How US Midterms Could Mean for Asia-Pacific as Tariffs and China Policy Face Uncertainty

Energy costs hit the region

ISEAS-Yusof Ishak Institute says soaring fuel costs have depleted foreign exchange reserves in Cambodia, Laos, Myanmar and East Timor. Indonesia, Malaysia, Thailand and Vietnam have spent heavily on subsidies to limit the impact on consumers.

Public opinion across the region remains opposed to the war. Steven Okun of Singapore-based APAC Advisors said a Democratic-controlled Congress would be unlikely to make Trump end the eight-month conflict.

Tariffs and election uncertainty

Last year, Trump imposed tariffs ranging from 10 percent to 50 percent on about 90 countries, aiming to reduce the US trade deficit. Asian economies were among those hit hardest: Cambodia faced a 49 percent rate, Laos 48 percent, Vietnam 46 percent and Myanmar 45 percent.

Okun said the new Congress was unlikely to alter trade policy or the war. Stephen Olson, a visiting fellow at ISEAS-Yusof Ishak Institute, said a strong Republican setback could encourage pro-free-trade Republicans who had held back during Trump’s presidency.

Businesses will watch for signs that Republicans in Congress might challenge Trump alongside Democrats on issues affecting Asian companies. Those concerns include tariffs, trade policy, arms sales and wider economic unpredictability, said Kurlantzick.

Technology controls on China

Analysts see US policy on Chinese technology as one area where change may be more likely. Proposals under consideration include extending export controls to remote access of US goods, software and technology, and requiring checks that advanced AI chips remain in authorised locations.

The MATCH Act would push allies to align restrictions on chipmaking equipment with Washington’s, with the goal of keeping advanced technology out of China’s hands. The article also says Trump has held off approving a $14bn arms-sales package to Taiwan, the largest ever for Taipei, to preserve a fragile trade truce with China.

Trump and Xi have met twice this year as relations warmed after last year’s costly trade war. James Guild, an assistant professor at the Indonesian International Islamic University, said continued erratic US foreign policy should not come as a surprise.