The geopolitical tension between the two largest economies, the USA and China, has greatly benefitted the ASEAN (Association of Southeast Asian Nations) Economies. According to the data the International Monetary Fund (IMF) shared, ASEAN nations have long benefited from decades of globalisation, building strong trade links with China and the United States. It further added that since 2018, the region has increased the market share in the import of both nations. Moreover, the region also witnessed a rise in FDI (Foreign Direct Investment) from the United States and China.
“Despite geopolitical tensions, ASEAN has continued to strengthen trade and investment links with both China and the U.S.” — IMF’s Latest Asia-Pacific Outlook. The same report also mentioned that “[T]he region has even been able to take advantage of trade diversion opportunities caused by US-China trade tensions.”
Donald Trump & Tariffs
Donald Trump, during his tenure as US president, imposed a series of tariffs on Chinese imports in 2018 and 2019, which the Biden administration continued, widening the gap between the two nations.
Empirical analysis shows that these tariffs increased exports from the ASEAN nations. Moreover, exports of tariffed goods increased not only in the USA or China but also in other parts of the world. Countries like Japan and the Philippines especially experienced tremendous growth.
According to the report, ASEAN’s exports of these tariffed goods to countries beyond China and the U.S. have risen, indicating that the region has not only gained from trade diversion but also achieved economies of scale. Additionally, trade among the political and economic union member countries has grown.
