Five things to watch in 2025: Washington’s Asia economic strategy

Trade-minded people in Asia need to pay particularly close attention to Trump’s pledge to fundamentally reverse the US’ traditional Asia-facing economic openness, manifested in the team of personalities the president-elect has assembled to manage his foreign policy. Some are neo-conservatives who want to devote more US resources to the projection of American power and take additional steps to constrain the rise of China. But others – including Donald Trump himself – lean isolationist and transactional, and apply "America First" principles when evaluating the question of "what’s in it for the United States?"

Donald Trump’s transactional attitude extends into the trade and investment policy realm, reflecting a deep sense of national grievance about America’s trade deficits and dependence on manufactured imports. Trump firmly believes that America’s current external economic situation is "unfair," and needs to be rectified. On the campaign trail, the president-elect has threatened to impose tariffs of 60% on China and up to 20% on imports coming from elsewhere globally.

But just as Trump’s general geopolitical isolationism is balanced by a desire to appear "strong" on the international stage, the president-elect’s protectionist and anti-globalist instincts are similarly counterbalanced by a desire for solid noninflationary economic growth, and for American financial markets to continue to reign supreme as pools of global and national wealth. Trump’s top economic advisors, such as Treasury Secretary-designate Scott Bessent, surely understand that across-the-board tariff hikes could create inflationary expectations that lead to higher interest rates and a stronger dollar – possibly wiping out the theoretical "onshoring" and trade balance gains from the tariffs.