Asia-Pacific firms brace for trade and war continuity after US midterms

Singapore-based APAC Advisors chief executive Steven Okun told Al Jazeera that Asia-Pacific governments and businesses are monitoring Tuesday's US midterm elections with high interest. However, regional experts expect few substantive policy shifts during the remainder of President Donald Trump's term, even if Democrats capture both houses of Congress. The region faces continued pressure from the energy shock caused by the US and Israel's war on Iran and the administration's aggressive tariff regime.

The conflict began in January when the US and Israel launched strikes on Iran. In response, Iran closed the Strait of Hormuz, a critical chokepoint for Gulf oil and gas. Before the war, the Asia-Pacific region imported most of that supply. The Philippines, which sources over 90 percent of its crude oil from the Gulf, has declared a national energy emergency since March. According to the ISEAS-Yusof Ishak Institute, soaring fuel costs have depleted foreign exchange reserves in Cambodia, Laos, Myanmar, and East Timor. Indonesia, Malaysia, Thailand, and Vietnam have also spent heavily on fuel subsidies to protect consumers.

Trade policy remains a primary concern for exporters. Last year, President Trump imposed reciprocal tariffs of 10 percent to 50 percent on roughly 90 countries. Cambodia faced a 49 percent tariff, Laos 48 percent, Vietnam 46 percent, and Myanmar 45 percent. After the Supreme Court struck down those measures in February, the administration introduced new tariffs in July. A 10 percent and 12.5 percent levy now applies to goods from 60 trading partners, including China, Japan, South Korea, and seven Southeast Asian nations, citing forced labour concerns.

Okun stated that a new Congress will not alter these trade policies because congressional power to change tariffs is limited. He noted that tariffs and the war are likely to remain constant regardless of election results. Stephen Olson, a visiting fellow at the ISEAS-Yusof Ishak Institute, offered a more optimistic view. He argued that a strong Democratic showing could embolden pro-free-trade Republicans and push for tariff carve-outs. However, he maintained that deeper policy changes will likely wait until the 2028 presidential election.

Security concerns also drive regional anxiety. Council on Foreign Relations senior fellow Joshua Kurlantzick said Asia-Pacific nations desire greater stability in US security guarantees. Specifically, countries want a clearer US military presence in the South China Sea and the Taiwan Strait. Businesses are also watching for increased congressional oversight of arms sales and economic unpredictability.

One area of expected change involves Chinese technology. Okun said the next Congress will pass tougher restrictions on China regardless of party control. These include the Remote Access Security Act, the Chip Security Act, and the MATCH Act. These bills aim to extend export controls and verify the location of advanced AI chips. Okun added that President Trump is currently the least restrictive on China, having met with President Xi Jinping twice this year and paused a $14 billion arms sale to Taiwan.

James Guild, an assistant professor at the Indonesian International Islamic University, warned that a Democratic Congress may struggle to hold a lame-duck Trump accountable. He suggested that erratic foreign policy could continue as the administration seeks to offset domestic constraints.