Should America’s security and economic partners in Asia worry about the possibility of a Donald Trump presidency?
The Donald certainly seems to think they should if his comments on ending the perceived security free-riding, and driving a harder deal in America’s favor is anything to go by. Back in 2013, he set his sights on the Korean Peninsula, asking ‘How long will we go on defending South Korea from North Korea without payment? When will they start to pay us?’
This was no lonely thought bubble. In a CNN interview in January, he scolded the South Koreas for paying America “peanuts” and demanded that Seoul “pay us a lot of money”. Presumably, he would apply the same logic to the alliance with Japan, and possibly even Australia even if he lauded a ‘special relationship’ with Aussies last month.
Trump is not actually alone in this line of reasoning. Many libertarians in America are arguing against what they call ‘military welfare’ by allies and partners, including in Asia. As the argument goes, the region has become dependent on American stewardship of the post-Second World War liberal order and it is time to end the free goodies. In an environment of strained fiscal and other resources, Washington can no longer afford the indulgence of a role as the indispensable regional power. It is time for Asia to pay up.
In a region which looks to America as the primary security provider, such words will make security allies uncomfortable. But some seven decades after the end of the Second World War, is it really that easy for America to reverse course in Asia? If Trump were to win office, he will bombarded with reasons why there is no alternative to U.S. power. With China’s growing strength, there is no effective regional balance without a fully engaged American Pacific Fleet. China’s defence budget is already three times larger than the next largest spending Asian power in Japan, while the budget of the People’s Liberation Army constitutes almost half of all military spending in East Asia if we exclude America.
Any significant American strategic or military withdrawal from Asia would put at severe risk open access and stability of sea-lines-of-communication or SLOCs, especially if the maritime domain in East Asia becomes a Chinese lake. Does anyone really trust the Chinese Navy to offer free and open access to maritime trading routes without strings attached? With two-way trade between the U.S. and Asia worth around US$1.5 trillion each year, and almost all of it going and coming on ships, Trump would come to understand that the American presence in Asia is not just a matter of national ego. And when it comes to the cost of foreign bases in Asia, these are already shared with bargaining constantly taking place between the U.S. and host nation. For example, and in a five year agreement signed in 2014, Seoul will bear around 40% of the costs of stationing U.S. troops on its territory. America is presently negotiating a cost-sharing agreement with Australia with respect to the presence of U.S. marines and other American military assets in northern Australia.
At most, Trump can deploy his self-proclaimed negotiation and deal making skills to the fore and gain no more than a marginal financial advantage for his side. He has assured voters that “I am a great negotiator. I’m awesome.” But that will hardly make a dent when it comes to national fiscal repair. In fact, 60% of fiscal spending each year goes towards social services, health and aged care. Trump wants to cut taxes and improve these services at the same time, all the while railing against Obamacare. If he really wants rapid fiscal repair, he will need to raise taxes and find large cuts in domestic spending.
Besides, Trump’s catchcry of wanting to ‘Make America Great Again’ depends on enhancing American leverage and using a bigger stick in Asia to achieve Washington’s objectives. He cannot advocate American withdrawal and the return to a regional self-help system on the one hand, and enhance Washington’s capacity to shape outcomes at the same time.
What about his frequent accusation that that Asian trading partners are “eating our lunch” on account of the current account deficits America has with the region? In this context, Trump has referred to China more than any other candidate in the race. He does not seem enthused about America’s trade relationship with Japan or South Korea either. When asked to elaborate in a number of debates regarding trade with China, his emphasis is usually the same. The Donald is not “going to let them cheat.” “The first day in office [he is] gonna knock their socks off and they’re gonna to have to be fair or I’m gonna to make them pay us the whole trade deficit” which was US$365.7 billion in 2015.
How will he do that? In an interview with the New York Times last December, he threatened to slap a 45% tariff on Chinese imports, and duties against any other Asian country who The Donald believes has artificially devalued its currency to help exporters? By the way, tariffs will also be threatened against China if they are not more helpful in arm twisting North Korea to give up their nuclear weapons. Besides being illegal on account of violating World Trade Organisation rules, economic punishments invariably have wide ranging unintended consequences that will harm American firms and consumers, as well as other Asian trading partners. After all, East Asia is a deeply integrated production zone, meaning it becomes impossible to avoid collateral damage when imposing economic costs on one country. For example, an American icon such as the iPhone uses parts from and is assembled in up to a dozen countries throughout Asia.
Moreover, while Trump and other American politicians target global trade as the culprit for lost manufacturing jobs through global outsourcing, corporate America will remind every president that half of all Asian made goods entering the U.S. are produced by firms wholly or partially owned by multinationals based in advanced economies, with up to a third of these American multinationals. The U.S. is one of the top three sources of foreign direct investment in every major Asian economy, including China, Japan, South Korea and Southeast Asia if treated as one entity. Hardly surprising since four-fifths of all American FDI into Asia goes toward funding export-manufacturing companies. One doubts any White House could afford to take on the collective might of Walmart, HP, Apple and others.
In any event, American consumers benefit through cheaper prices than if the product is made in America. Try telling consumers in the U.S. that their plasma TV or iPad is suddenly going to cost a lot more because of a trade war precipitated by their President. And even if one went ahead and imposed tariffs on say, goods made in China, American exporting firms will simply shift production to other parts of Asia such as Vietnam or Malaysia rather than back to the U.S.
Mario Cuomo, the former Governor of New York, famously said that you campaign in poetry but you govern in prose. From the Big Apple himself, Trump would know this saying well even if the poetry of his campaign has been controversial and distasteful along the way. In the end, and whether it is The Donald or Hillary Clinton who wins through to the White House, every commander-in-chief confronts constitutional, institutional, economic and political limits on their power.
Trump has defied all his critics to come this far. He is peddling the message to voters that he is not just the only genuine outsider but the only ‘Mr Fix-it” in the political race. If he goes all the way, reality will hit him. And it is only when we know how he responds to the real world and its constraints that he can be properly judged.