Many countries in Asia beyond China have gotten significantly richer in the past decade, meaning that a much different set of trade policy circumstances would face Donald Trump if he takes office in January.
Times are much different than at the outset of Trump’s first presidency, when he ditched former President Barack Obama’s plans to form a Pacific-nation pact meant to ensure that the United States, not China, set the terms of trade. Trump instead launched a direct trade war with China. Now, that dispute, under President Joe Biden, is stretching on toward a decade. In the meantime, many of the nations around China have also gotten richer, in part by deepening their reliance on China for trade.
“The trade policy landscape has changed dramatically,” Clyde Prestowitz, the president of the Economic Strategy Institute who served as counselor to the secretary of commerce in the Reagan administration, said.
Prestowitz was critical of the Trans-Pacific Partnership, the 12-nation Pacific trade deal signed in early 2016 by Obama and backed by GOP free-trade advocates, such as then-House Speaker Paul Ryan. The deal was not ratified by Congress, as populist resistance rose on the right alongside Trump.
Obama and other advocates of the deal argued that it would strengthen the U.S. position relative to China, foreseeing the continued rise of Asian economic power.
That forecast has been borne out. In the past decade, most of which has taken place in the post-TPP era, a number of poor Asian countries have seen significant growth that in some cases has brought them out of poverty.
Vietnam, for example, saw its per capita gross domestic product double from 2013 to 2023 on a purchasing power parity basis (that is, a measure meant to correct for varying price levels across countries). The country has benefited from domestic free-market economic reforms and foreign investment. It also has been a beneficiary of trade tensions between the U.S. and China, as some Western countries have viewed it as relatively more attractive. Some Chinese companies have routed production through Vietnam to avoid U.S. tariffs.
Bangladesh, a nation of more than 171 million people, is no longer among the poorest countries in the world, as its per capita GDP has also more than doubled during the same time period, thanks in large part to its rise as a major hub for textile manufacturing. Poverty, as defined by the share of people living on less than $2.15 a day, has fallen from 13.5% of the population in 2016 to 5% in 2022, according to the World Bank.
India and China, the two most populous nations, have also seen strong growth in the meantime.
As Asia has gotten richer, Washington, D.C., has become significantly more skeptical of business ties with China. The Biden administration has kept in place tariffs on some $300 billion of Chinese goods. Biden has also signed large-scale legislation meant to onshore manufacturing and move supply chains out of Chinese influence, including the Inflation Reduction Act, which includes hundreds of billions of dollars in subsidies for electric vehicle manufacturing and clean tech, and the CHIPS and Science Act, which includes $80 billion to subsidize the domestic manufacturing of semiconductors. The Biden Commerce Department has also imposed export controls to prevent China from gaining advanced chips and the equipment to make them. Most recently, Congress voted on a bipartisan basis to force a divestiture of the ubiquitous social media platform TikTok from its Chinese parent company.
Treasury Secretary Janet Yellen last month completed a trip to China in which she confronted Chinese officials over their pursuit of “overcapacity” to dominate trade markets, accusing them of pursuing “unfair economic practices.” She also suggested in an interview that she had been naive to regard the earlier rise in cheap Chinese imports as an unalloyed good for the U.S.
Trump, meanwhile, has pledged a massively ramped-up trade war if he wins. He’s called for legislation to enact tariffs on all countries that put levies on U.S. goods. He’s floated tariffs of 60% on Chinese goods. And his advisers have raised the possibility of devaluing the dollar to provide an advantage to U.S. manufacturers.
Looming over all of the trade politics with China is the rising fear that the next few years could see armed conflict. Some analysts argue that the U.S. would be better situated to respond to provocations now with a regional trade deal in place, as China has deepened its ties with growing Asian neighbors.
“The U.S. has lost a chance to make itself the focal point of an Asia-Pacific trade community excluding China, to the noticeable detriment of its overall political influence in Asia,” Henry Storey, an analyst at the political risk consulting group Dragoman, wrote in an email to the Washington Examiner.
If TPP were in place, the U.S. and its allies would be in a stronger position to counter China’s recent efforts to harass the Philippines in the South China Sea, said Claude Barfield, a trade expert at the American Enterprise Institute.
“It’s not that we’ve walked totally away, but we’ve undercut ourselves in economic terms,” he said.
The U.S. does have a mutual defense treaty with the Philippines, Prestowitz noted in countering the idea that the U.S. is at a disadvantage because of the demise of the TPP. This week, American forces conducted drills with allies in the South China Sea as a sign of coordination in the face of China’s hostility.
Still, greater trade ties with the Philippines, which was not part of the TPP, and its neighbors would have signaled greater commitment on the part of the U.S., Bill Reinsch, a scholar at the Center for Strategic and International Studies, said. “If you have an economic presence there, then it’s different,” he said. “And we don’t have enough of an economic presence there, I’m afraid.”
The TPP was meant in part as a signal that the U.S. would remain committed, strategically, to East Asia. “Our absence from that field I think hurts us diplomatically,” he said.
China, meanwhile, has strengthened trade ties with and investment in its neighbors in recent years. Trade experts said that the U.S. focus on the growing bilateral tensions with China had led to a diminished appreciation of the relationships China had built with trade partners.
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Those ties provide a benefit to China. “China does a lot of investing and trade with other countries that those countries see as a great benefit, and that’s something you don’t hear too much of in the U.S. trade policy debate,” Simon Lester, a fellow at the Baker Institute International Economics Program, said.
“It’s important to put a focus on the fact that this region is prospering and they’re doing very well, and China is well integrated with them and benefiting from the stronger trade and investment with those growing countries,” Jeffrey Schott of the Peterson Institute for International Economics said. “We sort of lose sight of that in focusing on the bilateral U.S.-China trade and investment relationship.”