Trump is driving Asia to diversify away from US

President Donald Trump’s economic policies and “America first” statements are changing Asia’s approach to trade and investment. Financiers and officials across the region are seeking to reduce their reliance on the United States in fear of a trade war. 

Since the end of World War II in 1945, the US has arguably been the most dominant country in global trade, supported by the dollar as the world’s reserve currency. 

According to some economists, Trump’s administration has disrupted that order with tariff policies, challenges to multilateral institutions, and a relationship with foreign countries that’s more transactional than not.

Trump’s push to place the US’s needs first has left Asian markets looking for what some are calling an “America plus 1” strategy, diversifying away west-bound equities and the dollar.

Asia is searching for alternatives

Interviews with senior bankers, investors, and officials in Asia, cited by Reuters, suggest that discussions about reducing US dependence have grown significantly in recent months. However, Asian investors have yet to jump on any alternatives, and some believe that finding one is next to impossible. 

Ben Hung, President of International at Standard Chartered, coined the change in sentiment as a “once-in-100-year shift,” with the world becoming increasingly multipolar, led by the United States, China, and India. “The post-World War II order has changed,” Hung added.

Citi reported a surge in inquiries from Asian clients trying to find some form of balance at a time when there’s heightened geopolitical uncertainty. The bank has seen double-digit growth in trade flows between Asia and emerging markets such as the Middle East and Latin America. 

Still, even with calls and prospects for more diversification, investments in the United States continue to rise.

In a recent press briefing, White House spokesperson Kush Desai pointed to recent foreign investment commitments in the US as evidence that Trump’s economic policies are still lucrative in the eyes of foreign investors.

Desai mentioned Taiwanese chipmaker TSMC and Dubai-based property developer DAMAC as examples of companies responding positively to Trump’s “America First” agenda of tariffs, deregulation, and the prospect of the country’s energy expansion.

China’s trade relations with the U.S.

Communication between Beijing and Washington hasn’t reached the levels it was before Trump’s inauguration, and is now more “sporadic” and undefined. 

Official records show only a few high-profile talking sessions, including China’s top diplomat, Wang Yi’s meeting with US Secretary of State Marco Rubio in late January, and Vice Premier He Lifeng speaking with Treasury Secretary Scott Bessent last month.

Chinese officials undoubtedly want to understand what Trump wants before starting any trade negotiations. The Asian country could also have a list of priorities, including the removal of US tariffs, easing restrictions on Chinese investments and technology imports and exports, including Nvidia Chips, and assurances regarding Taiwan. 

For now, Beijing is responding to Trump’s tariffs with countermeasures designed to impose economic costs on the US. A Chinese official stated that China would “fight to the end” in a “tariff war, trade war, or any other war” with the United States.

US markets resilient with no other opportunities in sight

According to Standard Chartered’s survey, US assets are still attractive due to the strength of its economy, the depth of its capital markets, and the resilience of its institutions. For those looking to move away from the dollar, options are rather limited. The most feasible alternatives, gold, cryptocurrencies, and the Chinese yuan, come with drawbacks.

Ben Hung noted that companies looking to transact in yuan face hurdles, particularly the need to hedge exposure to currency fluctuations. 

“None of those three are perfect,” he told Reuters.

Yet, there is one available option; the Hong Kong Exchange’s Swap Connect, which allows investors to trade renminbi interest rate swaps to manage interest rate risk. 

Swap Connect’s daily turnover surged from 3 billion yuan when it launched in 2023 to 14.9 billion yuan last year. However, several banking executives said that hedging to manage yuan exposure is more marginal compared to dollar-denominated transactions.

As reported by Cryptopolitan on Wednesday, Trump does not want to play a hand in any strengthening ties between China and Russia. Speaking to Fox News after a call with Russian President Vladimir Putin, Trump said: “As a student of history, which I am—I’ve watched it all—the first thing you learn is you don’t want Russia and China to get together.” 

🇨🇳🇺🇸🇷🇺 China and Russia want to get along with the United States. We are respected now,Trump declared.

Trump always feels good about himself.🥱 pic.twitter.com/xKXvMFR8le

— 𝘊𝘰𝘳𝘳𝘪𝘯𝘦 (@OopsGuess) March 19, 2025

The US president told FOX that he has been in talks with China’s President Xi Jinping, adding that he would like America to be “friendly with both.” 

“China needs us in terms of trade very badly, but we have to straighten out the deficit,” Trump reckoned. 

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