Taiwan and much of the world remain mired in uncertainty after the U.S. opened a global trade war, with high tariffs rocking markets. To discuss how the geopolitical order stands following the tariffs enactment and subsequent pause, Alec MacDonald spoke to Ja Ian Chong of the National University of Singapore.
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00:00With the U.S. opening a trade war that has been underpinned by uncertain policy, how have geopolitical partnerships shifted in Asia?
00:09What's actually really interesting is with the tariffs, the alliance and formerly the alliances and the other kinds of relationships have not changed.
00:19They've not technically changed. There's been no aggregation of treaties. There's been no amendment of treaties.
00:24But what has happened is that there's a lot more apprehension about U.S. commitment.
00:31There's a lot less clarity over the direction in which the U.S. is heading, especially in terms of cooperation.
00:37People might bring up the issue of Ukraine, but Ukraine is not a U.S. treaty ally.
00:42In this incidence, then what case can Taipei benefit from this new trade environment?
00:46So what's interesting is because Taiwan had actually benefited from the last sort of shock to trade during the first Trump administration, where economic ties with the PRC between the U.S. and the PRC were tightened.
00:59So there was this acceleration of a China plus one strategy.
01:02Many Taiwanese firms relocated back to Taiwan or Taiwanese firms moved from the PRC elsewhere.
01:08And because Taiwan was seen as part of that safer supply chain, it gained.
01:12I guess that is something that Taiwan can still bank on, although the certainty of that approach certainly is called into question by the Trump administration's more perhaps cavalier attitude towards longstanding relationships.
01:27That having been said, Taiwan is a major producer of semiconductors.
01:33It is important for U.S. security interests.
01:36U.S. have not stepped away from them.
01:38In fact, Secretary of Defense Pete Hegseth during his visit has said that the U.S. continues to be interested in deterrence in East Asia.
01:45So those are things that Taiwan can work on.
01:47Taiwan has shown itself to be a good partner in the past.
01:50It can potentially do that, continue to do that.
01:53Next week, Xi Jinping will visit Malaysia, Cambodia and Vietnam, three nations which had very high U.S. tariffs applied on them before the pause.
02:01So what implications could this visit bring about?
02:04I think these states were beneficiaries of the China plus one strategies and hence their high surplus and probably with the United States, hence the tariffs.
02:17At the same time, these three Southeast Asian states are ones that have been trying to cultivate closer relations with the PRC at any rate.
02:24So I suppose looking at the trade war with the United States, General Secretary Xi Jinping probably thinks that he can perhaps find inroads for cooperation with these three states.
02:38Now, things are also complicated and probably Xi will have to work through them.
02:43One, because these three states, the way that their economies work is that they will sometimes produce components that get shipped to China for final assembly or vice versa.
02:52But one of the major final markets is the United States.
02:55If the U.S. is closed off to the PRC, we could see a diversion of trade through these countries toward the U.S.
03:03And the question will be whether Washington wants to then shut off those channels as well.
03:08At the same time, these three countries, they being in close economic ties, having close economic ties with the PRC means to say that they also take quite a lot of PRC exports.
03:22And there have been concerns about overcapacity in the past.
03:25This pressure is likely to increase as the U.S. market is shut, essentially shut off to PRC goods.
03:31And that the diversion of trade to these countries from the PRC could put a lot of pressure on these economies, especially small and medium-sized enterprises.