India and Asean Are Growing Apart. Blame Tariffs

3 comments

1. In his *Bloomberg Opinion* column, Mihir Sharma argues that India’s trade relationship with ASEAN is fraying under the dual pressures of Donald Trump’s tariff-driven trade disruptions and China’s unchecked manufacturing overcapacity. While Southeast Asian nations are tempted by the competitiveness advantage of lower US tariffs compared to China, they are also alarmed by the impending influx of cheap Chinese goods.

   Some countries are already responding with anti-dumping measures, but others may exploit tariff arbitrage by trans-shipping Chinese goods through their economies. This has raised red flags for the US and India, with New Delhi accusing ASEAN of acting as “China’s B-team” and stalling on tighter rules-of-origin clauses in the India–ASEAN Free Trade Agreement, even as ASEAN quickly expanded its FTA with China.

   Sharma concludes that trust between India and ASEAN is eroding, and warns that without greater supply chain transparency from ASEAN, India may view tariff-free trade as a backdoor for Chinese imports: undermining the region’s fragile economic cohesion.

2. As someone who lives in ASEAN, I feel that the article misses out on one crucial fact. It’s not so much that ASEAN countries prefer China over India or that we have sided with China. Most countries here are straddling the middle ground.

   Countries in this region are using the trade war as an opportunity to snag Foreign Direct Investment. Many of us suffered when China joined the WTO because Western countries began investing in China instead of SE Asia.

   The trade war finally brought Western FDI back into SE Asia. As an added bonus, China was also forced to set up factories and logistics depots here to reroute goods to the US.

   The strategy of most ASEAN countries is to play both sides and reap as much money as possible. We are drifting apart from India because India isn’t a source of FDI and tech transfers that ASEAN needs at the moment.

3. Trump is destroying every advantage the west has.

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