Asia is suddenly starting to think about the “what-if” storm that will sweep Donald Trump and his Republican Party to win on November 5th. situations.
Despite the extremely close election in the US, Kamala Harris ‘ Democrats constantly had a statistical advantage. The GOP-controlled White House, Senate, and House of Representatives is currently influencing betting markets, which will force Asia to fight a” Trump business” circumstance in 2025.
Most Asian officials prefer Harris, as she would represent stability from Joe Biden’s administration. Trump’s industry policies alone had transform the world economic system, which is unusual.
The most immediate danger from Tokyo to Jakarta to the rest , of export-oriented Asia is Trump’s supersized taxes. The Trump plan for a 60 % tax on China will stifle growth in Asia’s largest economy and stifle supply stores everywhere.
UBS , Group thinks that tariff alone will cut China’s annual growth by more than half – chopping 2.5 percentage points off the gross domestic product ( GDP ) of the globe’s top trading nation. Due to weak retail spending, property purchase, and new home sales, China increased just 4.6 % in the third quarter year over year.
Over time, UBS , analyst Wang Tao warns of the “risk of various nations raising tariffs on imports from China as well”, kicking off a prospective hands culture of tit-for-tat trade restrictions.
It’s not the end of the world, of training. As Tianchen Xu, senior analyst at The Economist Intelligence Unit, information, China’s full-year GDP target of around 5 %  , “is presently within approach with more stimulus in the third fourth”.
Despite the magnitude of these” challenges”, Xu notes,” China’s economy is not incurable as some would suggest”. However, Trump’s return to the height of massive trade wars was quickly alter that situation.
Trump has threatened to impose taxes of between 100 % and 20 % on imported cars from Mexico, and he has threatened to increase Biden’s new punitive tariffs on Chinese electric vehicles even further. But how long will it be before Chinese, South Asian and Indian-made cars face comparable Trump levies?
For maneuvers did put Thailand and other Southeast Asian export-oriented economies in harm’s way. Trump 2.0 may aggravate Thailand’s” Detroit of Asia” styles on being the leading China fence for international automakers.
According to Capital Economics ‘ chief economist, Neil Shearing, Asia is anticipating a “universal tariff on all imports to the US” as well as higher Trump taxes.
Additionally, Eastern policymakers must figure out how much more stringent the restrictions on US immigration will cost. Additionally, Trump has promised fresh tax breaks, which will only help the US’s$ 35 trillion national debt grow.
” While it’s reasonable to assume that many of Trump ‘s , campaign pledges will be diluted , when faced with the reality of government, the common thread running through each of these proposals is that they will end in higher inflation”, Shearing says.
By the middle of 2026, according to Capital Economics, Trump 2.0 plans could increase prices by two percentage points over recent levels. Real GDP may be roughly 0. 75 % lower while the federal funds rate would be roughly 50 basis points higher. ” Used up”, Shearing says,” this would be bad for both US bonds , and , stocks”.
The comments effects may be felt worldwide. Shearing notes that “emerging markets with higher levels of additional debt or northern banks that are especially vulnerable to movements in the exchange rate – somewhat Turkey, Indonesia, and, given its latest inflation problems, Brazil – would probably dial up the pace of monetary easing.”
Shearing adds that” the risk of higher tariffs, if implemented, could also have a significant impact on countries that trade with the US – Mexico, Korea, Vietnam and, of course, China— especially if Trump imposes a general tariff, which would be much harder to avoid through trans-shipment”.
Trump’s policies may have an impact on emerging markets and investment. ” Tariff concerns have been a drag on EU equities”, says Emmanuel Cau, a strategist at Barclays.
Emre Peker, an analyst at Eurasia Group, notes that ,” Trump’s threat of at least 60 % tariffs on all Chinese goods and a 10 % levy on US imports from the rest of the world, as well as his potential suspension of China’s most-favored-nation trading status under World Trade Organization rules, would stoke EU-China , trade , tensions as more Chinese overcapacity flows to Europe. It could also increase the pressure on European industries, which are already struggling against US and Chinese rivals, from metals to automotive, green energy, and technology.
This, Peker adds,” could put pressure on Brussels to be more forward-leaning on its own duty or tariff posture toward Beijing. Furthermore, a , Trump , administration would likely monitor third countries for possible trans-shipment of Chinese goods and/or circumvention of US tariffs against Chinese overcapacity, threatening additional duties on the EU and others to close any backdoors into the US market”.
One of the bigger wildcards about a Trump presidency is that the US dollar will increase, putting downward pressure on China’s exchange rate. Carie Li, a global market strategist at DBS Bank, says “markets are watching if the Trump trade is heating up and pushing the yuan back to 7.15 against the dollar.”
Some people believe there is a reason to worry about Trump. According to Bilal Hafeez, CEO and head of research at Macro Hive,” The fixed income selloff accompanying rising odds of a Republican sweep could be overdone because Trumponomics is likely to be more rational than the media conveys.”
Hafeez goes on to say that” the impact of the tariffs on inflation has been greatly exaggerated. The US is a domestic-driven economy. Consumer goods imports, excluding cars, represent only about 5 % of total consumer spending, with imports from China accounting for about 40 %”.
A 60 % tariff increase on imports from China and a 10 % tariff increase on imports from other countries could increase consumer price indices by about 150 basis points, according to Hafeez.
However, crypto bets and other assets are all being negatively impacted by Trump’s re-election specter. ” Elections remain hard to call, but if you are long crypto here, you are likely taking a Trump trade”, says Bernstein analyst Gautam Chhugani.
Most troubling about Trump 2.0 is what Asia does n’t know. Imponderables abound. Trump’s first act as president in 2017, remember, was pulling out of the Trans-Pacific Partnership ( TPP ). A President Harris, by sharp contrast, will almost certainly attend next year’s Asia Pacific Economic Cooperation ( APEC ) summit and as she did in Bangkok in 2022 declare the US a” Pacific nation”.
But it’s easy to count the ways Trump might shake up Asia’s 2025 and beyond. He would undoubtedly act to lower the dollar in order to boost US manufacturers ‘ competitiveness, for instance. That could worsen the negative effects China’s current headwinds and undermine confidence in the dollar as a global reserve currency.
Trump will undoubtedly pounce on the Federal Reserve during a second term. Trump will browbeat Fed Chairman Jerome Powell to lower rates in 2019. Trump also considered firing Powell, along with criticizing the Fed on social media. Thus, Powell injected unneeded liquidity into a struggling economy.
Recently, Trump argued that ,” the president should have at least a say in” Fed interest rate decisions. Meanwhile, the” Project 2025″ scheme that the Heritage Foundation right-wing think tank devised for Trump 2.0 favors meddling with the Fed’s mandate.
Then there’s the default risk.  , As a businessman in decades past, Trump was a serial bankruptcy filer. Trump made hints about US debt default while campaigning in 2016 and spooked Wall Street.
” I would borrow, knowing that if the economy crashed, you could make a deal”, Trump told CNBC when asked about his fiscal plans. ” And if the economy was good, it was good. So, therefore, you ca n’t lose”.
In 2020, the Washington Post reported that Trump officials, looking to punish China, mulled canceling debt held by Beijing. It’s not difficult to comprehend how catastrophic a catastrophe would be because the US national debt is now twice the size of the Chinese GDP.
Trump is not going away, even if Harris wins on November 5. There is only a slim chance that Trump will graciously concede defeat and go back to his golf courses. Trump’s legal team is already working on the election results, which could incite a 2021-like insurrection that will be staged at locations across the country.
Washington’s political polarization could lead to unexpected risks that would cause the laws of financial gravity to resurface. The last insurrection , Trump fomented dragged Washington’s credit , rating , down with it. When , Fitch , Ratings , yanked away Washington’s AAA status last year, it cited the insurrection as a key factor.
As , Fitch , put it, the chaos on , January , 6, 2021, was a “reflection of the deterioration in governance” imperiling US finances. The US national debt is now twice the size of , China’s GDP, threatening Washington’s last remaining AAA , rating , from Moody’s Investors Service.
Here, it’s worth noting how a Trump 2.0 presidency would play into Beijing’s hands. Surely, Team Xi is n’t looking forward to Trump’s coming onslaught of tariffs. However, the ways that nations like Japan and Korea could end up as collateral damage may make China appear more appealing as a trading partner.
At the same time, the more Trump 2.0 blocks Asia’s access to US markets, the more governments in Bangkok, Jakarta, Manila, Putrajaya and Singapore might be incentivized to draw closer to Beijing.
Hence Asia’s worries about a “red wave” 11 days from now that makes economic paranoia great again. Policymakers in the region are already weighing how hard their economies would be hit by tariff-sealed US markets and how to respond as the odds of Trump’s return rise.
Follow William Pesek on X at @WilliamPesek