Trump’s victory and South Asia

USA: The US has just concluded our generation's most eagerly watched presidential elections. Donald J Trump has won the White House resoundingly, and in addition, the Republican Party, also known as the Grand Old Party, has now wrested control of the Senate and has a comfortable majority in Congress.

 

photo: Reuters

Simply put, Trump and the GOP now have complete control of the executive and legislative branches of the government, which will embolden the new Trump administration to pursue policies with determination. The world is closely watching how the Trump administration will usher in a new foreign policy paradigm that revolves around Trump’s “America First” philosophy.

Foreign policy mandarins across the globe have mixed feelings about Trump's victory: Allies in Europe are gripped with anxiety, whereas in South Asia, there is a sense that since the rhetoric of Trump’s election campaign focused on combating China, Asia is on the cusp of witnessing unprecedented American engagement.

It is in this context of American outreach in Asia that South Asia will play a pivotal role in shaping outcomes of a constantly evolving new world order. Nepal must remain steadfast in keeping up with developments of the great power games whilst constantly safeguarding and pursuing its interests independently.

The heart of the US’s contention with China revolves around two critical issues: Trade and technology. The Covid-19 pandemic demonstrated to the world how global trade supply chains depended on supply lines in China. With the resurgence of the America First policy, the Trump administration is determined to impose new trade tariffs of up to 60 percent on Chinese exports. While the supposed new tariffs are likely to come into play in the second half of 2025, there is palpable fear that new trade tariffs could bring in disruptions to global trade as costs are likely to increase in the coming days.

The Trump administration is determined to create new jobs to revitalise the economy by incentivising manufacturing in the country. Whilst Trump's plan to re-establish the US as a manufacturing hub is seen as a patriotic move, could higher labour costs in a developed country contribute towards lower production costs?

The US’s trade conflict with China presents other developing nations in Asia with a unique opportunity to attract investments in the manufacturing industry. Although it is outlandish to suggest China will be entirely substituted as a manufacturing hub, the emergence of new manufacturing opportunities in the global south presents the US with the opportunity to fuel economic growth essential for the sustenance of democracy.

South Asia gives the US a unique avenue for enhanced collaboration. With a democratic polity spread across most of South Asia’s landmass, job creation and energy production are the key elements for stability in the region. The Indo-Gangetic delta is among the most populous regions in the world and possesses the human capital to fuel economic growth across South Asia.

Although the Civilian Nuclear Deal between India and the US is a milestone agreement for the use of clean nuclear energy to generate electricity in India, the nuclear plants in India only contribute 3.11 percent of the total electricity generated in India. For India to meet the energy requirements to set up a large-scale industrial base, access to high-quality uninterrupted energy will be critical for industrialisation in India and across South Asia.

The Millennium Challenge Corporation pact signed between Nepal and the US is a significant breakthrough in Nepal’s energy sector, as American investment in upgrading transmission line infrastructure is greatly required to transport high-quality, uninterrupted energy.

Nepal still requires robust investment in the transmission side to feed supply lines across South Asia. The fact that Nepal, Bangladesh and India have signed a power trade agreement demonstrates the potential of Nepal’s energy sector in fuelling energy to propel economic growth in the region.

South Asia missed the industrial flight back in the decades of the 80s and the 90s; it’s time the region reaped the benefits of the US capital that could trigger a wave of industrialisation.

Another focal point of tension between the US and China is the issue of semiconductors. The US would want to retain the technological leadership of high-end chips in the hands of its allies, namely Taiwan, South Korea and the Netherlands.

Currently, the world relies solely on Taiwan and its crown jewel, Taiwan Semiconductor Manufacturing Company Limited (TSMC), for high-end chips TSMC has a market share of 90 percent of advanced chip manufacturing. Both the US and China know the strategic advantage one can gain by accessing high-end chips, which is critical for next-generation AI modelling in sectors such as defence, intelligence, telecom, medicine and aerospace.

The ability to store big data also depends on the quality and the advanced functioning of high-end chips. In simple words, the US’s ability to retain control and contain access to high-end chips to compete whilst diversifying the production of low-end chips will provide the US and its allies the political leverage it desperately wants.

The tech industry in South Asia has been recognised as a force to reckon with, particularly in India and the periphery of Bangladesh. Sri Lanka seems to have made progress, while Nepal also aspires to expand its tech business reach.

Cross-border payments, the expansion of data centres and the use of technology in the delivery of governance are areas of expansive collaboration. India’s ability to produce low-end chips in the future is also critical to expanding the tech industry in South Asia, as indigenously produced chips can help reduce manufacturing costs and the tech industry’s dependency on accessing chips elsewhere, which are always in high demand globally.

But there are also areas of concern for South Asia regarding Trump’s ascendency to the White House. Trump has vowed to pull out of the Paris Climate Agreement and climate change is an issue that confronts South Asia, particularly Nepal. Nepal has witnessed firsthand the impacts of climate change and, therefore, the country and South Asia at large cannot afford to ignore the impact of climate change. This issue cannot become secondary for either Nepal or the region.

Climate change challenges the livelihoods of our people, and the Government of Nepal must voice its concern visibly and work towards creating strategic alliances that will compel the new US administration to rethink walking away from Paris Climate Agreement.

The new US administration and its South Asian partners must work on issues impacting human welfare to achieve wider social and economic participation in the democratic process in the region. Trump’s vision of America First is virtuous, but to restore the US’s trust globally, he must take its allies into confidence.