Executive Summary
- President Trump concluded his participation in the ASEAN summit, overseeing diplomatic and trade activities and affirming U.S. commitment to the region, despite existing U.S. tariffs.
- Following Trump’s departure, the summit’s focus shifted to broader multilateral trade initiatives, particularly the China-backed Regional Comprehensive Economic Partnership (RCEP), aiming to solidify regional economic ties.
- European Council President Antonio Costa raised concerns about China’s expanding export controls on critical raw materials, while Brazilian President Luiz Inacio Lula da Silva secured a more favorable trade deal with the U.S.
The Story So Far
- The current global economic discussions are taking place against a backdrop of looming U.S. tariffs on several nations and ongoing trade disputes, which have led countries, particularly China, to advocate for multilateral trade initiatives like the Regional Comprehensive Economic Partnership (RCEP) as a potential bulwark. This push for broader economic partnerships also reflects concerns over China’s significant control of critical raw materials and its use of export controls as leverage in trade relations, adding complexity to global supply chain stability.
Why This Matters
- Despite President Trump’s efforts to secure bilateral trade deals and a temporary tariff pause with China, the continued presence of U.S. tariffs is driving Southeast Asian nations towards multilateral economic partnerships like the China-backed RCEP, potentially reshaping global trade dynamics and offering a counterweight to protectionist policies. This evolving landscape also underscores persistent concerns about the stability of global supply chains, particularly regarding China’s leverage through its control of critical raw materials.
Who Thinks What?
- President Donald Trump and the U.S. emphasized strengthening bilateral ties and overseeing regional trade deals, while maintaining existing tariffs on several Southeast Asian nations and agreeing to a temporary tariff pause with China.
- Chinese officials and proponents of the Regional Comprehensive Economic Partnership (RCEP) advocated for trade multilateralism and reinforced regional relationships, viewing RCEP as a potential counter to U.S. tariffs.
- European Council President Antonio Costa expressed strong concerns regarding China’s expanding export controls on critical raw materials, urging for the restoration of fluid, reliable, and predictable supply chains.
KUALA LUMPUR – World leaders convened in Malaysia on Monday to deliberate on strengthening economic and trade ties, with discussions unfolding against the backdrop of looming U.S. tariffs, even as President Donald Trump departed a summit of Southeast Asian nations to continue a regional tour. The day’s events in Kuala Lumpur saw a focus shift towards multilateral trade initiatives, including a China-backed regional economic partnership, after Trump oversaw several regional deals and U.S. and Chinese negotiators agreed to a temporary tariff pause.
Trump’s Regional Engagement
President Trump concluded his participation in the 47th Association of Southeast Asian Nations (ASEAN) summit on Monday, having overseen significant diplomatic and trade activities. On Sunday, he presided over the signing of an expanded ceasefire pact between Cambodia and Thailand, alongside four regional trade deals aimed at bolstering economic cooperation.
Despite these agreements, the White House confirmed that none of the framework deals reduced existing steep U.S. tariffs on Cambodia, Malaysia, Thailand, and Vietnam, though they did allow for some exemptions. President Trump affirmed the U.S. commitment to the region, stating, “Our message to the nations of Southeast Asia is that the United States is with you 100% and we intend to be a strong partner for many generations.” His remarks coincided with news that U.S. and Chinese negotiators had agreed to a tariff pause in their ongoing trade dispute.
Shift to Multilateralism and RCEP
Following the departure of President Trump and Secretary of State Marco Rubio for Japan, the summit’s focus pivoted to broader economic partnerships. Top officials from China, along with leaders from Brazil, Canada, the European Council, and the 11-member ASEAN bloc, remained to solidify economic ties and negotiate trade agreements.
Chinese officials were anticipated to advocate for trade multilateralism and reinforce regional relationships. A key agenda item was the summit of the China-backed Regional Comprehensive Economic Partnership (RCEP), which includes the 10 ASEAN members, Australia, Japan, New Zealand, and South Korea. This bloc, representing approximately 30% of global gross domestic product, is viewed by some analysts as a potential bulwark against U.S. tariffs.
EU Concerns on China’s Export Controls
In a separate but related development, European Council President Antonio Costa met with Chinese Premier Li Qiang, conveying strong concerns regarding Beijing’s expanding export controls on critical raw materials. Costa urged Premier Li to restore “fluid, reliable and predictable supply chains” and also sought China’s assistance in resolving Russia’s war in Ukraine.
China’s control over 90% of the global supply of rare earth magnets and minerals has been a contentious point in its trade relations with the United States. Beijing has utilized this leverage in response to U.S. tariffs.
Brazil-U.S. Trade Deal
Brazilian President Luiz Inacio Lula da Silva also engaged with President Trump on Sunday, stating that their meeting “guaranteed” a more favorable trade deal for Brazil. The United States had previously imposed 50% tariffs on Brazilian products in retaliation for the sentencing of former President Jair Bolsonaro.
President Lula highlighted Brazil’s strategic importance, noting, “I told him it was extremely important to take into account Brazil’s experience as the largest country in South America, as the most economically important country that has almost all of South America as a neighbor.”
Outlook
The Kuala Lumpur summit underscored the complex and evolving landscape of global trade and diplomacy. While President Trump’s engagements focused on bilateral and smaller regional agreements, the broader assembly emphasized multilateral frameworks like RCEP and addressed critical issues such as supply chain stability and trade disputes, reflecting ongoing efforts to navigate a challenging economic environment.
