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Asia will be watching the new US president carefully, especially his approach to the issues that most affect the region, namely the economy and defence, says Lawrence Yeo.

No one can predict the full impact of incoming US president Donald Trump’s administration on Asia. However, even before his election, there were policies common to both Republicans and Democrats. These included imposition of tariffs on Chinese steel imports, greater use of fiscal policy and increased infrastructure expenditure.

So the new US president is only one factor in a bigger picture, as there are other forces affecting the region, the first one being economic issues. Mr Trump is likely to be more protectionist and renegotiate existing agreements, and he has already signalled he will withdraw from the Trans-Pacific Partnership (TPP).

A revised TPP without US membership will likely result in higher costs, the raising of trade and non-trade barriers for Asian businesses entering the US, and fewer US investments entering Asia. However, some US businesses will still export to and invest in Asia despite the US withdrawal from TPP.

Asia will continue with existing regional trade agreements and is likely to create new ones, trading more within the Asia region and with post-Brexit Europe.

The second impact is on defence. Mr Trump is likely to expand the US military but given that he has promised to avoid foreign entanglements, it is unclear how this will affect Asia. US military forces are deployed in a few Asian allied states such as Japan, the Philippines, Singapore and South Korea. Mr Trump is likely to revise Mr Obama’s stance on Asia-Pacific to a mostly domestic front.

As for immigration restrictions on countries 'compromised by terrorism', it depends which Asian countries, if any, are blacklisted by the US. We can only wait and see, with some hope Asia will continue to benefit from intra-Asia trade and increased security.

Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asia market research and investment/trade promotion services. Email: lawrence@asiabizstrategy.com

This article is sourced from fDi Magazine
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