAST Asia was a

clear winner in the era of
hyper-globalisation. Between the
relations with China now makes it
vulnerable to repercussions from the
trade disruption by Trump’s trade
short-term impact on the region
will depend on the outcome of the
negotiations with Washington and
1980s and the 2000s, the region war, especially the measures aimed at how the deals are implemented, not
became an economic powerhouse China. just between the United States and
due to its relative stability, young Trump’s threat of so-called ASEAN member states but also with
demography, proximity to Northeast reciprocal tariffs—from their China and other major partners.
Asia’s production and innovation announcement on 2 April 2025 to the The impact of US tariffs on ASEAN
hubs and adoption of open trade series of tariff letters and deals in July, will vary by country, depending on
and regionalism. But the region’s culminating in the July 2025 Executive eventual tariff levels and coverage and
embeddedness in global supply Order on Modifying the Reciprocal each country’s exposure to the US
chains and deepening economic Tariffs—add to the uncertainty. The market, among other factors. It will

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 3 5
also depend on how other players like global demand and may face pressure that are already underway or planned,
China and the EU retaliate. from diversion of Chinese goods like the upgrading of the ASEAN
The member states of ASEAN are from the United States looking for Trade in Goods Agreement and
rightfully not only concerned about alternative markets, though more negotiations on the ASEAN Digital
reciprocal tariffs. Under Section analysis is needed to verify the Economy Framework Agreement.
232 of the Trade Expansion Act, the magnitude of this risk. Bilateral discussions between the
US president has the authority to Politically, ASEAN responded to United States and selected ASEAN
impose or raise tariffs on national Trump’s tariffs by releasing statements member states have been conducted
security grounds. These sectoral tariffs at the Special Meeting of the ASEAN in parallel. Vietnam, Indonesia and
such as the ones on automotives Economic Ministers in April and the Philippines secured bilateral trade
and auto parts, semiconductors or the 46th ASEAN Summit in May. deals days before the reciprocal tariffs
pharmaceuticals will affect some While these statements were a strong were due to apply on 1 August 2025.
ASEAN countries significantly. assertion of the region’s unity, there are These deals involve commitments to
ASEAN domestic markets are also at few details yet on the joint steps that purchase certain US goods, address
risk from the general weakening of ASEAN will take beyond initiatives non-tariff measures and trans-
shipment, and cooperate on economic
PICTURE: MOHD RASFAN / POOL VIA REUTERS security. Aside from the US–Indonesia
Joint Statement, little detail is available
on the other two deals. Vietnam and
Indonesia have indicated that they are
still working on the details of these
agreements. The 31 July Executive
Order also includes lower rates for
Cambodia, Thailand and Malaysia, but
with little details otherwise available.
Even with the rates now
announced for ASEAN member
states, negotiations on the technical
and implementation details are still
underway. Uncoordinated bilateral
negotiations risk weakening the
region’s economic integration and
its compliance with international
trade rules. Whether tariff reductions
or the streamlining of non-tariff
barriers are undertaken in a WTO-
consistent manner is a key concern,
while the additional purchases of US
products—if not in line with the axiom
of efficiency—will impact ASEAN
member states’ competitiveness and
fiscal space. Both deals may also
trigger responses from other trade
partners.
Negotiations have only been
bilateral. Following the ASEAN Chair’s
request for a US–ASEAN dialogue,
Malaysia's Prime Minister Anwar Ibrahim speaks with the press as he waits to greet leaders before the Malaysia has reported that Trump
plenary session at the 46th ASEAN Summit in Kuala Lumpur (26 May 2025). will attend the ASEAN–US Summit

3 6 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
planned for October 2025. Despite established Geoeconomics Task Force trade practices. ASEAN should also
the barriers to negotiation with should be empowered through access continue working with different
Washington, the region would benefit to expert inputs, as well as its mandate partners across a range of issues and
from better coordination among to coordinate between relevant be clear what its collective interests
ASEAN member states through sectoral bodies and to report and are.
information exchange and sharing provide recommendations to relevant Individual ASEAN member states
experience at the highest level as well ASEAN processes to underpin will continue to expand and diversify
as a possible common framework to regional coordination. The taskforce their partnerships including by
deal with the situation. needs to be institutionalised and tasked joining plurilateral frameworks and
with monitoring the transmission of negotiating or upgrading bilateral

S OUTHEAST Asian states need

to discuss the principles guiding
negotiations and future trade relations,
risks from geoeconomic disruptions.
A more coordinated approach to
addressing the intersection between
trade and economic partnerships.
Some are pushing domestic reforms,
from Indonesia’s deregulation agenda
cooperate on common issues such as economics and security is also to Vietnam’s bureaucratic and
non-preferential rules of origin, tackle needed, along with mechanisms governance reforms. Certainty in
illegal trans-shipments together and to consolidate ASEAN member policy direction and implementation
enhance supply chain traceability. states’ shared priorities and interests is crucial and member states can
They should also gather feedback across platforms such as the WTO, leverage on this momentum.
from regional businesses, strengthen the East Asian arrangements and In this age of trade and economic
economic linkages with other partners, APEC. Assessments of the utilisation policy uncertainty, ASEAN cannot
especially in East Asia, and ensure and effectiveness of ASEAN trade turn its back to trade openness but
that any deal will not be at the expense facilitation initiatives to date and needs to hone and develop a more
of another member state, existing the ASEAN free trade agreements closely targeted approach. ASEAN
ASEAN commitments or multilateral are a necessary complement to this need to get its language and reference
rules. coordination. points right on regional integration,
ASEAN needs to ramp up Given its growing economic the rules-based international order
its regional response. Its newly weight, prominent participation in and its external relations strategy.
global supply chains and diversity in ASEAN and individual member states
levels of development, ASEAN is a also need to be more proactive in
natural advocate for more inclusive shaping new trade rules.
In this age of trade global trade. Myanmar, Laos and A more practical—and less
Cambodia—the three member states ideological—push is needed for
and economic policy that hold least developed country regional supply chain development and
status—have been threatened with trade facilitation as a buffer to external
uncertainty, ASEAN among the highest of Trump’s trade and investment uncertainties. To
reciprocal tariffs. Capacity-building this end, ASEAN must fully leverage
cannot turn its back activities or greater concessions alone the available frameworks at hand,
are not sufficient: a fundamental including the Regional Comprehensive
to trade openness rethinking of the rules for more Economic Partnership (RCEP). The
sustainable, inclusive and fairer trade ASEAN Chair’s call to convene the
but needs to hone is now required. 5th RCEP Summit in October 2025 is
Global trade reform could explore most timely. EAFQ
and develop a more ways to improve trade and supply
chain resilience in the face of great Julia Tijaja is Associate Senior Fellow
closely targeted power rivalry, introduce rules at the ASEAN Studies Centre, ISEAS–
around invoking security-related Yusof Ishak Institute, Singapore.
approach exemptions, uphold transparency
and clarity of rules around subsidies
and seek effective redress for unfair

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 3 7
DEFENDING MULTILATERALISM
PICTURE: AGOES RUDIANTO / NURPHOTO

People walk at Bukit Bintang shopping area in Kuala Lumpur, Malaysia.

Asia’s antidote to Trump’s

tariffs
SHIRO ARMSTRONG
AND SAM HARDWICK

S EVEN months into President

Trump’s second term, US tariffs
now sit at levels that until recently
Back in 2017, the effective US tariff
rate was 1.7 per cent. It rose to 2.9 per
cent in Trump’s first term, and as of
threatened and realised tariffs. This gap
creates macro-scale uncertainty. The full
costs, especially from delayed or forgone
would have been unthinkable. US August 2025, is around 18.6 per cent. investment, will be felt over decades.
tariff rates of 10 or 15 per cent have If it was based on Trump’s threats, Since Trump 1.0 (and the broadly
been effectively normalised. Many rather than duties already being paid, continuous Biden interlude), US trade
foreign governments seem prepared to the rate would be higher still. policy has driven a sharp shift away
accept this punishment if it lets them There is both a long lag between from China. In 2017, China accounted
stave off worse threats and relieve, if when tariffs are announced and when for about 22 per cent of total US
only slightly, some of the uncertainty they are paid—due to stockpiling and imports. In 2024, that had fallen to 14
confronting businesses and voters. tariff pauses—and a wide gap between per cent, and in the first five months of

3 8 E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5
2025, it was just 10 per cent. Tariffs are
by far the main cause of this decline.
Interdependence remains high
U NCERTAINTY is here to stay.
It will not unwind quickly nor
without a major bipartisan shift in US
Most critically, these

globally, but tariffs are reshaping trade policy. For one, the tariffs will bring bilateral deals are a
and already imposing heavy costs on revenue to a fiscally stressed and
consumers and firms. Ongoing battles politically hamstrung United States, flagrant breach of
over technology, semiconductors and making them stickier.
critical minerals will intensify this What should Asia Pacific the most-favoured-
decoupling. governments do now?
Rolling back these tariffs, when A strong step would be a summit nation principle and
there is any US will to do so, will be among leaders of Regional
slow and difficult. Other countries, Comprehensive Economic Partnership WTO rules. These rules
especially smaller, more exposed (RCEP) economies to set a clear
economies, have understandably felt strategic direction on trade. Asia must matter because equal
compelled to grant concessions. So continue to affirm its commitments
far, bilateral deals have offered little to multilateral cooperation and forge treatment is essential to
relief. And as Japan has discovered, connections with partners elsewhere
the path to a deal is fraught. Any with the same interests. a rules-based system in
compromise rests on unstable ground Europe, which has made huge
and is vulnerable to the US President’s concessions to Trump and received which trade delivers the
whims. nothing in return, shares those
Most critically, these bilateral deals interests. Reducing Trump’s leverage greatest benefit to all
are a flagrant breach of the most- by liberalising trade with other
favoured-nation principle and WTO partners is a practical way forward countries ...
rules. These rules matter because and discourages further economic
equal treatment is essential to a rules- coercion. Coalitions must be built,
based system in which trade delivers not against the United States but to
the greatest benefit to all countries, protect multilateral interests. CPTPP’s tested rulebook and UK
not just the big ones. Cutting side The megaregional agreements, membership provide a ready template
deals with Washington encourages its RCEP and the Comprehensive and and an external bridge.
push towards a ‘might is right’ world. Progressive Agreement for Trans- In parallel, these agreements can
Some early efforts to mollify Trump Pacific Partnership (CPTPP), can work help anchor the global trading system
were understandable—especially for in tandem—not through merging, as the United States continues to
smaller economies—but continued which would present impracticalities retreat. EAFQ
reliance on bilateral deals is untenable. that outweigh the gains—but by
Governments should push to highlighting areas of convergence Shiro Armstrong is Professor and
plurilateralise any concessions granted where progress can be made. The Director of East Asian Bureau of
to the United States. Otherwise, the CPTPP’s forward-looking rules and Economic Research at the Crawford
deals are plain capitulation, eroding RCEP’s economic cooperation agenda School of Public Policy, The Australian
the rules-based order that replaced the can jointly deepen integration in the National University.
volatile, preference-ridden system of region and streamline various existing
the interwar years. commitments. Sam Hardwick is Research Fellow in
More tariffs are coming, not least High-level agreement and political the East Asian Bureau of Economic
through additional Section 232 will are critical. Summits may not Research at the Crawford School of
investigations under the implausible solve problems immediately, but they Public Policy, The Australian National
guise of national security. Other recent signal shared interests and galvanise University.
threats include tariffs of 39 per cent on joint action. A leaders’ summit among
Switzerland and 50 per cent on India RCEP economies can set directions
and Brazil. and cooperation priorities, while the

E A S T A S I A F O R U M Q U A R T E R LY J U LY — S E P T E M B E R 2 0 2 5 3 9
 CRICOS Provider #00120C

TEQSA Provider ID: PRV12002 (Australian University)

Contesting public policy -
what it is and what it can be
Through expert collaboration and engagement across
disciplines, geographies and policy problems, the
Crawford School addresses key policy issues confronting
Australia, Asia and the Pacific.

Our outstanding research program driven by deep

relationships with policymakers and communities brings
Crawford into close contact with the dilemmas and
debates about what public policy is and what it can be.

[Link]