By Ross Darrell Feingold, Hong Kong
President Donald J. Trump’s administration will seek better relations with Asia albeit under the America First framework discussed in President Trump’s inaugural address, despite uncertainty about U.S.-China relations and potential imposition of higher tariffs on goods exported to the United States from Asia. Within days of his inauguration, President Trump had teleconferences with the prime ministers of Japan and India, setting the stage for positive relationships with two key leaders. Trans-Pacific Partnership (TPP) members had ample time to prepare for the U.S. withdrawal, and must now change their strategy to working with the Trump Administration on bilateral initiatives such as free trade agreements (FTA).
Recent presidents began their terms calling for more U.S. engagement in Asia. For George W. Bush and Barack Obama, non-Asia issues consumed the foreign affairs agendas in their final months in office. The failure to advance the TPP through Congress prior to the end of his presidency will, fairly or not, be the final note on President Obama’s Asia “re-balance”.
Most legal and regulatory changes needed to reach FTAs must be made by the trading partners and not by the U.S., thus, political opposition is likely as these countries are not immune from protectionist sentiment. In Asia, the U.S. has bilateral FTAs with Australia, Singapore and South Korea; the latter has encountered opposition from numerous domestic constituencies.
U.S. companies manufacturing in Asia, and especially in China, face possible U.S. tariff increases. In the event of trade tensions between the U.S. and China, U.S. manufacturers and service providers operating in China must monitor the risk of increased regulatory investigations, audits, etc. by Chinese authorities, a tool China uses against companies domiciled in countries whose governments offend China, regardless of whether the source of disagreement is trade-related or not.
Separately, U.S. companies and individuals doing business in Asia, as in other parts of the world, expect the Trump Administration to examine multilateral initiatives that add to regulatory burdens and costs, such as the Organization for Economic Co-operation and Development’s “Base Erosion and Profit Shifting” project. In conjunction with implementation of the Foreign Account Tax Compliance Act, such initiatives increase the regulatory burden for U.S. companies and individuals operating in Asia. Thus, Americans based in Asia have high hopes that the Trump Administration can address these burdens on both business and personal transactions.
Ross Darrell Feingold is a Hong Kong-based member of AARO’s board of directors. The views expressed herein are his own.
Mr. Feingold is regularly interviewed by the media. Recent examples include:
- a recent interview on Radio Taiwan International on US-China-Taiwan relations: http://bit.ly/2ldXtSW
- his analysis of why Asian markets rose following President Trump's decision to withdraw from the Trans Pacific Partnership: http://bit.ly/2ksEJi5