TRADE AND TARIFFS: WHAT CHANGES FOR ASIAN ECONOMIES?
Stephen Olson, visiting senior fellow at ISEAS-Yusof Ishak Institute, a Singapore-based research centre, warned that with the electoral pressure of the midterms behind him, Trump could become less constrained in pursuing an aggressive trade policy, including potentially imposing further tariffs on China and other Asian economies.
“Section 301 tariffs on excess capacity could be forthcoming shortly and new trade actions against key partners could also be opened. That obviously would be bad news, especially in the Indo-Pacific,” Olson said, referring to the provision of US trade law that allows Washington to investigate and take action against foreign countries it believes are engaging in unfair trade practices.
At the same time, the Democrats’ electoral gains could embolden lawmakers from both parties to challenge the president’s trade agenda, potentially opening the door to greater congressional scrutiny, he said.
Asian countries, particularly US allies such as South Korea and Japan, will be “hoping that Democrats in Congress will be able to moderate the worst impacts of Trump’s trade policies”, according to Reuters columnist Clyde Russell.
In a commentary published on Wednesday, Russell noted that these countries would welcome a rollback of tariffs and greater consistency in Washington’s treatment of its allies.
But not all aspects of Trump’s economic agenda are likely to face resistance, Russell said – pointing to Washington’s efforts to develop critical mineral supply chains outside China, including investments in rare earths, tungsten and lithium, as an area where bipartisan support could ensure continuity.
The bigger question is whether Democrats can meaningfully constrain Trump’s tariff policies, given the president’s considerable executive authority over trade.
Olson said that while Trump would continue to wield broad powers, Congress could push for more exemptions from tariffs on products that directly affect American consumers.
Lawmakers could also seek to reclaim some of the authority over trade policy that Congress has ceded to the executive branch.
“Depending on how badly the Republicans get wiped out, and how badly Trump’s aura of political potency gets dented, Congress, including pro-free trade Republicans who have been intimidated into standing down, might be inclined to reassert some degree of Congressional authority on trade,” Olson said.
