EDITORIAL – APRIL 2025 – Trade and trust: turning the tables

A destructive common trend has emerged within the rivalry between democratic and autocratic societies. Whatever system of government, big nations are now acting in ways that damage the material well-being of their citizens.

Britain’s decision to leave the European Union has hammered its growth just as Vladimir Putin’s invasion of Ukraine shredded Russia’s economy. China’s hostile policies towards the West risks its development,while experts are at a loss to explain how President Trump’s weaponisation of tariffs can do anything except make Americans poorer.

These governments are openly sacrificing higher living standards in favour of those far more woolly concepts of nationhood, dignity and identity.

Asia’s reaction has been measured as its leaders consider how to handle this new trade environment which is unfolding with two questions: What impact, if any, will there be on alliances and security networks, and how will Asian governments counter Washington’s evolving unpredictability?

America’s unilateral implementation of tariffs brings these two issues together. Refrains about trust and friendship echo throughout the Asia-Pacific, from staunchest allies such as Australia, Japan and South Korea to those pioneering multi-polar policies like India and Vietnam.

One of the harshest lines came from Australia, which is deeply entwined with the US in the Five Eyes intelligence gathering. Canberra is also a pillar of the Quadrilateral Dialogue involving Delhi, Tokyo and Washington, and a founder of the new defence agreement with the US and Britain.

Australia’s case is particularly interesting in that trade flows fall in America’s favour and the aluminium and steel targeted by tariffs is negligible, representing less than 0.2 per cent of the country’s total exports.

‘This is not a friendly act,’said Australian prime minister Anthony Albanese. ‘Friends need to act in a way that reinforces to our respective populations the fact that we are friends.’

Albanese’ sentiments echo throughout the region.

Japan said the situation was ‘regrettable’. Beijing has vowed to ‘take all necessary measures’ to protect its interests. Stock markets fell. India mostly stayed quiet, but commerce minister Piyush Goyal made a sudden, unscheduled visit to Washington in search of common ground, which analysts said would not be easy.

In a pithy soundbite, White House press secretary Karoline Leavitt told countries seeking tariff exemption, ‘If they want to be exempted, they should consider moving steel manufacturing here.’

Those steeped in the realities of building supply chains and factories know that steel production cannot be shifted from country to country based on the electoral cycle of one nation – however powerful it might be

President Trump’s grass-root voters support his erratic announcements, but they have yet to feel the hard impact.

The China tariffs are causing havoc among American car-makers, who are highly dependent on Chinese parts and technology. The cost of medicine, too, will soar. Ninety per cent of prescriptions in the US are for generic drugs, half of which come from India.

Washington is keen to sell Delhi the F35 warplane against the Russian SU-57. Such erratic policies from the supplier raise question marks over whether the F35 would be a sensible purchase, given thatRussia has been a reliable weapons supplier to India for more than 50 years.

In short, American-created instability in global trade is disrupting supply chains, worsening uncertainty, risking jobs and increasing prices.

In a region high on pragmatism and short on ideology, Asian companies are seeking new markets, many with the increasingly wealthy Global South. 

They are also re-adjusting to the anticipated deepening of Sino-American hostilities. The auto-industry, for example, is moving out of China, mostly to Thailand. An area east of Bangkok has become a deeply intertwined network of factories, close to outbound ports, and capable of shipping large quantities of auto parts abroad.

American elections continue to deliver unpredictability and those countries building their institutions and economies are seeing a political system that is unsuited to their stage of development.

The greatest irony is that, as democratic America strides the global stage, breaking trust and supply chains, autocratic Russia and China are presenting themselves as the more reliable partners in both politics and trade.