Asia-Pacific Watches US Midterms for Shifts in Trump's War, Trade, and Tech Policies

Governments and businesses across the Asia-Pacific region, significantly impacted by the energy shock from the United States and Israel’s war on Iran, are closely observing the US midterm elections. Analysts suggest that many in the region desire substantial changes during the remainder of President Donald Trump’s term, particularly concerning the war on Iran and his trade and tariff policies. However, widespread expectations of such shifts are low, even with projections of Democrats gaining control of the House of Representatives and possibly the Senate.

Steven Okun, a trade specialist and CEO of APAC Advisors, commented, “Of course, everybody is watching. It’s great political theatre.” The Asia-Pacific has been more severely affected by the war on Iran than any region outside the Middle East. Before the conflict began in January, the region was a major recipient of Gulf oil and gas transiting the Strait of Hormuz. Iran’s closure of this chokepoint in retaliation for US and Israeli strikes led to shortages across much of the region. The Philippines, which imports over 90 percent of its crude oil from the Gulf, has been under a national energy emergency since March. According to the Institute of Southeast Asian Studies (ISEAS)-Yusof Ishak Institute in Singapore, escalating fuel costs have depleted the foreign exchange reserves of the region’s less affluent economies, including Cambodia, Laos, Myanmar, and East Timor. Indonesia, Malaysia, Thailand, and Vietnam have also incurred significant expenses on fuel subsidies to protect consumers.

Public sentiment in the Asia-Pacific remains strongly against the war. However, Okun believes a Democratic-controlled US Congress is unlikely to compel Trump to end the eight-month conflict. “With Iran, I don’t see [a Democrat-controlled Congress] having much change at all, other than the fact that the war will be investigated and there will be oversight hearings,” Okun stated. “We might even see an impeachment of the secretary of defence, but it doesn’t change the overall impact of the war.” While Congress holds the constitutional power to declare war, Trump has asserted the attacks on Iran were in self-defence and has disregarded congressional directives to withdraw US forces. Should a Democratic-controlled Congress pass legislation to restrict military operations or funding, Trump could veto it. Overriding such a veto would require a two-thirds majority in both chambers, a threshold Democrats are unlikely to meet.

Regarding trade and tariffs, analysts also foresee limited congressional ability to curb Trump’s actions. Last year, the US president disrupted global markets by implementing “reciprocal” tariffs ranging from 10 percent to 50 percent on goods from approximately 90 countries, aiming to reduce the US trade deficit. Asia bore a disproportionate impact, with Cambodia facing a 49 percent tariff, Laos 48 percent, Vietnam 46 percent, and Myanmar 45 percent. Following the Supreme Court's invalidation of these tariffs in February, the Trump administration employed alternative measures. In July, it imposed tariffs of 10 percent and 12.5 percent on goods from 60 trading partners, citing their failure to prevent imports made with forced labour. In Asia, this list includes China, Japan, South Korea, and seven Southeast Asian nations: Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

“In some ways, the new Congress is not going to matter to the Asia Pacific because it’s not going to affect trade policy,” Okun observed. “Congress cannot change that … Tariffs don’t change. The war doesn’t change.” Nevertheless, some analysts perceive a slight possibility for change. Stephen Olson, a visiting fellow at the ISEAS-Yusof Ishak Institute, suggested in a recent essay that a significant rejection of “Trumpism” in the elections could empower a pro-free-trade faction within the Republican Party, which has been subdued during Trump’s presidency. Olson believes this offers “a glimmer of hope” for Southeast Asian countries reliant on the US market. A Democratic-controlled Congress might also advocate for exceptions and carve-outs that could provide some relief to the region’s exporters. However, any more profound alteration in US trade policy, he noted, would likely await the 2028 presidential election.

Joshua Kurlantzick, a senior fellow for Southeast Asia and South Asia at the Council on Foreign Relations, indicated that the region’s aspirations extend beyond trade to security. “I think nearly all of Asia would like to see enormous changes, across many domains, during the rest of Trump’s term,” he told Al Jazeera. “But I think much of the region believes this will not happen.” In addition to desiring “more stability” in trade and tariff policies, Asia-Pacific nations seek greater security assurances from the US. They also desire a more visible US presence in the South China Sea, where China’s territorial claims conflict with those of five Southeast Asian nations, and in the Taiwan Strait, separating China from Taiwan. Businesses are also monitoring whether a substantial Republican defeat might lead to “greater GOP willingness in Congress to stand up to Trump, along with Democrats, on issues important to companies in Asia,” Kurlantzick added, citing tariffs, trade policy, arms sales, and general economic unpredictability.

Regarding US policy on Chinese technology, analysts anticipate some shifts. Okun of APAC Advisors predicts that the incoming Congress, regardless of party control, will enact stricter regulations on China. These include the Remote Access Security Act, which would extend export controls to remote access of US goods, software, or technology, and the Chip Security Act, mandating that companies ensure advanced artificial intelligence (AI) chips are not diverted to foreign adversaries. The Multilateral Alignment of Technology Controls on Hardware Act (MATCH Act) is also expected, which would encourage allies to align their controls on chipmaking equipment with Washington’s to prevent advanced chipmaking technology from reaching China. “The next Congress is going to pass them regardless of midterms because both parties agree on them,” Okun stated. He referred to Trump’s engagement with China’s President Xi Jinping, noting, “The person who is least restrictive now on China is the US president.” The two leaders have met twice this year, with relations improving following a severe trade war last year. To maintain the fragile trade truce, Trump has postponed approving a $14 billion arms sale package to Taiwan, which would be the largest ever for Taipei.

Some analysts express concern that a weakened Trump, facing a Democratic Congress, might adopt a more aggressive foreign policy. “We should not be surprised by continued erratic foreign policy,” said James Guild, an assistant professor at the Indonesian International Islamic University. “The Democrats have a poor record of effectively opposing and holding Trump accountable using conventional tools of congressional oversight,” Guild noted. “We will have to wait and see if they rise to the moment this time.”