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Andrew Sheng

Several Asian economies are anxiously assessing how to compete for trade with the United States after missing the August 1 deadline for the Trump administration’s tariff negotiations.
The tariff rate for exports from the Philippines to the US is reportedly down to 19 per cent. However, one Filipino lawmaker says it’s effectively 6 per cent. The rate for Indonesia is now 19 per cent and for Vietnam 20 per cent. Hours before the deadline, Malaysian and Thai leaders seemed to be on the cusp of reaching deals with the US. Meanwhile, Laos is bracing for stiff tariffs of up to 40 per cent.
This is “Make America Great Again” (Maga) economics in a nutshell. Washington has traded in a multilateral approach to hegemony for a “divide and conquer” strategy that makes smaller economies compete against each other for the superpower’s favour. Against the largest importer in the world, small exporters have no cards, as Trump might say.
As governments scramble to negotiate deals, businesses may have to close entire factories or shift to countries with lower tariffs. If current profit margins are too thin, higher tariff rates are likely to put further stress on the cost of doing business.
Vietnam, Cambodia and Bangladesh emerged as big winners from the first phase of the US-China trade war in the late 2010s. But on April 1, Trump announced tariffs of 46 per cent on Vietnam, 49 per cent on Cambodia and 37 per cent on Bangladesh. Trump has now basically equalised tariffs – Cambodia will face tariffs of 19 per cent, and Vietnam and Bangladesh 20 per cent.
This climate of fierce geoeconomic competition is ushering in a wave of uncertainty. The unpredictable nature of who will win or lose from the US’ “divide and conquer” strategy produces more questions than answers. Meanwhile, any attempt to use technology to stay ahead of the game may be in vain due to US policy on artificial intelligence (AI).


Last month, the Trump administration released “America’s AI Action Plan.” According to Trump, “As [the US’] global competitors race to exploit these technologies [such as AI], it is a national security imperative for the United States to achieve and maintain unquestioned and unchallenged global technological dominance”.
In a unipolar order, the hegemon dictates the rules. After the second world war, the global economy was comparatively stable. Under Pax Americana, one set of rules governed free trade and capital flows. However, the world system wasn’t without contradiction. Europe and Russia began to wield more influence after recovering from the second world war. The rise of China, India and emerging economies such as Indonesia and Brazil was also on the horizon. The unipolar world order gradually gave way to a multipolar one.
During the Cold War, Chinese leader Mao Zedong divided the world into the “first world” of superpowers, “second world” of advanced economies and the “third world” of non-aligned countries. One might mathematically approach this fragmentation through the N-body equation, more popularly fictionalised by Chinese author Liu Cixin in his science fiction novel, The Three-Body Problem.
When physicist Isaac Newton studied the motion of planets, he was able to predict the trajectory of two bodies mathematically. But the three-body problem has no solution to predict the outcome of multiple-body gravitational interactions.

Each body’s motion is influenced by the changing gravitational pull of the other two or more bodies, creating complex interactions that current mathematics cannot accurately explain. The system illustrates chaotic behaviour characterised by a lack of information and random variables.
The three-body problem illustrates science’s limitations, as well as the limitations of historically informed paradigms used to understand contemporary times and predict the future. AI stems from this paradigm as it combines existing data, computing power and algorithms in the form of large language models.
The US believes AI could shape the outcome of several geonomic puzzles. Will AI help Maga return the world to a unipolar order? Is the bipolar order between the US and China stable? Will a multipolar order comprising three or more powers lead to conflict and more disorder? National security thinkers posit that if they collect real-time data through social media and intelligence-gathering, gain superiority in computing and apply the most advanced learning models, they can beat the opposition. If only life were that simple.
Chinese strategist Sun Tzu understood the importance of gathering intelligence. War is all about operating in uncertainty. Decision-making is difficult in a fast-changing environment plagued by misinformation, disinformation and information gaps.


AI can use algorithms to generate “synthetic data”, but all data exporters know the fatal flaw of “garbage in, garbage out”. Bad data leads to bad decisions. Hence, there is no perfect AI solution.
The clash of civilisations and economies on a global scale involves system-wide competition between entangled systems that are not independent of one another. China, being an older civilisation – compared to the US – understands the need for resilient systems, whether they be supply chains or governing institutions.
Ultimately, these systems are underpinned by people and the planet we live on. After all, decisions are inevitably made by people, even if they use AI. Climate change only adds new risks, making outcomes even more unpredictable. The world system will be shaped by how each competitor learns from mistakes or missteps and takes action to be more resilient against future shocks.
We have no algorithm to predict how the contest for the 21st century will unfold. As the Spanish poet Antonio Machado profoundly put it, “Traveller, there is no road, the road is made by walking.”


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In a world disrupted by ‘Maga economics’, all bets are off

Garment workers walk out of their factory during their lunch break in Phnom Penh, Cambodia, on July 8. Trump threatened steep tariffs on the country, finally agreeing on 19 per cent. Photo: AFP

Yu Guming (left) and Zine Tseng respectively portray Yang Weining and Ye Wenjie in the 3 Body Problem, an adaptation of Liu Cixin’s similarly titled novel. Photo: Netflix

US ‘lone wolf’ diplomacy helps China win Asean hearts and minds

Illustration: Stephen Case

Asean-GCC economic axis: the Global South’s answer to US volatility?

Asean and Gulf officials join hands for a group photo at the second Asean-GCC Summit in Kuala Lumpur on May 27. Photo: AFP

Malaysia’s Prime Minister Anwar Ibrahim (left), also this year’s Asean chair, greets Sheikh Saud bin Saqr al-Qasimi of the UAE in Kuala Lumpur on May 27. Photo: AFP

Engineers work at an oil refinery in Saudi Arabia. The Gulf’s vast energy reserves complement Southeast Asia’s advanced industrial base, analysts say. Photo: Armaco / AFP

Riyadh, capital of Saudi Arabia. Islamic finance and halal industries are just two of the sectors that both the GCC and Asean prioritise. Photo: Shutterstock

Indonesian President Prabowo Subianto (centre) performs the Umrah pilgrimage in Mecca on July 2 during his three-day visit to Saudi Arabia. Photo: Indonesian Presidential Palace / AFP

A Vinfast electric car is seen parked outside a showroom in Hanoi. Photo: AFP

A win for ‘sovereign rights’? Malaysia agrees 19% tariff deal with Trump

Trade Minister Tengku Zafrul Aziz said the 19 per cent tariff rate was a ‘positive outcome’ for Malaysia.

US President Donald Trump points a finger as he delivers remarks in the Roosevelt Room at the White House on Thursday. Photo: Reuters

Trade Minister Tengku Zafrul Aziz said the 19 per cent tariff rate was a ‘positive outcome’ for Malaysia. Photo: Nora Tam

Did Philippines get low Trump tariffs, ‘exemptions’, from quiet talks?

US President Donald Trump (left) welcomes Philippine President Ferdinand Marcos Jnr to the White House earlier this month. Photo: Xinhua

Joey Salceda said Philippine trade negotiators quietly secured tariff exemptions from Trump’s import levy, cutting the effective rate to 6.33 per cent. Photo: Handout

As trade deals show, the US now seeks rent from Asean, not partnership

An Indonesian security employee looks at containers being loaded onto transport trucks at the Jakarta International Container Terminal at Tanjung Priok Port in Jakarta, Indonesia, on July 9. Photo: EPA / Bagus Indahono

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No algorithm can predict how the clash of civilisations and economies on a global scale will unfold


No algorithm can predict how the clash of civilisations and economies on a global scale will unfold.


US-ally trade wars

US-China trade war

Artificial intelligence (AI)

Trade

China trade

Donald Trump

Vietnam

Cambodia

Malaysia

Thailand

Laos

China

Science

Science fiction

Technology

Bangladesh

Spain

United States

Isaac Newton

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


In a world disrupted by ‘Maga economics’, all bets are off

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}No algorithm can predict how the clash of civilisations and economies on a global scale will unfold

No algorithm can predict how the clash of civilisations and economies on a global scale will unfold