The Deal of the ART: Assessing the “America First” Trade Policy in Asia

As President Donald Trump readies to travel to China this month, observers are revisiting a year of tariff wars, trade talks, and “America First” signaling across Asia. In the past year, the stated aim of this policy—recasting the United States’ global trade relations to close bilateral deficits and bolster economic security—has driven a raft of negotiations for Agreements on Reciprocal Trade (ARTs) with major partners, most of them in Asia. Most observers are not anticipating a major shift in the U.S. approach to China at this point—China’s leverage remains real. But in any case, other countries in Asia, especially Southeast Asia, have a lot riding on how U.S.-China trade issues are ultimately resolved.

Implementing the “America First” Trade Policy in Asia

To understand why so much of consequence remains in the global and Asian regional balance, it helps to take a look back at the current state of the Trump administration’s trade policy. By the administration’s own lights, the guiding principle of its “America First” trade policy, as announced publicly on January 20, 2025, is to address persistent “imbalances” in U.S. global goods trade, notably the bilateral deficits with key partners, which the Trump administration poses as the source of decades of damage to the U.S. economy. In a formal articulation released on April 2 (“Liberation Day”), the administration framed the challenge as an imbalance that must be corrected not merely through tariffs, but through a broader reconfiguration of market access, investment commitments, and economic security guarantees. What this translates to on the ground, and what it means for Asian economies in particular, is an evolving set of economic arrangements that mix tariff reductions, nontariff measures, and assurances around supply chains, investment, and national security.

The administration’s Asian trade strategy has so far been anchored in two distinct tracks. First, with larger North Asian economies—such as Japan, South Korea, and Taiwan—the focus has been on securing inward direct investment commitments. Second, with Southeast Asian economies, the goal has been to extract substantial market access concessions alongside “economic security” commitments that would require those countries to mirror U.S. trade restrictions on China. There is ample logic to this approach. Southeast Asia, with significant deficits and deep ties to China’s manufacturing ecosystem, presents a critical test for the U.S. capacity to reshape regional production networks, while the larger North Asian economies possess, in principle, the resources for major new investments in the United States.

Of further note, the second Trump administration’s perspective toward Association of Southeast Asian Nations (ASEAN) countries appears to have shifted from the pragmatic strategy—“China Plus One” diversification of supply chains under Trump’s first term—to a more direct, unyielding objective of preventing production from simply moving away from China to neighboring economies. This approach raises a new dilemma for Southeast Asia, however. If Chinese-linked investment is pushed by the United States out of ASEAN, it is unclear where it goes—and there is a real possibility it stays in, or returns to, China. Southeast Asian economies may then face a paradox: Rather than serving as an alternative to China in global supply chains, they may need to fight to preserve their role as part of a balanced, multisourced supply network—one that, under current pressures, has less incentive than before to leave China at all.

Inside the ARTs: What Countries Actually Agreed To

To better understand the position and predicament of other Asian economies at this juncture, it helps to understand the internal structure of the ARTs. As a virtual precondition, both Northern and Southeast Asian countries have been forced to accept much higher U.S. “reciprocal” tariffs. In the case of Japan, South Korea, and Taiwan (all of which ultimately made significant U.S. investment commitments and also possess larger economic leverage with the United States), these tariffs sit at a net maximum of 15 percent, whereas in Southeast Asia, they are in the 18–20 percent range. Though in the case of Southeast Asian economies, the 18–20 percent tariff is in addition to preexisting U.S. tariffs that averaged about 3 percent (in some key sectors such as apparel and footwear, they are much higher at around 20 percent).

In exchange, all countries have agreed to lower their tariffs to minimal rates, in many cases in Southeast Asia to near 0 percent. In short, there is nothing “reciprocal” about the agreed tariff rates. The United States has succeeded in leveraging its market size to actually drive U.S. rates and foreign rates further apart, ostensibly to address trade imbalances. It is true, of course, that the high U.S. rates imposed under the International Emergency Economic Powers Act (IEEPA) were overturned by the Supreme Court in February 2026; however, the Trump administration is now set on replacing the IEEPA tool with other, more legally defensible tools (such as Section 301 of the 1974 Trade Act), though these tools are more administratively burdensome. Most expect the divergence of U.S. and foreign rates agreed in the ARTs to remain in some fashion through 2026.

As of today, Japan, South Korea, and Taiwan are working to conclude the details of their ARTs with the United States and to ratify these deals legislatively, with most of the focus on their huge U.S. investment commitments (in the hundreds of billions of dollars), which have proven technically and politically difficult. In Southeast Asia, the three agreements (Cambodia, Malaysia, and Indonesia) have been finalized. These agreements include not only market access commitments, but novel commitments related to economic security, including commitments on mirroring U.S. export controls, sanctions, and other trade actions against China as well. Agreements with Vietnam and Thailand remain uncompleted—in large part because of the difficulty of agreeing to such “economic security provisions.”

Why Did China Get a Different Deal?

In the context of all of these regional trade concessions to the United States, the China question remains central and paradoxical: Even as the Trump administration touts ART-style concessions across North Asia and Southeast Asia, it has not secured a comprehensive ART with China. In fact, it has not even really begun one. Instead, Beijing has leveraged U.S. concessions in a manner unavailable to others, resulting in an uneasy truce that raises crucial questions about the U.S. policy’s strategic effectiveness, durability, and regional consequences.

Washington now has a bilateral trade relationship with Beijing that remains short of the tariff and market access concessions typical of ARTs elsewhere. Instead of a broad ART, the United States retreated on its initially uniquely high tariffs on China (reaching 145 percent at one point) in exchange for Chinese commitments on critical minerals export controls. In short, as nearly all observers have noted, China’s hard-headed, tit-for-tat approach worked. China obtained relief for its exports, while the United States just barely maintained its global “America First” agenda by retaining tariff levels on China roughly the same as those that were in place since the first Trump administration. As of May 2026, the chief question remains: Will this months-long truce persist, or will the Trump administration attempt to make a meaningful shift toward addressing its global trade deficit and the deeper structural issues where it matters most—in U.S.-China trade?

What Comes Next: Scenarios for U.S.-China Trade

At this juncture, two plausible futures loom, both of them posing risk, especially to Southeast Asian economies:

1. The truce endures, and the bilateral U.S.-China status quo is maintained. If the current U.S. tariff concessions and Chinese moratorium on critical mineral export controls remain in place, the United States may decide to prolong the current equilibrium indefinitely while, at most, seeking incremental concessions on nontariff barriers or investment access. In ASEAN terms, if the terms of existing ARTs remain, this could place these smaller countries at a competitive disadvantage to China, or at best force them to maintain a carefully calibrated balance between China and the United States that could create enduring investment uncertainty. It would also drive a realization in the United States that the Trump administration has not confronted the core driver of the trade deficit or the most important target in terms of trade practices, even while high tariffs on dozens of peripheral countries remain.
2. The Trump administration shifts to extract more from China, seeking concessions akin to those in ARTs. If this outcome occurs (which seems unlikely given China’s resistant posture for the past year, as well as its enduring leverage), China would likely insist on further U.S. tariff reductions, potentially aligning with levels seen in other major economies such as Japan or the European Union (i.e, a net cap of 15 percent), which go beyond those achieved by ASEAN countries. This shift would likely complicate the political and economic calculations for ASEAN partners, many of whom have benefited from existing regional arrangements but would fear being left even worse off if China were to receive better treatment for its exports. 
    

The consequences of either path for ASEAN nations are worrisome. The net effect could be to widen the asymmetry between the benefits received by China and those received by ASEAN members, and, perversely, for both ASEAN and U.S interests, make China a more desirable place to invest relative to others. Moreover, the higher U.S. tariffs on ASEAN exports could mute inward foreign direct investment from Japan, Korea, and Taiwan (which use ASEAN largely as an export platform to the United States), which have been the backbone of much regional economic development and are now being drawn toward the United States itself. ASEAN nations would also need to be on their guard if another new U.S. approach were accepted by China: the establishment of a bilateral U.S.-China “Board of Trade” recently proposed by U.S. Trade Representative Jamieson Greer, meant to manage bilateral trade flows directly. Such a board could prejudice Southeast Asian trade interests if it restricted or managed China’s trade flows that moved to neighboring countries. But this seems far from likely at this point.

That said, another, more favorable outcome is possible for Southeast Asia. If the Trump administration falters in enforcing the breadth and depth of ARTs, if commitments remain vague and nonbinding, or if the statutory trade authorities meant to replace IEEPA are restricted in the courts, then the practical harm to ASEAN countries, especially their economic security, could be somewhat muted (though some higher U.S. tariffs could still apply). However, it could take months or even years for this result to become clear, and in the meantime, uncertainty and risk would remain for Southeast Asia.

The ASEAN region has shown resilience and strategic pragmatism, balancing engagement with China, diversification of supply chains, and strategic ties with the United States. Yet without a coherent, enforceable, and comprehensive framework that addresses China’s structural advantages in manufacturing and technology, ARTs risk making ASEAN members’ position worse than before, especially vis-à-vis China itself, an outcome not anticipated (certainly not by the U.S. administration) a year ago. Unfortunately, it is not clear whether the United States would benefit at all from such a result, not simply because of its inability to foster reform actions by China, but because it will have simply alienated countries that it is trying to pull out of China’s orbit.

The Stakes for Southeast Asia

As President Trump’s visit to China unfolds, observers should watch not only the tariff headlines but also whether there are any new commitments to even a process that leads to new Chinese market opening or economic reform. The Trump-Xi summit is perhaps the last real chance for the Trump administration to execute a policy that is true to its global January 2025 vision. A central critique—one that emerges with acute clarity in the ASEAN context—is the gap between U.S. rhetoric and action. If the United States does not deploy effective measures against its most consequential target in terms of trade practices and deficits (China), then the “America First” policy risks becoming simply peripheral and thus a strategic failure in the Trump administration’s own terms. More importantly, for Southeast Asian nations, the summit could also have a significant impact on the stability and robustness of their own economies in the coming years.

Joseph Damond is a senior associate (non-resident) with the Southeast Asia Program at the Center for Strategic and International Studies in Washington, D.C.