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China

How Trump’s Tariffs are driving Asia and the Gulf into China’s Arms

Neil Thompson 03/17/2025

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London (Special to Informed Comment; Feature) – US President Donald Trump’s America First trade policy has seen the global economy enter a new era of protectionism in the two months since he took office. The US leader has embarked on a series of trade wars with countries that run trade deficits with the US, including a number of close US allies, and rivals like China. Earlier this month the US leader signaled that he was doubling down tariffs and similar trade restrictions with countries the White House sees as economic rivals despite stock market falls. During a meeting with NATO leader Mark Rutte he told press on March 13 “I’m not going to bend at all.” Citing his plans to impose reciprocal tariffs on states that retaliated against US tariffs, he complained that the US had been “ripped off for years” by trading partners like Canada and that he wouldn’t allow this state of affairs to continue.

Malaysian Matchmaking at ASEAN

The shift in US economic thinking since Trump’s first term away from free market globalization towards mercantilism has strained many countries’ diplomatic relations with Washington. However, it has also spurred governments to re-examine their other relations with neighbouring countries or emerging powers like the BRICS grouping. Countries like Malaysia with middle-ranking economies whose populations benefitted from trends like the offshoring of manufacturing jobs from developed countries after the Cold War are leading the way. Their governments are keen to find new markets for their export industries and investors for their infrastructure projects, and wary of taking sides in geopolitical struggles between competing great powers.

In February, Malaysia’s trade minister warned that US tariffs on its key export products like semiconductors could cut its trade growth in half in 2025. Southeast Asian states with their export-oriented economies are vulnerable to US tariffs on many goods including steel, aluminium, cars and any item linked with Chinese manufacturing entities but produced there. As a Muslim-majority country Malaysia has long maintained close ties with the Middle East, in addition to its regional neighbors and China, the emerging superpower to its north. Malaysia is also chairing the regional Association of Southeast Asian Nations (ASEAN) in 2025. In November, it took the unprecedented step of inviting China to attend a summit in May between ASEAN and the Gulf Cooperation Council (GCC) countries, aimed at cementing the regional bloc’s wider pool of trading partners.

Non-Alignment Back in Fashion

Malaysian Prime Minister Anwar Ibrahim is keen to stress that ASEAN is not seeking to take sides in the growing confrontation between China and the US. In November, he said that the summit between ASEAN and the GCC was of “of great consequence to the trajectory of regional growth.” Meanwhile, he said “As Asean chair next year, Malaysia aims to enhance regional cooperation and inclusive, rules-based regional framework.” In March Anwar re-stressed that the ASEAN bloc was neutral in the growing struggle between the US and China since 2018, when Trump launched a trade war with China in his first term. He told reporters that the tripart summit was about “ensuring ASEAN’s strategic relevance in a multipolar world.”


“Red Star over Abu Dhabi,” Digital, Midjourney / Clip2Comic, 2025

While nominally US allies, most of the GCC would appear to subscribe to Anwar’s worldview; that the interests of its members are served best by forging rules-based trading ties to other states and avoiding great power conflicts where possible. The GCC consists of the energy-rich monarchies of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates and they have a combined GDP of about $2.1 trillion. Collectively they represent a major global trading bloc and thus a valuable horizontal alliance for ASEAN members. Malaysia’s Muslim-majority status and its subsequent relations with Middle Eastern actors makes it a natural bridge between the Arab nations of the GCC — many of whom are major importers — and the export-oriented ASEAN bloc.

Tightening South-South Links

GCC nations have announced a number of investments in ASEAN members, highlighting the growth of economic links between the two blocs. Earlier this month, Saudi Arabia’s sovereign wealth fund the Public Investment Fund (PIF) invested $100 million into Malaysia’s AirAsia budget carrier. The PIF’s investment was part of Saudi efforts to grow the Arab country’s tourist sector to reach 150 million visitors a year by 2030 under Riyadh’s Vision 2030 plan. In February, Indonesia’s economic affairs minister met with the Saudi economy minister to discuss leveraging Jakarta’s free trade agreement with the GCC to raise exports. Indonesian exports to Saudi Arabia grew 11% in 2024. In October, Vietnam and the UAE upgraded their diplomatic relationship to a Comprehensive Partnership, with Vietnam’s government hoping the GCC member would invest in energy storage and transit operations there.

China is also tightening its commercial ties with both groups, even though it has territorial disputes with various ASEAN members including Malaysia, Vietnam and Indonesia, among others. ASEAN is China’s top trading partner, with trade flows reaching $911 billion in 2023, and diversifying global supply chains driving greater China-ASEAN integration. Meanwhile Beijing has emerged as a key partner in the GCC countries’ energy transition, and a would-be partner in emerging technologies GCC governments want to develop like artificial intelligence. The ASEAN summit in May will bring all three together to deepen their research, economic and diplomatic links without a US presence.

 

The Rest Side-Stepping the West?

China has worsening trade relations with both the EU and the US and is seeking to present itself as a reliable and neutral economic partner to regional bodies like ASEAN and the GCC that are interested more in trade than human rights. Beijing has used rhetoric about upholding the system of globalized trade that emerged after the Cold War. On March 14, a Chinese foreign ministry spokesperson responded to EU comments that China was “laughing” at US trade wars by saying: “We have stressed on multiple occasions that tariff wars and trade wars have no winners. We have no comment on how the U.S. and the EU get along, but we oppose directing the issue at China. Both the US and the EU are important economies in the world. They have a responsibility to uphold the WTO-centered multilateral trading system, rather than deflecting the tension on someone else.”

While ASEAN and the GCC are unlikely to embrace Beijing to the extent that the Chinese government would like, they will be more receptive to Chinese overtures as they aim to offset the negative impact of Trump’s tariffs on their economies. Moreover, the economic destabilization caused by the US-China trade war will also weigh on the outlook to the global economy, incentivizing regional blocs like the GCC and ASEAN to rely more on one another for growth and trade, rather than just replace the US with China. Much as Trump’s attacks on traditional US allies in Europe and the Americas have done there, a more hostile US government trade policy will push Middle Eastern and Southeast Asian governments to bandwagon with their local neighbors as well as new trading linkages. The result is likely to be a world of stronger regional blocs with deeper ties to other such multilateral groupings; and a much less deferential international community towards Washington post-Trump.

Filed Under: China, Featured, Southeast Asia, Tariffs, Trade

About the Author

Neil Thompson is a freelance writer who has lived and travelled extensively through East Asia and the Middle East. He holds an MA in the International Relations of East Asia from Durham University, and is now based in the UK.

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