The end of the American Century: New possibilities for a rising Asia
The use of tariffs as a political whip is just one indicator of America’s decline. What the world is witnessing is nothing less than a collective loss of confidence in the American form of government, its major institutions, and the legal framework that weaves together its complex democratic geometry.
The erosion of trust in America may be its weakest link, unraveling the tested bonds of global friendship, destroying the architecture of US-backed international institutions, and badly eroding US Soft Power. America’s decline has begun. It is almost impossible to go back.
The US White House can be accused of many things today. Extreme originality is not one of them.
Tariffs and quotas combined with piracy, armed robbery, kidnapping and slavery are painfully familiar in the former colonies of Asia, South America and Africa. As in the days of colonial expansion, tariffs and non-tariff barriers came as an unwelcome, brutal package. Land quotas for indigo cultivation in India, the Opium Wars in China, the opening of Japanese trading ports after Captain Perry’s bombardment of Osaka, slave laborers sent from India to lay railroad tracks in Burma and Malaya, slave-fueled sugar plantations in Brazil, and cotton picking in South America are all notable examples of the mercantilist approach to economic policy.
The lessons are firmly engraved in the minds of colonized Asian peoples. For them, the only effective response to mercantilism in its modern guise is not a groveling renunciation of some supposed sin. Enraptured by dreams of colonial expansion in neighboring Canada, Greenland and Panama, Napoleon is a modern day challenger. This is the reality of the 21st century United States under Trump II. Tragic but historically familiar.; capricious but predictable. It is dangerous but not strategic. The desired and effective response is to not play the game the Trump way. The 21st century is not the 16th century. The world has changed. Trump’s attack can be resisted and overcome. We cannot afford to waste this crisis.
Domestic reactions to US tariffs: China, India and Indonesia
Trump has galvanized public opinion against America more than any other leader in modern times. This is evident in the disintegration of long-standing alliances with Europe, Latin America and, above all, Asia. As might be expected, this situation has led to the use of monetary and fiscal policies to increase consumption in domestic markets, as well as a determined search for alternative export markets.
The quest for self-sufficiency and reduced dependence on the United States begins with the supply of basic essential goods. Food and medical safety is another part of the same intended response. The almost universal mutual learning in food production, storage, distribution and pricing demonstrates the determination of the spirit of independence. Cooperation in medical research, production of basic vaccines and supplements, and creation of medical reserves in parallel with food reserves are steps taken in the same direction.
That’s not all. Concerns for human and physical security are accompanied by Trump’s neglect of the environment and a refusal to stand by the folly of reversing climate-friendly policies, commitments, and funding. India, China and Indonesia are committed to reducing carbon emissions and net zero policies. China has already stunned the world with its remarkable track record in electric vehicle production and advancements in solar energy.
In the field of defense, the planned significant increase in defense spending is aimed at reducing dependence on any US military umbrella, particularly in Japan and Korea. The same may be true for India and Indonesia.
In the fields of human capital: groundbreaking research in digital, industrial/material technologies, bio-technology and genetic engineering, and the management of global epidemics; space exploration and Artificial intelligence; transportation methods, biometric authentication and cybersecurity demonstrate the dynamism and foresight of Asian experts. Short-term crackdowns on student visas and admissions to Ivy League American universities will likely prove a boon for China, India, and Indonesia, or even a dividend for Trump.
In addition, the major countries of Asia are characterized by high savings rates, family solidarity that values education, and intergenerational transfers of income and wealth. This contrasts sharply with the credit card-based, debt-dependent consumption habits of the developed West, particularly the United States. Shortages of American gum, mobile phones, Hollywood movies, communications apps and financial services are unlikely to pose an unbearable burden for Asian consumers.
Then there is the so-called “strong dollar.” The open conflict between the White House and the US Fed does not bode well for either of the two famous characteristics of the US Dollar. If the FED improves, confidence in the dollar will decline sharply under the excited Trump administration. Trading a number of essential commodities in local currency may become a serious possibility.
As a result, the major Asian countries and the world’s most resource-rich countries, Russia, Brazil and South Africa, have many tools at their disposal to resist the onslaught of Trump’s tariffs, with the support of at least some of the countries in the developed world.
For all the talk, the jokes, the deliberate body language, the enfant terrible in the White House has done a disservice to the people of the United States. The good thing is that it has initiated a global rethinking about the drivers of the coming Multipolar World. In his effort to make America Great, he has only succeeded in making the rest of the world much greater.
The contributor is the Executive Director of Arthashastra Institute, Indonesia.
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