Economy

What Happened: On April 2, U.S. President Donald Trump announced sweeping new tariffs on almost every U.S. trade partner, including 34 percent tariffs on China. Two weeks later, what started as a global effort to “liberate” the U.S. economy has become a full-blown trade war between China and the United States. New hikes pushed the effective U.S. tariff burden on Chinese goods to a staggering 145 percent, while all other countries saw the new tariffs lowered to 10 percent. Beijing responded by raising its tariffs on U.S. goods to 125 percent. “The headlines may center on retaliatory tariffs and shipping slowdowns,” writes analyst Lizzi Lee for The Diplomat, “but beneath the surface, a more consequential shift is unfolding: a long-term strategic recalibration aimed not at out-escalating Washington, but at enduring it.”

Our Focus: Part of the reason behind China’s escalation is that it puts no faith in the potential to resolve the trade dispute through negotiation. With that assumption in place, Beijing is moving to weather the storm, rather than trying to avoid it altogether. As Lee outlines, China has adopted a three-part strategy: shoring up its domestic economic situation, with an emphasis on consumption; hitting back at the U.S. to raise the cost of the trade war for Washington; and “doubling down on regional diplomacy and offering itself as a more predictable, if not always less complex, partner.” China is preparing its public to soldier through economic hardship while trying to mitigate the damage through policies at home and abroad.

What Comes Next: As Lee notes, none of these ideas are truly new. China has been trying for decades to boost consumption and make its economy less export-dependent. Its trade outreach to other countries likewise has a long history, but has been complicated more recently by China’s use of economic coercion and controversial industrial policy amid growing overcapacity. “Headwinds abound: economic slowdown, wary foreign investors, and unresolved tensions with neighboring countries,” Lee acknowledges. “But for now, Beijing is proceeding with a logic that sees the trade war not as an aberration, but as a feature of the new landscape – and is shaping its posture accordingly.”

INTERVIEW

Asanga Abeyagoonasekera, a senior fellow at The Millennium Project in Washington D.C. and former founding director general of the Institute of National Security Studies (INSS) at the Ministry of Defense in Sri Lanka, on the new Defense Cooperation Agreement between India and Sri Lanka: “The DCA has been described as ‘historic’ with good reason. It marks the first time India and Sri Lanka have entered into a formalized framework for defense cooperation, reflecting a significant evolution in bilateral security relations.”

Northeast Asia

While China has adopted a hard-line tit-for-tat response to Trump’s trade war, Taiwan – which heavily relies on the United States for its security – is taking a different approach. President Lai Ching-te ruled out reciprocal tariffs, instead (like many U.S. allies) seeking to resolve the issue through negotiations. Now opposition party figures are criticizing Lai for appearing weak or overly dependent on the U.S. While the 90-day “pause” in the full force of Trump’s tariffs buys Taiwan some breathing room, the U.S. administration’s promise that tariffs on semiconductors are coming next is cause for concern. The chip industry is vital to Taiwan both economically and in terms of national security.

South Asia

First, it was Trump praising Pakistan for its assistance in arresting an Islamic State terrorist during a speech to the U.S. Congress. Then it was a long-awaited phone call between Pakistan’s Foreign Minister Ishaq Dar and U.S. Secretary of State Marco Rubio. Recent developments have analysts wondering about the potential for a positive swing in Pakistan-U.S. relations. With the war in Afghanistan over, Washington’s focus has shifted to confrontation with China – Pakistan’s avowed “iron brother” – and bonhomie with India, bringing predictably negative impacts for Pakistan-U.S. relations. Against that backdrop, even small progress is notable, yet the threat of Trump’s tariffs continues to loom in the background.

Southeast Asia

China’s paramount leader Xi Jinping is on the road in Southeast Asia this week, making stops in Vietnam, Malaysia, and Cambodia. The tour follows closely on the heels of U.S. President Donald Trump’s “reciprocal” tariffs announcement on April 2, which saw Southeast Asian nations hit especially hard. While the tariffs have been reduced to a 10 percent flat rate for 90 days, the trade war has given Xi the opportunity to depict China as a calm and predictable economic partner for a region still scrambling to respond to Trump’s move. During his two-day stop in Vietnam, where he met with Communist Party chief To Lam and other senior leaders, Xi directly addressed the issue, arguing that “there are no winners in a trade war, or a tariff war.” Southeast Asian nations are no doubt uneasy about China’s growing power, but the capricious and chaotic nature of the Trump administration’s decision-making has shaken the region’s confidence in the U.S. – perhaps for the long term.

Central Asia

After an extremely quick trial – three days – that followed two months of delays, a court in Kazakhstan deemed Temirlan Yensebek guilty of “inciting ethnic hatred” for the inclusion of an offensive 20-year-old rap track in a social media post critical of a Russian propagandist. Yensebek was given a five-year restricted freedom sentence that comes paired with a near-total ban on social and political activity. He is not allowed to work as a journalist or participate in conferences, debates, seminars, rallies, or strikes; he is barred from publishing anything in print or online and from giving interviews. He cannot participate in charitable activities or human rights initiatives. The sentence is short of the possible seven-year prison term, but is tremendously harsh for a joke posted on a satiric Instagram account.

Source: World Bank Data Library, Frontier Research calculations

The vulnerability of countries to Trump’s tariffs is heavily colored by how reliant their economies are on exports of goods – and in East Asia, the picture is bleak.

Magazine

Neak tosour, literally “military fighter” in Khmer, refers to the generation of CPP leaders who came to power through the revolutionary upheaval of the 1970s.