US President Donald Trump is undertaking a diplomatic visit to Asia, which includes stops in Malaysia for the ASEAN summit, Japan, and South Korea. A key event is a scheduled meeting with Chinese President Xi Jinping, where trade is expected to be a central discussion point. Leaders in the region are seeking agreements on trade and investment, while addressing existing economic and security dynamics.
US President's Objectives
A central focus of Trump's Asia trip is expected to be the finalization of new trade deals aimed at creating opportunities for American businesses and maintaining tariff revenue for the US Treasury. China's role is significant for Trump's objectives regarding global trade. The scheduled meeting between Trump and Chinese President Xi Jinping at APEC, the first since 2019, may influence US-China relations during Trump's potential second term.
The US president has stated that tariffs on Chinese imports are unsustainable. Fluctuations in major US stock indexes have occurred during periods of US-China trade impasses. Trump's objectives include finalizing a deal with South Korea and securing new Japanese investment in US manufacturing. A key priority is engaging Xi on resuming American agricultural exports, easing restrictions on foreign access to Chinese rare earth materials, increasing US company access to the Chinese market, and preventing an expanded trade conflict.
China's Strategy
When Chinese President Xi Jinping meets Trump on October 30 in South Korea, China's negotiating position is expected to be firm. China has utilized its control over rare earth minerals, which are essential for manufacturing various technologies, and this approach impacts US reliance on these materials and has affected American agricultural exports, such as soybeans.
China's stance suggests a readiness to manage the impact of tariffs, drawing on previous interactions. The US share of Chinese exports, previously one-fifth, has reportedly decreased in importance for China. Xi faces the challenge of balancing economic discussions with the US against domestic issues. US analyses indicate awareness of China's domestic economic issues, including youth unemployment, real estate challenges, local government debt, and consumer spending patterns. Analysts suggest China might consider an agreement if certain conditions are met, such as the export of advanced AI chips or reduced military support for Taiwan. Reaching such an agreement is anticipated to be complex. Different negotiating styles have been observed, with Trump sometimes perceived as taking risks, while Xi's approach is often described as long-term.
Southeast Asia Engagements
During his visit to Malaysia, the US president is expected to participate in a ceremony where Thailand and Cambodia are slated to sign a peace accord. Border disputes between Thailand and Cambodia are ongoing, but progress has been reported on demilitarizing the border. In July, a US threat to conclude tariff talks reportedly contributed to a ceasefire between Thailand and Cambodia during a period of conflict.
Other ASEAN member states anticipate Trump's presence may contribute to normalizing relations with the US. Their export-dependent economies have experienced challenges related to tariffs over the past year. Exports from Southeast Asia to the US have doubled since the 2017 ASEAN summit. The civil war in Myanmar, which began following a coup in 2021, is also on the ASEAN agenda.
Regional Economic Considerations
Asian manufacturing economies, significant global producers, are seeking relief from US tariffs. While some agreements have been reached, signed agreements are pending, and negotiations are ongoing for others. Concrete agreements or productive discussions are sought.
The meeting between Trump and Xi represents a development, with discussions expected to cover tariffs, export controls, and competition in areas like AI and advanced technology. A reduction in these tensions would provide economic relief to other regional countries. Southeast Asia is integrated into US electronics supply chains but also significantly dependent on Chinese demand. Exports to the US have doubled over the last decade, but tariffs ranging from 10% to 40% could impact manufacturers in Vietnam, Indonesia, Singapore, and Thailand. Such tariffs could also affect US chipmakers, including Micron Technology, which has operations in Malaysia. Malaysia exported approximately $10 billion in semiconductors to the US last year, accounting for about one-fifth of total US chip imports.
Japan and South Korea, as developed economies, have distinct economic considerations. Despite being US allies, they aim to secure tariff terms and investments. Automakers in both countries, for whom the US is a major market, are managing current economic conditions.
Japan's New Prime Minister
Trump has commented positively on Japan's new Prime Minister, Sanae Takaichi. Her establishment of a stable working relationship with Trump this week will be an early assessment of her leadership and Japan's international positioning. In her inaugural parliamentary speech, she committed to increasing Japan's defense budget, indicating a greater share of the security burden with Washington. Trump has previously addressed this topic and is anticipated to urge Tokyo to increase contributions for US troop deployments; Japan hosts approximately 53,000 American forces.
Both nations aim to finalize a tariff agreement initiated by the previous administration. This deal is intended to reduce US import duties on Japanese cars from 27.5% to 15%, potentially enhancing their competitiveness. Takaichi's decision to retain Ryosei Akazawa as chief tariff negotiator suggests a strategy of continuity. Japan has committed to a $550 billion investment in the US to bolster supply chains in pharmaceuticals and semiconductors. Trump has stated that Japan will increase purchases of US agricultural products, including rice. Takaichi's connections to former Prime Minister Shinzo Abe, who had a close relationship with Trump, may be a factor; Abe engaged in personal diplomacy, and Takaichi may pursue similar methods.