January 23, 2017

Sourabh Gupta

Using the same Bible that Abraham Lincoln used at his inauguration, Donald Trump, amid pomp and protest, was sworn in on January 20 as the 45th president of the United States of America. More than 150 years ago, with civil war looming, Lincoln had urged his countrymen to renew the common ties that bound them.

“We are not enemies, but friends … we are not, we must not be, aliens or enemies but fellow countrymen and brethren,” he noted in vain.

Lincoln had directed his words to a domestic audience. Trump would be wise to apply Lincoln’s sentiments to his international allies and partners, notably in Asia. For the better part of 70 years, the US has, by and large, been a force for good in Asia, deploying its superiority of strength and resolve in the service of secure sea lanes, open markets and stable politics.

Non-reciprocal market access for Asia’s light manufacturing exports was at the core of this strategy; the US Navy’s Seventh Fleet was tasked with protecting the sea lanes that delivered the energy resources to fire up this manufacturing-driven engine of Asian prosperity.

But under the weight of Trump’s personality and a set of anti-trade (and anti-immigrant) beliefs that he shares with his advisers, the US stands poised to forfeit the patent on the geopolitical “operating system” that it laboriously constructed over seven decades.

Several parts of Trump’s economic plan to “Make America Great Again” have direct downsides for Asia.

First, the Trans-Pacific Partnership, the China-excluding trade agreement, is to be torn down, devaluing the immense political capital expended by the leaders of one of Asia’s richest (Japan) and one of its poorest (Vietnam) economies. Ironically, it may fall to China to rescue America’s trade footprint in Asia by way of its leadership of, and US engagement in, the Free Trade Area of the Asia-Pacific talks.

Second, China seems likely to be labelled a currency manipulator and, in time, presumably hit with anti-subsidy import duties.

Third, the Trump trade policy team – Wilbur Ross at the Commerce Department, Robert Lighthizer as Trump’s trade representative and Peter Navarro at the National Trade Council – have promised to remedy the supposedly illegal activities that have precipitated America’s trade deficits with Asia. Lawful it may be but, brandished indiscriminately, such unilateral enforcement will almost certainly fall foul of the World Trade Organization’s dispute settlement processes. Some 30 years of badgering Japan with an even broader set of trade penalties did nothing to reverse that bilateral trade imbalance. Rather, it produced an appreciation in the yen’s value, which in turn inflicted deflation and stagnation on America’s foremost ally in Asia.

And India, Asia’s fastest-growing economy, is not to be spared either. IT-enabled services have in recent times assumed a larger role in elevating India’s image as a globally competitive society. But in the eyes of Steve Bannon, Trump’s chief strategist, the large representation of South Asians in Silicon Valley is a cultural assault. The wheels are in motion to restructure, and raid, the H1-B work visa program. This will probably emulate past efforts of the incoming attorney general, Jeff Sessions, to drive a stake into the very visa program that has aided the rise of India’s image on the back of its outsourcing prowess, and deepened US-India people-to-people ties.

In his address at the World Economic Forum in Davos on January 17, Chinese President Xi Jinping extended a hand to his global counterparts and welcomed them aboard the express train of China’s development. Seventy years earlier Harry Truman (pictured) had extended to Asia a similar, American, handshake. Whether Trump – the greatest come-from-behind victory in US presidential politics since Truman himself in 1948 – will relinquish America’s standing and goodwill in Asia, remains to be seen.

Sourabh Gupta is Senior Fellow at the Institute for China-America Studies. A version of this article appeared in the South China Morning Post.