Life With Donald, Seen From Asia

• Pivot to Asia Asia
  by Filippo Fasulo, Paola Morselli, Michele Danesi and Guido Alberto Casanova
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One year after Donald Trump's return to the White House, the administration has deepened the sense of disruption shaping the current international order. Indeed, Trump's second term has consolidated a distinctly revisionist worldview, one in which the US national interests - primarily defined in economic terms - have absolute priority over commitments to rules, institutions and long-standing partnerships. Within this framework, Asia has not been spared. Washington's pressure has gone beyond China, already firmly framed as a systemic rival, but has increasingly extended to countries that previous administrations regarded as indispensable partners for sustaining US influence in the Indo-Pacific. From India to ASEAN, relationships once led by shared strategic objectives have been reinterpreted to prioritize the issues of burden-sharing, market access and immediate economic returns. In a context where trade competition has become the dominant principle and multilateral forums are sidelined in favor of bilateral and transactional diplomacy, a key question emerges: how have countries across the Indo-Pacific adapted to a United States that is increasingly unpredictable, less committed to institutions and potentially more coercive?

Why it matters

1. Keep your enemies closer. As the United States step back from multilateral engagement, middle powers across Asia have responded by actively using regional and plurilateral forums to diversify economic and diplomatic ties and reduce dependence on single partners. In parallel, many have pursued targeted appeasement toward Washington to safeguard access to the US market, security guarantees, and political goodwill. At the same time, this accommodation has been coupled with a deliberate recalibration of relations with China, as regional actors seek to mitigate exposure to Chinese economic coercion without provoking direct confrontation, preserving room for maneuver in an increasingly polarized strategic environment.

2. Case in point. In Southeast Asia, several ASEAN countries have moved to defuse trade frictions with the United States by signing targeted bilateral agreements - aimed at managing tariffs, securing market acces, or aligning on supply-chain and industrial priorities - only to follow up with similar agreements or with high-level visits to China, like Vietnam and Thailand. Likewise, when faced with high tariffs imposed by the Trump administration, Prime Minister Narendra Modi has conceded selectively to US demands to contain short-term costs, while at the same time accelerating diplomatic re-engagement with China. Modi's participation in forums such as the Shanghai Cooperation Organisation meeting in Tianjin illustrates how US pressure might have contributed to search for diversification in multilateral organizations - or even China. In Japan and South Korea, tighter defense coordination with Washington has continued, yet it has been accompanied by cautious efforts to stabilize economic ties with China - with some difficulties, as seen by the tensions between Tokyo and Beijing escalated over statements related to the possibility of Japanese involvement in a Taiwan contingency.

3. Trade diversion toward Southeast Asia. The impact of Trump's tariffs is not limited to its direct effects on bilateral trade flows. Indeed, US tariffs on Chinese goods have accelerated patterns of trade diversion, with Chinese exports being redirected away from the US market toward alternative destinations, particularly in Southeast Asia. While this has led to a surge in imports across several ASEAN economies, it has also created growing pressures on domestic markets. Local producers increasingly face competition from Chinese goods manufactured at lower costs - often supported by state subsidies - raising concerns about long-term productivity, industrial resilience and de-industrialization risks in the region.

4. The "Venezuela" effect? The US capture of Venezuela's President Nicolás Maduro in early January 2026 sent shockwaves well beyond Latin America. It signals an explicit willingness by the Trump administration to use coercive tools to enforce political outcomes and to openly challenge the sovereignty of regimes deemed illegitimate. On the international stage, this move reinforced the logic of spheres of influence and power politics, weakening the already fragile norm-based global order. In Asia, this precedent resonates most strongly with the Taiwan issue: it raises concerns that great powers may feel increasingly legitimized to act unilaterally on sovereignty claims, eroding the diplomatic ambiguity and normative restraints that have so far helped contain cross-strait tensions.

OUR TAKE

One year into Trump's second term, the United States remain a central economic and security actor in Asia. US markets, defense cooperation and military presence continue to underpin regional stability in the South China Sea and along key maritime corridors. However, a set of concrete policy choices - including the expanded and often unpredictable use of tariffs, the prioritization of bilateral deals over regional frameworks and the growing conditionality attached to security cooperation - has weakened confidence in Washington as a reliable long-term partner and counterbalance to China. As a result, hedging strategies have emerged across the region: several ASEAN countries have paired targeted trade and security concessions to appease the United States with renewed diplomatic and economic engagement with China. In this context, the dominant response across the Indo-Pacific has therefore been pragmatic diversification: broadening economic partnerships, reinforcing regional and multilateral arrangements.

SPOTLIGHT: Taiwan's domestic troubles spilling onto the global stage

Over the last two months, Taiwanese domestic politics has taken an international dimension that elevates its internal challenges to global ones. Partisan clashes between the ruling DPP (the party of President Lai Ching-te) and the KMT-led opposition (which retains parliamentary majority) have been frequent since the 2024 elections, but escalated to a whole new level last December. The $40 billion special defense budget - targeting arms procurement and joint development with the US -, proposed by the government to counter the threat of a Chinese attack, has been repeatedly rejected by the opposition, which accuses Lai of ramming through large spending without sufficient clarifications or oversight. The clash became so intense that in late December the opposition-controlled parliament approved a motion to impeach president Lai, accusing him of undermining Taiwan's constitutional order and democracy for his refusal to promulgate a law on public finances approved by lawmakers. The political paralysis stalled important parliamentary discussions such as that on the 2026 budget and leaves Taiwan crippled amid mounting Chinese military pressure. On the last few days of December, Beijing conductedlarge-scale operations encircling the island, which is the first major exercise carried out since tensions broke out in the region after Japanese PM Takaichi's comment on the defense of Taiwan in early November.

EXPERTS' VIEWS

How are Asian countries framing the US' game-changing foreign policy stances and the erosion of the international liberal order?

South Korea and Japan have traditionally relied on the United States for both security and economic stability. Trump's transactional foreign policy is causing significant confusion among the political leaders and publics of both nations. Public opinion polls in both countries consistently show that anxiety has intensified following Trump's election, accompanied by an increase in negative outlooks regarding relations with the United States. However, in the short term, this anxiety is unlikely to lead to a fundamental shift in their relationship with Washington; instead, both Seoul and Tokyo have opted to strengthen their alliances by accommodating Trump's demands. Nevertheless, it remains uncertain how long this unstable relationship-defined by the coexistence of dissatisfaction with and dependence on the U.S.-can be sustained. Should trust in the United States continue to erode, the possibility of South Korea and Japan pursuing nuclear armament as a last resort is increasingly becoming a realistic scenario.

Lee Sangsin, Korea Institute for National Unification (KINU)

In an increasingly uncertain geopolitical and economic landscape, Asian countries are deepening ties with major powers, while also diversifying their economic and security partners. The Philippines, for instance, strengthened its alliance with the United States, welcomed Japan's growing security role in the region, and formalized regular military drills with Canada and New Zealand. Manila also recently signed a Comprehensive Economic Partnership Agreement with the United Arab Emirates, its first with a Middle Eastern country, and is negotiating a free trade agreement (FTA) with Canada. As the rotating ASEAN Chair this year, it will also likely push for the conclusion of the ASEAN-Canada FTA. Last year, ASEAN upgraded its free trade pact with China to factor in green and digital economies. BRICS has expanded, the first ASEAN-China-Gulf Cooperation Council (GCC) Summit was held last year, and Chile has applied to join RCEP, proof that linkages across regions are gathering steam as developing and emerging economies explore new markets and investors. While cautious, many are open to evolving strategic, security, and economic architectures.

Lucio Blanco Pitlo III, Philippine Association for Chinese Studies

WHAT AND WHERE

Italy's PM Giorgia Meloni on a diplomatic trip to Japan and South Korea

Between January 14 and January 19, Italy's Prime Minister Giorgia Meloni conducted a trip to Asia, visiting Oman, Japan and South Korea. This initiative signals a fundamental growth in Italy's interest towards the Indo-Pacific region, particularly in relation to the possibility of industrial cooperation on defense and technology, but also to increase economic diversification in Asia after normalizing post-BRI relations with China. On her third visit to Japan since taking office, Meloni celebrated with Sanae Takaichi the 160^th anniversary of Italy-Japan relations: the two highlighted the need to reinforce cooperation on LNG trade, agreed on a new consultation framework to boost space technology cooperation and discussed the future of the Global Combat Air Programme (GCAP), the trilateral project between the UK, Italy and Japan to develop new sixth-generation fighter jets by 2035. Instead, at the end of the meeting with South Korean President Lee Jae-myung, the two agreed on the need to strengthen the resilience of value chains and strategic industries and discussed the possibilities of economic cooperation in African countries where Italy is engaged through the Mattei Plan. To reassert the significance of Italy-Korea ties, Meloni finally invited Lee for a state visit to Rome to be held in 2026.

The first victim of Nepal's anti-corruption effort is related to a major BRI project

Amid public pressure for tougher government action against corruption, the first major case pursued by Nepal's interim government led by former chief of Justice Sushila Karki has been a Chinese state-owned enterprise (SOE). China CAMC Engineering and two of its managers are now facing corruption charges over the construction of the Pokhara airport, one of the PRC's biggest infrastructural investments in the country under the framework of the Belt and Road Initiative. The case filed by Nepal's anti-graft body to the Special Court involves 55 individuals, including five former ministers and ten former secretaries. They are being accused of having inflated the costs of the project and subsequently pocketing a total of about $74 million - making it "the biggest single-project loss in Nepal's history". Despite the relevance of this case, the movements born after the protests that ousted Nepali government last September remain unsatisfied with Karki's anti-corruption efforts, which have failed to bring other high-profile results. At the regional level, this scandal is likely to represent a setback in China's attempts to consolidate its influence in Kathmandu: Beijing, in fact, had long supported the communist party of K.P. Sharma Oli, leader of the government coalition that was ousted last September, after the popular protests.

Selfies, drumsticks and the security architecture of East Asia

Regional security and inter-Korean tensions, but also a viral selfie with Xi Jinping and the video-cover of a BTS song playing the drums with Sanae Takaichi. These are the main snapshots at the centre of the diplomatic trips that the South Korean President Lee Jae-myung took in the first weeks of January to China and Japan. 'A "new phase" in ties between Seoul and Beijing'. This is how he called it in a meeting with Xi Jinping on the 5 January, where the two discussed shared historic past, regional tensions and the recent US intervention in Venezuela. Xi urged the Korean President to make "correct strategic choices", implicitly drawing a parallel with the Japanese stance on Taiwan, while Lee asked for support in mediating with the North Korean government. The following week, Lee met the Japanese Prime Minister Sanae Takaichi in her hometown Nara, with whom he spoke about regional diplomatic engagement, denuclearization and trade. The logic behind Lee's engagement with the two neighbours seems to point in one direction: warming ties signal South Korea's intention to protect relations with both Tokyo and Beijing, establishing itself as a go-between parter in an attempt to stabilize the agitated waters of Indo-Pacific security.

Elections in Myanmar: A Controlled Vote Amid a Civil War

Myanmar is about to enter in the third phase of elections (scheduled for January 25) organized by the ruling military junta, a process widely seen as an attempt to institutionalise its grip on a country still amid a violent civil war. Large parts of the country remain outside the control of the military authorities that seized power in the 2021 coup, and this reality - combined with the ongoing conflict and the junta's systematic disregard for basic democratic practices, including political freedoms - has led observers todismiss the elections as largely performative. The electoral process began in December 2025 and was structured in three phases, starting with over 100 townships (out of 330) firmly under junta control before gradually extending to areas where military authority is weaker. In over 60 townships there were no constituencies, as voting has not been conducted in areas beyond the junta's reach. Predictably, the results have so far favoured the Union Solidarity and Development party, a political group that gathers candidates close to the ruling military and supported by the junta leader, General Min Aung Hlaing. Rather than signalling a genuine political transition, the electoral process has reinforced the military's control, offering a veneer of institutional legitimacy without addressing the underlying political conflict or the fragmentation of authority across the country. ASEAN, of which Myanmar is still a member, has announced that it will not certify the outcome of the vote; while China - the external actor that has more influence in the country - has taken a more accommodating stance, supporting the electoral process as part of its broader effort to preserve stability in the country. However, rather than a step toward stabilization, the elections risk entrenching Myanmar's internal fragmentation.

TREND: Trade projections in Asia (2034)

The chart shows China's projected compound annual growth rates (CAGR) in trade with major partner groups between 2026 and 2034. Trade with fellow BRICS countries is expected to grow by an average 5,5% per year, making Beijing bound to surpass Washington - whose trade with the bloc is forecast to grow at an average 1,5% - as the leading trade partner, according to BCG analysis. At the same time, economic disengagement between China and the United States is set to deepen. Indeed, the value of China-US bilateral trade is projected to fall by an average 4,5% yearly, reflecting the impact of long-lasting economic competition between the two great powers. By contrast, a slight overall increase (2,5%) is expected to take place with relevant multilateral partners as the EU and CPTPP blocs. Although moderate, this expansion still outpaces the United States' projected trade growth with the same partners (+1,5%), meaning that actors caught in the middle of US-China rivalry are likely to avoid full disengagement with both their major partners. Finally, it is interesting to notice how the PRC's trade with other remaining countries is also projected to rise significantly, by about 3% per year. This, together with the exceptional growth of China-BRICS trade, highlights Beijing's sustained efforts to promote itself as a reliable partner for the Global South.

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