Editors' pick: Originally published Nov. 11.

American elections normally don't get much attention in Asia.

Americans keep buying Asian-made goods regardless of who is president. And in trying to delay China's inevitable rise for as long as it can, the U.S. has been trying to maintain the region's geopolitical balance in its favor.

But it is different this time for Asia.

It remains to be seen if President-elect Donald J. Trump will follow through with everything he has said on the campaign trail. But if he does, it will mean trouble for Asia.

That means that it might be more difficult to find investment opportunities in Asia.

"We can't continue to allow China to rape our country," Trump said during the election campaign.

He has repeatedly said that one of the first things he would do as president is designate China as a currency manipulator. This designation is applied to countries that weaken their currency on purpose to make their exports cheaper and more competitive.

If this happens, the U.S. could put duties on "artificially cheap" Chinese imports.

Closely tied to this, Trump would like to see U.S.-China trade "reform."

In his opinion, the trade relationship between the two countries is balanced in China's favor, and he would like to tilt the balance back in the U.S.' favor.

Trump has said that China breaks the rules of international trade, steals commercial secrets, manipulates its currency and has been taking American jobs.

If Trump's proposed policies are enacted it could result in a U.S.-China trade war.

That would result in more tariffs and quotas on each others exports and imports, and history has shown that trade wars hurt everyone involved and result in a negative economic spiral.

In American history, the best example of how higher tariffs affect an economy is the Smoot-Hawley tariff bill of 1930. It raised tariffs on wide range of goods.

Other countries started doing the same thing, and world trade dropped 66% within four years.

The Smoot-Hawley tariffs were a major factor that contributed to the Great Depression and, indirectly, to World War II.

The Republican Party has been the pro-business, pro-free trade party for decades. But Trump has changed that.

He equates renegotiating, or canceling, long-standing trade deals with American "economic independence."

Trump has said that the North American Free Trade Agreement the first such deal among Canada, Mexico and the U.S. is "the worst trade deal in the history of the country."

He has also said the Trans-Pacific Partnership is a "terrible deal" for the U.S., even though this 12-country trade deal would encompass about 40% of the world's gross domestic product and 25% of global exports.

The TPP could increase GDP by an average of 1.1% in each of the participating countries by 2030.

But the TPP has yet to be approved by Congress, and now it won't be, according to the World Bank.

Trump isn't the first to take this anti-trade angle. U.K. voters' decision to leave the European Union in June reflected a growing global disenchantment with trade and openness, and he has effectively channeled the same sentiment.

Asian economies have benefited from Americans' endless need for stuff for decades. It started with Japan, then the so-called Asian tigers, then China and now the region's other emerging economies, such as Vietnam.

But Asian factories can only sell cheap stuff to the U.S. if America keeps buying it. If there are more and higher tariffs on Asian goods, the relationship will break down.

Asian economies need easy access to the U.S. market to continue as important manufacturing sectors.

Some of this production might eventually move to either the U.S. or to other countries, likely those favored by Trump. Either scenario would hurt Asia.

In his 1987 book, "The Art of the Deal," Trump outlined his top 11 negotiation strategies. One of them is to keep options open.

"I never get too attached to one deal or one approach ... I keep a lot of balls in the air, because most deals fall out, no matter how promising they seem at first," Trump wrote.

This could mean that his campaign bark is worse than his policy bite and his policies and positions are flexible.

So, there are challenging times ahead for Asia. It is home to the world's most dynamic economies, so there will always be investment opportunities, but they might get harder to find.

A lot more could be said about Trump and Asian and global markets, including where to invest and what will happen to markets over the next several months.


Check out this special report that shows the five sectors to invest in now that Trump has been elected. It also discusses in more detail Trump's potential impact on Asia. Download a free copy by clicking here.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

Kim Iskyan is the founder of Truewealth Publishing, an independent investment research company based in Singapore.

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