Donald Trump won’t become president of the United States. But what if he does?
Trump’s “Make America Great Again” message has continued to play well with a bigger-than-anticipated demographic of economically and politically alienated American voters. With the celebrity billionaire still at or near the top of many polls, even reasonable people – in the U.S., Asia and elsewhere – have to think about what would happen if the unthinkable happens.
The extended American political season means there’s still a lot of time for voters to get tired of the real estate mogul. To even become a candidate for president, Trump would have to win enough support in a long series of primary elections in different states. He’d then need to be formally nominated at the Republican convention in July.
Only then – if he doesn’t become an independent candidate that’s not part of either of the two major American political parties – would Trump actually be in the run for president, against the Democratic party nominee. It’s unlikely he’d win. But it’s possible enough to consider.
Trump puts U.S.-China trade “reform” at the forefront of his election message. A big element of his message is that the U.S. needs to keep more of what, in his mind, belongs to it. So he’s critical about what he views as an imbalance in the relationship between the two countries. The argument goes that China is taking American jobs, not following the rules of international trade, stealing commercial secrets, and manipulating its currency to gain an economic advantage.
For Trump, the problem partly dates back to China joining the World Trade Organization (WTO) in 2001. He claims Americans have suffered the closure of more than 50,000 factories, and the loss of tens of millions of jobs, because other countries haven’t followed WTO rules. And China has been a big part of this. (Trump does tend to exaggerate, so the figures he uses aren’t very reliable.) Counterfeit goods, the theft of intellectual property, and lax labor and environmental standards are all part of his complaint against trade agreements in general.
Trump has said that one of the first things he’d do as president would be to officially designate China as a currency manipulator – a country that intentionally weakens its currency in order to make its exports cheaper and more competitive. By declaring this, the U.S. could impose duties on “artificially cheap” Chinese products. It could also bring the two countries closer to a trade war, where they’d put tariffs or quotas on each other’s imports and exports. That wouldn’t be good for anyone.
Southeast Asia also comes under the spotlight with Trump’s views on the Trans-Pacific Partnership (TPP). In October 2015, the U.S. government signed the TPP along with 11 other nations, including Japan, Australia, New Zealand, Malaysia, Singapore and Vietnam. The TPP has the goal of making it easier for the participating countries to trade with each other by removing trade tariffs, and lowering the costs of importing and exporting between members.
But in Trump’s eyes the TPP is “a terrible deal” for the U.S. China isn’t actually a signatory, but he expects them to somehow join through “the back door and totally take advantage of everyone.” So if Trump does get into office, expect him to either renegotiate the terms of TPP, or even try to scrap it entirely. The signatories in Southeast Asia, hoping to increase trade and grow their economies, could be the big losers in Trump’s ongoing issues with China.
The “Trump Tax Plan” could also affect East Asia. His plan is to cut the U.S. corporate tax rate to 15%, the argument being that the current top rate of 35% pushes companies and jobs offshore. By stressing that the reduced rate is “10 percentage points below China,” again it’s clear where Trump sees the problem – cheap labor in Asia is taking American jobs. His idea is that U.S. companies would no longer need to move abroad to take advantage of lower taxes. This could, in theory, result in less manufacturing being done in Asia by U.S. companies.
Then there’s defense policy. Trump wants a “military of quality, not quantity.” That means reducing troop counts and deploying resources selectively in the Asia Pacific region. His “non-interventionist” foreign policy is based on strengthening homeland defense, while not getting involved in other countries’ disputes. For Asia, that could mean the U.S. would reduce its long-standing military commitment to regional stability. Six decades after the end of the Korean War, the U.S. still maintains 28,500 troops in Korea. But under a Trump presidency that number could fall and South Korea would at the very least have to increase its financial commitment. In his words, “How long will we go on defending South Korea from North Korea without payment?”
There would be obvious economic impacts on countries like South Korea, which would need to increase their existing defense spending. But there’s also the issue of how historic tensions in the region would play out in the vacuum created by a less involved U.S.
It’s true that “President Trump” becoming a reality is still a remote possibility. But, it’s still a possibility – and if fate does take him to the top job, we can expect a presidency less comfortable with Asia’s growing influence and more willing to challenge existing alliances and relationships. That wouldn’t be good for the region, or for investors in the region.