Collateral damage in the Trade War

AAYLF delegate from Australia Maddison O’Gradey-Lee investigates the implications of the US-China trade war for ASEAN and Australia.  

A current challenge the ASEAN-Australian community faces is the trade war between the United States (US) and China. Economies in ASEAN and Australia are growing, however, many communities do not have the infrastructure or policies to sustain and create resilient and thriving societies. Sustainable and resilient communities are important for regional growth as identified in the ASEAN 2025: Forging Ahead Together declaration. 

Sustainable communities promote social development and environmental protection to meet both the current and future needs of people. Resilient communities fosters enhanced capacity and capability to adapt and respond to social and economic vulnerabilities. 

The trade war between the US and China is a growing threat to Australia and ASEAN retaining economic stability to become both sustainable and resilient communities. 

Under world systems theory China sits in the semi-periphery where they are exploited by the core countries (USA) but able to hold their own through strong trade relations and production. Australia also sits in the semi-periphery as do ASEAN member states. Some fall in the periphery where they are faced with lower technology and disadvantageous relations such as Indonesia. The increasing tariffs on China are already impacting the economy however further tariffs could lead to another Global Financial crisis for ASEAN countries. 

Australia is in a tricky place being a close partner of ASEAN, having a strong economic connection with China and with the US having large influence on our government decisions. 

Historically we have followed the US’s decisions. 

At this turning point, whoever we side with will create disadvantageous circumstances as we have strong economic and political relationships with both countries. To solve this I believe bringing together an exploratory committee of experts across ASEAN and Australia to prevent the fallback from the tariffs through diplomatic and economic efforts and protection from the reduction of trade. 

For Australia, a diplomatic solution must be reached to continue trade and political relationships. 

Further, we could look to strengthen Australia and ASEAN economies through trade relations and capacity building such as increasing our digital trade and investment. This could look at creating increased access to education particularly on entrepreneurship and the selling of goods between our two nations digitally.