By Dinouk Colombage
Coated under the guise of economic rebalancing, the US tariffs have been described as a complete disregard of the rule-based order (RBO) that has governed global politics since the conclusion of the Second World War.
On April 2, Donald Trump unveiled what he termed “reciprocal tariffs” for over 90 countries including China, the European Union (EU), and Japan. While Washington has described the measures as necessary to balance out their trade deficits, the rest of the world has decried the steps as the first salvo in what promises to be a full-blown global trade war.
While these developments in international trade have been focused on from an economic perspective, the geopolitical repercussions promise to be felt around the world. The last time the global economy experienced what could only be described as a global trade war was in the 1930s. On that occasion US President Herbet Hoover signed into law the Smoot-Hawley Tariff Act, which was aimed at introducing greater protectionist measures for American industries.
The result was a reduction in global trade by over two-thirds and unemployment around the world, which indirectly contributed to the reemergence of nationalism in the person of Adolf Hitler in Germany.
While America has defended the newly introduced tariffs as a global matter, a deeper examination points to the fact that behind the curtain this was a surgical strike on the growing economic might of the Asian region, including China and India.
Countries such as Vietnam, Cambodia, Sri Lanka, and Thailand have all seen tariffs over 35% imposed on them, with the former three exceeding 40%. Even traditional allies of the US, such as Japan and South Korea, have not been spared, with tariffs of 26% each imposed on them.
China was one of the first victims of the trade war, with 20% tariffs imposed upon them following Trump’s assumption of office in January. This has since increased to 54% with the “Liberation Day” round of tariffs. While India was also targeted with a 26% tariff, Delhi’s swift engagement with the Trump administration has opened the door for a potential reduction in the future.
Aside from the economic impact on the region, which has been discussed elsewhere in detail, the geopolitical fallout promises to be long-lasting. When Trump first targeted China with tariffs back in 2016, the Chinese market undertook a shift towards a greater integration with Asia. Countries such as Vietnam and Thailand benefitted as Chinese companies shifted operations to these nations.
This opened the door for greater regional integration, which no doubt assisted in the finalization of the Regional Comprehensive Economic Partnership (RCEP) in 2020. Not only did this regional economic grouping open new markets to the 15 member states, but it also saw countries such as Australia, Japan, and South Korea expand ties with China. Traditionally considered to be bulwarks against Chinese expansion in the Pacific, the RCEP allowed for a softening of tensions.
In March, three days prior to “Liberation Day”, Japan, South Korea. and China held trade talks for the first time in five years, signaling a shift towards closer engagement. Following the imposition of the new tariffs, it is expected that a further strengthening of regional cooperation will follow. As these two nations look to increase ties with China, US influence in the Pacific will certainly see a reduction.
Since assuming office, the Trump administration has made it clear that they no longer view being a global security provider as a priority. Donald Trump, himself, has on several occasions made it clear that under his leadership America will expect their allies to pay “their fair share” for defense.
For the past 11 years, Japan’s defense budget has consistently increased. In the neighborhood of three nuclear-armed powers, North Korea, Russia, and China, Japan appears to be militarily preparing to reduce its dependency on countries such as the US for its security. The imposition of these tariffs will further embolden the country to pursue stronger ties with China, recognizing that their security apparatus can no longer be indebted to the US.
The Far-East alone has not been targeted in Asia. Moving further westward, the ASEAN states have seen significant shots fired at their economies by Trump. 2024 saw bilateral trade between Vietnam and China reach over USD 260 billion. Investment projects have also expanded, with both countries pursuing cross-border connectivity, while China is attempting to align its Belt and Road Initiative with Vietnam’s Two Corridors and One Economic Circle strategy.
China’s financial investments in Vietnam experienced an upshoot, with over USD 4 billion being invested in the latter’s manufacturing sector. Incidentally the latest tariffs on Vietnam were supported by officials in Washington claiming that China was using Vietnam and Cambodia as “front lines in a massive tariff dodging operation”. Washington now believes that forcing the South-Eastern Asian states to negotiate directly with the US will allow them to gain the upper hand in dividing China from the rest of Asia.
Further west, Thailand has also been targeted by the US. The tariffs on Thailand have followed on recent efforts this year to expand security and digital cooperation between themselves and China.
On the back of Thailand’s Prime Minister visiting Beijing, in February this year, China’s Vice-Minister of Security Affairs visited the Thailand-Myanmar border to oversee the repatriation of several hundred Chinese citizens who had been detained in Myanmar by cyber-criminals. This visit was billed as China signaling that they were prepared to expand its security cooperation with Thailand, helping ensure the security of Thailand’s engagements with Myanmar.
While Trump has employed the metaphorical stick regarding the Asian region’s growing shift towards China, his administration has employed the carrot in dealing with the China-Russia ties. Foreign policy experts have described Washington as adopting the “reverse Kissinger” policy when dealing with Russia, attempting to force a wedge between them and China.
In 2022, Russia and China announced a “no-limits” friendship which came ahead of Russia’s invasion of Ukraine. While China has downplayed their support for Russia in regard the conflict, Beijing continues to strengthen its influence in Moscow. With this as a backdrop, Trump interestingly decided to omit Russia from the list of tariffs.
Despite being under sanctions, Russia and the US recorded a USD 3.5 billion trade in 2024, with the US recording a USD 2.5 billion trade deficit. Despite similar figures having been recorded between Sri Lanka and the U.S, on this occasion there were no tariffs imposed.
There is a clear indication that the Trump administration is ready to explore increasing engagement with Russia, while also demonstrating to Moscow that close ties with China are to the detriment of their economy. Whether Putin is prepared to abandon his “no-limits” friendship with Xi remains to be seen.
As the global community continues to strategize over how best to respond to Donald Trump’s tariffs, the United States has made it clear that the chapter on the rule-based order has been closed.
The weaponization of the dollar and the apparent abandonment of the World Trade Organization (WHO) guidelines leaves the question of whether the era of global cooperation is ending. This period will also open the door for a rapid shift in geopolitical hierarchy towards Asia, away from the US and its traditional allies in Europe.
Dinouk Colombage is an international affairs and public policy consultant. He served as the Director of International Affairs to former President Ranil Wickremesinghe from 2022. He is currently a senior researcher at the Geopolitical Cartographer.
Factum is an Asia-Pacific focused think tank on International Relations, Tech Cooperation, Strategic Communications, and Climate Outreach accessible via www.factum.lk.
The views expressed here are the author’s own and do not necessarily reflect the organization’s.
