India and Asean are growing apart. Blame tariffs

IT IS still far from clear what US President Donald Trump’s tariffs will eventually look like. But the pressures they will put on stable trading relationships – even those that don’t directly involve the US – are already visible. Ties between India and the 10-member Asean are already fraying: They’re being pushed into different camps, and the free-trade agreement they signed in 2010 could become an unexpected victim of the turmoil.

Trump might be the immediate cause of this rift, but, as always, China’s massive manufacturing overcapacity is at the heart of the problem. Even if no country knows what rates they or others will face, everyone can be reasonably certain that the mainland’s tariffs will be the highest of all. Unfortunately, this also means that there’s a big incentive to help Beijing game the system enough that we all trust each other less.

Many Asian countries are reasonably pleased at the thought that duties on their exports will be lower than on those out of China: They’ve all been searching for a way to regain a sliver of competitiveness, and this might help. But the same nations are also a little scared. They fear a flood of underpriced Chinese goods, once meant for the US, will inundate their fledgling manufacturing sectors.