Asian nations are building new trading zones to deflect the Trump tariff impact

Thanks to the imposition of Trump administration tariffs, Asian nations are investing more in new trade blocs that include China, Canada, Australia, Japan, and Vietnam, who are joining in one or both of the Asia-Pacific trade blocs launched in recent years: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).

According to a Nikkei Asia report, Vietnamese seafood exporters, for example, see these pacts as “an assurance of relative predictability and preferential market access more attractive than what the U.S. now offers. Other industries across Asia are also finding CPTPP and RCEP useful cushions against the vagaries of Trump's trade policies and the disruptive side effects of his military campaign against Iran,” although the report adds that “the agreements' net economic impact so far appears limited.”

While the tariff reduction pledges made by RCEP and CPTPP “signatories are only gradually coming into effect … The promise of greater benefits to come is already attracting new interest in the Trump 2.0 era. Over the past year, the Philippines, Cambodia, the United Arab Emirates, and Argentina have each applied for CPTPP membership, joining a waiting list that includes China, Taiwan, Indonesia, Ecuador, and Ukraine; Costa Rica and Uruguay are expected to be accepted soon as the bloc's first new members since the U.K. joined the original group of 11 in 2024. Meanwhile, Hong Kong, Bangladesh, Sri Lanka, and Chile have applied to join the 15-member RCEP club,” Nikkei Asia reported on July 3^rd.

Impact On US Imports & Exports & Ports

There have been warnings that Trump administration tariffs and consequent trade uncertainty would isolate the United States and lead to fewer imports and exports.

Mixed signals on US tariffs and trade have resulted in many US trading partners giving up on the United States for the immediate future, according to Lars Jensen, CEO of Vespucci Maritime.

In an interview with AJOT, Jensen said he was pessimistic about U.S. trade prospects, which he warned would have an impact on U.S. port volumes: “We've gotten to a point where, at least that is what I see outside of the US, basically nobody cares anymore. I mean, this (Trump) administration changes trade rules more frequently than other people change their underwear, and that is why basically we have gotten to the point where nobody cares. They do not assume there is any stability to be found. There is no predictability, which means that they are just not making any long-term decisions. That is the only rational approach, and that is what I see.”

Jensen says the Trump administration’s tariff policies have created a crisis of confidence: “If you suddenly have this much tariff on China and this much on Vietnam and this one in Cambodia, then I'm going to change my supply chain set up. I might source from Vietnam instead of Cambodia, or whatever is rational. That was the first approach because that makes sense. You may not like the tariffs, but then you will look at the landscape and say, "If the landscape is now this, I am going to adapt to the landscape. But very quickly over the last year, we then learned this landscape is quicksand. It changes day to day unpredictably. So, there is no foundation for building a long-term plan.”

The impact of this downturn will impact US imports: “The same thing goes for you as importers. There is no way you can make a meaningful medium or long-term supply chain plan (investment), because no matter what assumptions you put in, they are likely to change anyhow. It means for foreign investors going in and saying, "We are going to build manufacturing capabilities in the US, that is typically a 10-year investment horizon. Very few are seriously actually contemplating that because there is no certainty over what the trade situation will be. Not just in 10 years, but in 10 days from now. So, when I say nobody cares anymore, it's because everybody assumes this, no matter what comes from the government, this will change anyhow.”

CPTPP

According to the Congressional Research Service, “The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement (FTA) formed by the 11 remaining members of the proposed Trans-Pacific Partnership (TPP) after the Trump Administration withdrew the U.S. signature in 2017. CPTPP, which retains most of TPP's provisions, reduces and eliminates tariff and non-tariff barriers and establishes enforceable trade rules. CPTPP is in effect for all parties entering into force for Australia, Canada, Japan, Mexico, New Zealand, and Singapore in 2018; Vietnam in 2019; Peru in 2021; Malaysia and Chile in 2022; and Brunei in 2023. To date, China, Costa Rica, Ecuador, Taiwan, and the United Kingdom (UK) have applied to join CPTPP. Others, such as South Korea, Thailand, and Ukraine, are considering applying. The UK is to become the first new member, after reaching an agreement in March 2023 on accession terms.”

The analysis said members of Congress may have an interest in monitoring and shaping the Administration's views on CPTPP, regarding:

• US commercial competitiveness. CPTPP involves three of the top four US trade partners and may expand to other major economies, potentially leading to greater economic integration and trade liberalization among the parties.
• China's potential accession. China's “economic heft and contrasting approach to certain US priority trade issues suggest its potential membership would have implications for US interests in the region.”

RCEP

According to the Congressional Research Service, “US withdrawal in 2017 from the TPP (Trans-Pacific Partnership) as well as increasing U.S.-China trade tensions, renewed interest among many RCEP countries to form a regional trade deal as a potential alternative vehicle for developing more open and stable regional trade links. Talks progressed slowly, largely due to the disparate levels of economic development and priorities among members. Some analyses characterize RCEP rules and commitments as relatively shallow and lacking in nontariff issues. Others emphasize significant progress compared to previous ASEAN deals, and potential impacts beyond trade concessions. Many experts view RCEP as deepening regional integration, while serving as a “stepping stone" for members to join higher-standard FTAs (Free Trade Agreements).”

In the case of RCEP, 10 of its 15 members belong to the Association of Southeast Asian Nations (ASEAN), which lowered barriers to internal trade years before. In 2025, ASEAN pledged to cooperate with countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as it seeks to build resilience against global trade uncertainties stemming from the new US tariffs. ASEAN also had separate preexisting trade pacts with the other nations in RCEP -- Australia, Japan, New Zealand, China, and South Korea. But until RCEP, Japan was not party to a broad trade liberalization pact with either China or South Korea. Under RCEP, China has pledged to trim its previous 40% tariff on sake imports from Japan by 1.9 percentage points a year until it reaches zero in 2042, Nikkei reported.

This has provided a significant boost to Hananomai Brewing, a sake producer based in Hamamatsu, in central Japan, cushioning the blow of higher U.S. tariffs: "For now, we are offsetting the decline in exports to the U.S. with increased exports to China," Sales Director Shinnosuke Takada told Nikkei.

Conversely, 58% of Japan's tariffed imports from China last year utilized RCEP trade preferences, according to data collated by Kazunobu Hayakawa, a senior research fellow at the Institute of Developing Economies, a think tank linked to the Japan External Trade Organization (JETRO).

CPTPP: Mexico and Australia

CPTPP has created more links between countries that were not previously cosignatories to a trade agreement, partly because of its more geographically dispersed membership: “For example, absent any trade pact, Mexico previously charged a 115% tariff on imports of barley from Australia, so none was shipped. With the launch of CPTPP, Australia has displaced the US as Mexico's dominant barley supplier, and the grain has become Australia's biggest merchandise export to Mexico,” Nikkei reported.

The report went on to say that thanks particularly to demand from Mexican beermakers, “shipments last year reached 138.7 million Australian dollars ($95.6 million). Reduced Mexican tariffs on beef and wine have also boosted imports from Australia. Australia had preexisting trade agreements with many of the other members of RCEP and CPTPP, but the pacts still managed to lower barriers. A government review last year said that reduced tariffs had boosted iron and steel exports to Vietnam, shipments of wine to Malaysia and Canada, and beef sales to Japan.”