Trump 2.0: East Asia Looks Ahead Tentatively

28 May

Figure 1 Japanese public reacting to election results

An Uncertain Future

Trump makes an unprecedented return to the White House, surpassing his political opponent Harris by over 50 electoral college votes. The buildup to the vote was largely speculated about by Americans and non-Americans alike, keeping the world awake to stay on track with the state wins, particularly in forecasting outcomes of the seven crucial swing states. Although a ‘national election’ in theory, the differences in leadership and policy between the Republican and Democratic parties are what make election day so prominent and decisive.

What could have been

As for the other side of the world, Japan perceives the result of this election politically and economically. It has been a troublesome year for the Japanese Yen and it was thought that a Harris victory would have had the potential to “support Japan’s ailing currency”, where US inflation would continue to be controlled and monitored, allowing the Federal Reserve to cut down on interest rates.

Consequently, the Yen could see itself strengthening from its recently historically low levels.

Short-term solution, long-term risk

Conversely, economists predict that with Trump now in charge, his focus on the US economy could lead to a short-term boost in the Tokyo stock market but simultaneously, a possible deepening of the yield gap between Japan and the US. Japan has been consistent with its export-driven economy and a loosening of business regulations by Trump would support this. However, the question of tariffs on trading partners could threaten Japanese shares, leading to an eventual pullback and thus reduced investment in the Japanese economy in the long term. Dedicating interests to the betterment of America could cause high economic growth and inflation, which would negatively impact foreign nations and their ability to purchase American goods.

Diplomacy between ‘old friends’

Even before the final announcement of the victory, the Japanese government made sure to secure ‘relationships of trust’ with both candidates, primarily through the Japanese Embassy located in the United States.

Given the historically strong and existing alliance between these two nations, it has rarely been the case for there to be any clear or direct disputes between Japan and the US from a political standpoint. Thus, the Japanese government and Prime Minister Ishiba hope to organise both telephone and in-person meetings with the president of the USA.

Following the chaotic aftermath of the national Japanese election that took place several weeks back, it stands chief that Japan maintains some level of international stability to compensate for the domestic concerns surrounding the notion of having a three-party coalition government.

A snippet into China

China, on the other hand, has undertaken a semi-ambassadorial approach concerning Trump’s upcoming presidency. A Chinese Foreign Ministry spokesperson made sure to emphasise that the nation ‘respects’ the choice of the Americans in the presidential election. Upon hearing that Donald Trump was projected to win the race, Chinese diplomat Mao Ning considered the election a ‘matter of US internal affairs’, where Beijing will continue to work with the US as part of their shared ideas on ‘win-win cooperation’.

As for any messages of congratulations towards Trump, ambiguity exists in Mao’s response to this question, perhaps hinting at Trump’s promise of imposing 60% tariffs on Chinese goods.