Implications for Asia of the US elections

With just days left before the US presidential election on 5 November, the outcome is still highly uncertain. While Kamala Harris and Donald Trump each bring distinct approaches to foreign policy, one thing is clear: heightened geopolitical friction and de-risking trends will prevail. For Asia, the implications will be significant regardless of who wins.

Here we break down what a Harris or Trump presidency will mean for Asia and what organisations should watch.

Shades of deterioration

Both Harris and Trump will sustain the trends of rising trade restrictions and strategic competition with China, and both are expected to expand trade and technology controls. The difference lies in their approach.

Harris will pursue a more focused approach to competition with China in the name of national security and domestic jobs. US-China tensions and tit-for-tat protective or punitive trade measures will continue, but her administration will be more cautious in using the kind of blunt policy tools – such as blanket tariffs and sanctions, as well as heavy-handed tactics to press third countries limit trade with China – which may characterise a Trump presidency. Trade friction and decoupling pressures will likely proceed further and faster under a Trump administration, potentially bringing the US-China competition into a more escalatory and disruptive phase.

Regardless of who wins the election, China already expects intensified geopolitical tensions and is working to increase its own economic resilience and retaliation options. Its additional export controls on critical minerals and use of the Unreliable Entity List in 2024 are the latest reminders that Beijing could step up trade retaliation in response to US actions in 2025. Intensified trade warfare will likely see Beijing wield these tools more frequently and forcefully – though still selectively – with negative impacts often felt by third countries, companies and global supply chains as much as by the US itself. Countries could also be caught between conflicting demands from Beijing (to comply with its laws) and from Washington or others (to enact new restrictions).

With more Chinese companies offshoring export-focused production to South-East Asia, a second Trump administration may start to target South-East Asian countries for trade-related violations. One area to watch would be South-East Asia’s automotive sector, where Chinese players are flooding and dominating the original equipment manufacturer industry as the region gears up to fulfil ambitions of being a hub for the production, assembly and export of electric vehicles in the coming decade.

Countries with which the US has large trade deficits – such as Vietnam and Malaysia – could see more disruption with either candidate, but in different ways depending on who wins. A Harris administration will be more mindful of preserving strategic ties with ASEAN members. She will take a much more targeted approach to de-risking and reshoring to address any concerns with a market like Vietnam, rather than pursue primary sanctions (to balance Vietnam’s trade surplus against the US) and/or secondary ones (to combat transshipments of China-made goods through Vietnam), as we might see with Trump. While both Harris’ and Trump’s approaches will impact Vietnam-based exporters, a more targeted approach will be less disruptive for them.

ASEAN governments have already moderated their expectations of the US playing a larger role in trade expansion in the region. With Biden, hopes of the US including market access via the Indo-Pacific Economic Framework (IPEF) or rejoining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (which the US exited under Trump) came to nothing. This outlook will persist under a Harris administration. Trump’s vow to kill the IPEF is well known and, in the absence of any new trade-related proposals, the trade relationship between the US and ASEAN is not likely to see any notable improvements.

Imperfect partnerships

A question of degree also applies to relationships between ASEAN nations and the US. Despite ongoing struggles around reaching a consensus on issues such as Myanmar and the South China Sea, ASEAN members are generally receptive to building and strengthening US relations. This is true even for countries like Laos and Cambodia, which have been perceived to be more aligned with China, but who also see the positive implications for their own markets of stronger ties with the US as they seek a more diversified FDI landscape and greater export opportunities in the US. None of this will change under either Harris or Trump, but there are several nuances that matter.

Indonesia’s newly inaugurated President Prabowo Subianto will continue to avoid choosing sides in a US-China rivalry, particularly given his pursuit of a stronger voice for Indonesia on the global stage. Nevertheless, he has longstanding private business ties with Trump, which he can leverage to balance China’s involvement in Indonesia’s economy, particularly in the realms of coal, palm oil and metals. If Harris wins and were to prioritise ESG issues, economic engagement with Indonesia will be less straightforward.

Given that ASEAN does not have a detailed foreign policy beyond “non-intervention” by the superpowers, engagement policies with the US going forward will be largely determined by local dynamics, which will also be influenced by geopolitical trends outside the region, including the role of the US in the Middle East conflict. Malaysia wants both distance and engagement from the US. The Philippines, amid an increasingly escalatory territorial dispute in the South China Sea, seeks a much more robust partnership with and presence from Washington, at least under the current leadership. Singapore seeks the same, but on more understated terms.

Bipartisan support in Washington for India as an ally will ensure India-US strategic ties continue to grow, irrespective of the outcome of the election. Trump and Harris will have different sets of issues with India that will serve as irritants without derailing the overall momentum in relations. With Harris, there will be continuity with the Biden administration in calling out Prime Minister Narendra Modi’s government over democratic backsliding, the treatment of minorities and other human rights concerns. And while Trump and Modi have a shared interest in populist nationalism, there are potential flashpoints, such as the surge in illegal Indian immigrants into the US and Trump’s proposed tariffs on Indian goods. The commitment of both Trump and Harris to embrace India as an ally may also be tested by India’s apparent unwillingness to side firmly with the West on Russia or China.

Harris’ reputation and record may also mean more emphasis on human rights issues compared with earlier US leaders, shining a stronger spotlight on conflicts and existing tensions around the region, such as the ongoing armed conflict in Myanmar.

Regional security

A Trump administration could compound uncertainty over longstanding security flashpoints in East Asia, notably the Taiwan Strait, the Korean peninsula and the South China Sea. It could increase the likelihood of a wider set of scenarios at both ends of the spectrum. For Harris, the current state of play is more likely to be sustained.

In the case of the Korean peninsula, a Trump presidency could lead to anything from a serious escalation to another attempt at engagement, or both. By contrast, Harris will maintain some variation on the policies pursued by Biden. However, Korea dynamics will likely depend more on Pyongyang, and to a lesser extent Seoul, rather than be driven by US and China. With the recent rise in tensions on the peninsula, we can expect another escalation cycle sometime in the next four years, regardless of who is in the White House.

On Taiwan, major military conflict risks are low but could rise substantially if the US were to change its current position and signal that it would either not defend the island or do the opposite and dramatically increase military or diplomatic ties. Both scenarios would be more probable under Trump, though several of his possible foreign policy and security advisers are staunch advocates of closer support for the island.

A second Trump presidency will cause concern for Tokyo, regardless of how the current Japanese leadership transition plays out over time. Tokyo fears that Trump’s transactional and America First view of diplomacy may mean that Japan will be cut out of the loop on any major decisions impacting their regional interests regarding China, the Taiwan Strait or the Korean peninsula. Japanese leadership expects that Harris will broadly maintain the Biden administration’s foreign and defence policies, including an emphasis on alliances. These have resulted in a significant expansion of the US’ bilateral diplomatic and military relationship with Japan, particularly in relation to the US military command structures in Japan and trilateral Japan-South Korea-US defence co-operation.

For ASEAN governments, the preference is for the next US administration to not escalate tensions with China, as they very much want to avoid being forced to choose between the two superpowers. However, they strongly wish the US to maintain a security presence in the region, especially in the South China Sea, where many of them have significant maritime and energy security interests at stake. This is even more likely to be the case next year, when the ASEAN chairmanship is taken on by Malaysia, a claimant state in the South China Sea. Kuala Lumpur has an ongoing concern about Chinese coast guard activity off the coast of Sarawak, where Malaysia is engaged in hydrocarbon exploration activities.

Singapore, Vietnam, the Philippines and Malaysia would make special efforts to incentivise the US to maintain freedom of navigation operations in the South China Sea, regardless of whether Harris or Trump wins. If the US becomes less engaged in security co-operation, ASEAN governments will pursue even closer relationships with other friendly US allies in the region, such as Australia and Japan.

Pressure regardless

The one thing that unites almost all governments in Asia is a desire for Washington to put a ceiling on its escalating tension with China. Neither US presidential candidate is going to do that, which puts increasing pressure on states in the region as US trade and other policies continue to take shape. The second thing that unites countries in Asia is fear of the US reducing its focus on the region. While the depth of ties with the US may vary across the region, the US is generally recognised as a much-needed counterbalance to a China that is transitioning from a “rising power” to a “superpower risen”.

The trade, business and security environment in Asia could vary quite significantly depending on who wins the White House this November. Both Harris and Trump will increase geopolitical tensions and put additional pressure on businesses in a region with both vibrant opportunities and highly interconnected and increasingly complicated supply chains.

The risks discussed here do not apply equally to every organisation. Exposure will vary widely depending on specific go-to-market strategies and operational footprints. But all organisations should be planning now for the various scenarios and associated impacts of the 2024 US election outcome.