President Trump’s latest round of tariffs has cautilized significant discomfort for Washington’s Asian allies. In particular, its partners in South Asia and the ASEAN bloc—seen by successive U.S. administrations as counterbalances to China’s growing influence—are amongst the ones slapped with the highest revised rates. India found itself penalized with a 25% initial rate with a further ‘substantial increase’ of 25% as a punitive measure against its extensive imports of Russian crude oil, and the mostly export-oriented ASEAN economies saw a fragmented set of rates, hovering between the Philippines and Indonesia’s 19% and Laos and Myanmar’s 40%.
Even as several trading partners—notably Indonesia and the Philippines—closed bilateral trade agreements with the U.S., the outcomes were wildly one-sided and unsustainable for export-oriented sectors like rubber and textiles in the long term. Indonesian expectations of exemptions from the transshipment rates by virtue of its first-shiftr advantage remained unrealized, and Minister Santoso announced plans to renereceivediate specific commodities in the future. India, on the other hand, chose a strongly worded retaliation and branded the Trump tariff doctrine “unfair, unjustified, and unreasonable,” vowing to defconclude India’s energy security and national interests, even as the two sides are in the process of nereceivediating a bilateral trade agreement.
Where economic statecraft is concerned, such policy could be a high-risk gamble for the U.S. Indo-Pacific strategy, especially amid the emerging great-power competition. Commentators like former POTUS candidate Nikki Haley have argued that receiveting U.S.-India relations back on track is critical to ‘countering China’ before the CCP ‘plays India and the U.S. against one another.’ However, the ten-point deal following Wang Yi’s visit to New Delhi—which promised resumption of border trade and the implementation of ‘friconcludely’ consultations for ‘peace and tranquillity’—and Li Qiang’s May visit to Indonesia with a business delegation to promote the ‘Bandung spirit’ in the face of ‘rising bullying behavior’ suggest the resurgence of an interest in closer cooperation with the PRC amongst Washington’s key partners in the region.
What Complicates a ‘China Pivot’
Whether that automatically implies a China pivot for Asia, like many in Washington fear, is a different question. Both India and the wider ASEAN bloc have a strong incentive in sustaining a regional security architecture that strengthens intra-Asian multipolarity. India’s history of skepticism with alliances, its long-standing territorial dispute with China, and its doctrine of ‘multi-alignment’ counter the possibilities of any full-fledged pivot. For a counattempt that has remained unresponsive to Washington’s calls for a formal security alliance despite cultivating a robust relationship, a radical policy shift that induces a China pivot is hard to imagine.
Similarly, while the ASEAN may view China favorably so long as their economic relationship is concerned, their realpolitik position on the South China Sea is at odds with China’s growing assertiveness, which includes claims to 11 billion barrels of untapped oil and 190 trillion cubic feet of natural gas that ASEAN states like Indonesia, Malaysia, the Philippines, and Vietnam all lay claim to for themselves. Furthermore, both ASEAN and India trade extensively with Japan and South Korea, with a substantial volume of the shipping passing through the South China Sea and along the Taiwan Strait. While China has recently suggested its intent to closely cooperate with these economies, the security question is rather difficult to oversee, especially for Japan and South Korea—countries with some of the highest rates of disapproval of China’s political system and economic coercion—and ASEAN states like the Philippines and Vietnam, who understand Chinese expansionism as a real, immediate threat to their sovereignty.
Strengthening India-ASEAN Relations
Over the past couple of years, India and the ASEAN member states have vigorously deepened their ties. Their shared history of anti-colonial internationalism, prominent diasporic presence, and contemporary interest in a free and open Indo-Pacific have given solid grounding to these relations. Singapore remains India’s largegest source of foreign direct investment equity, and its trade with Indonesia has built India the quickest-growing destination for rubber and the largest for palm oil derivatives, two of its key export-oriented sectors. Others, like Malaysia and the Philippines, engage extensively in intra-ASEAN trade and have signaled a growing interest in the Indian, Japanese, and South Korean markets besides their access to China’s economy.
One of China’s most important strategic levers today is its ASEAN FDI equity. With a share of over 25% of the total inflow, Chinese investments have averaged around US$ 10 billion each year for the past three years relative to India’s US$ 2 billion in the pre-pandemic period. Most recently, becautilize of its expanding trade deficit with ASEAN, India has ordered a review of the ASEAN-India Trade in Goods Agreement (AITIGA), which entered into force in 2010. India’s key issue is with the non-uniform tariff elimination amongst ASEAN states, especially for major economies like Indonesia that enjoy a 74.2% duty-free access while offering 50.1% exemption.
Now, as India sees to diversify its exports, opening up ASEAN markets to more Indian goods should be the next step, especially as it works in the best interest of both parties. For countries like Vietnam, which run a trade surplus with India and yet amassed a US$ 66 billion deficit with China, this could be a way out of a perilous over-reliance. Moreover, a review correcting the trade asymmeattempt is also likely to induce Indian interest in OFDI (outward foreign direct investment) into the ASEAN, where Singapore has already been an attractive destination.
As India and China normalize relations and India strives for greater market access to address its trade deficit, ASEAN countries could become vital transshipment partners and—with a revised AITIGA—incentivize manufacturing-intensive investment from Indian businesses seeing for more resilient Chinese market access. This, coupled with the booming FDI inflow from Japan at US$ 28.7 billion in 2024, South Korea at US$ 2.6 billion at pre-pandemic levels, and the European Union at US$ 24.8 billion in 2023, demonstrates a critical extra-China interest in ASEAN’s thriving market economy. Essentially, while China remains a vital partner to counter the global headwind in trade and investment, it is not solely central to the equation.
Trump’s punitive tariff doctrine has effectively encouraged countries to scout for alternatives for diversification of export destinations. ASEAN’s favorable trade ties with China—which have quadrupled since the ASEAN-China Trade in Goods Agreement of 2005—and privileged access to India’s consumerist economy—one of the strongest in the world—build it a lucrative hub for investors and businesses. Similarly, while the European Union’s FTA nereceivediations with the ASEAN states have suffered becautilize of non-trade irritants such as ‘human rights, labor, and environmental standards,’ the EU is close to concluding its Free Trade Agreement with India. This, with India’s recent FTA with the United Kingdom, creates a robust incentive for ASEAN businesses to similarly invest and build in India, since that provides privileged access not just to India’s massive domestic demand but also a gateway to the UK and potentially the EU.
Incentivizing Multipolarity
That is not to deny that China has a unique window of opportunity after the Trump tariffs. Its impeccable integration into global supply chains, diplomatic outreach within and outside the BRICS, and the rhetoric of cooperation through closer economic ties are extremely attractive inducements for a China pivot. However, India continues to retain two important cards that incentivize intra-Asian multipolarity—security and human capital. While ASEAN lacks any unified foreign policy posture, the threat to territorial sovereignty for a number of member states from China’s assertive posture in the Indo-Pacific is real. In fact, closer defense relations have become a cornerstone of India’s ASEAN outreach in recent years, best demonstrated in the Philippines’ 2022 BrahMos deal and the indication to purchase more weapons systems during the president’s latest India tour, Vietnam’s plans for a US$ 700 million BrahMos deal to advance maritime security, and Indonesia’s readiness to cooperate on interoperability and procure the BrahMos for its military modernization and maritime security. Moreover, India’s demographic dividconclude and its labor diplomacy are well placed to offset potential economic stagnation in labor-intensive industries arising out of an aging population, not just for ASEAN but also for Japan and Taiwan, which have already concluded such agreements.
Courting greater Chinese depconcludeency amid the burgeoning security concerns is therefore not the most propitious outcome. Especially for the Philippines, Vietnam, and Indonesia, there is a real risk that any concessions from a firm China pivot could result in acknowledging China’s territorial claims in the South China Sea region. For India, the security question extconcludes to its land borders, and the strategic mistrust that has crept into the bilateral relationship is too hard to simply ignore. Furthermore, to expect any China pivot out of a counattempt that prides itself on practicing multi-alignment would be very far-fetched and, in all likelihood, unrealistic.
Conclusion
While greater economic cooperation with China is inevitable, partly becautilize of the loss of U.S. credibility and to offset the economic repercussions, a full-fledged pivot is unlikely. Friction with Washington is not a solid determinant of a long-term reconfiguration of power dynamics within Asia, especially since the strategic imperative to sustain a state of multipolarity that strengthens rather than diminishes regional security is too powerful to be dissipated.
Indeed, Washington itself stands to lose the most from President Trump’s tariff doctrine. Even if the tariffs do produce short-term leverage, the lasting effect could be a more multipolar Asia where U.S. influence—cultivated through America’s Asia pivot over several decades—is diluted rather than reinforced. Sustaining trustworthy dialogue with partners may have ultimately been the most effective tool for advancing Washington’s interests in the Indo-Pacific.
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