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Trump's Trade War, Aid Cuts Sends Negative Signal To The Pacific - Analyst
Koroi Hawkins, RNZ Pacific Editor
The United States trade war and its pause on development assistance are sending "a negative signal to the Pacific", a regional analyst says.
Alexandre Dayant, a senior economist at the Australian think tank Lowy Institute, told Pacific Waves the reality with everything President Donald Trump did was there was a bit of uncertainty as to what would actually be implemented.
However, he said the decision to implement tariffs on countries that the US had trade imbalances with and freezing international aid showed Washington "is shooting itself in the foot".
"People from the region have been hearing that the United States was coming back to reinvest," he said.
"Now you have the Trump administration. He never said he would engage with the region, but at the moment, he is freezing everything.
"It does send a negative signal to the region."
Last August, the Biden administration deputy secretary of state Kurt Campbell told reporters in Nuku'alofa that "we believe that we have listened carefully" and "our step-up here in the Pacific has been very substantial".
"We are also seeking to partner and work with countries as never before," Campbell said on the sidelines of the Pacific Islands Forum leaders' meeting in Tonga.
Former US Agency for International Development (USAID) assistant administrator for Asia Michael Schiffer said the agency had redoubled its work over the past several years in the region.
"We are looking to step up across a range of activities, including economic growth, health, education, governance, humanitarian assistance and disaster relief, and support for the Pacific Island Forum itself," Schiffer said at the time.
Dayant said, as the competition for influence heightens, with both the US and China competing to gain ground in the region, Trump's decisions were guaranteed to "play negatively in the battle for influence".
"The Chinese investments are actually smaller than before, both in size and in volume, but they are more strategically targeted to specific sectors or specific countries that need a lot of support," he said.
"If you talk about geopolitical competition, China is winning this competition pretty easily and it was doing so [even] before the Trump administration."
Dayant said the tariffs the US is imposing on China would also impact the US.
"What this means for the Pacific is that they risk that the tariffs might actually impact the Chinese economy.," he said.
"This means that some of the countries that are exporting their products to China or to the United States as well will actually experience a significant drop in demand."
He said this could impact many countries, but in the Pacific, it might impact specific countries that are the big commodity exporters.
"China is the main trading partner for most of the Pacific Island countries. For some of those economies, China is [an] even bigger partner than others.
"For instance, Papua New Guinea, China imports a lot of natural gas and other other raw materials from this country and Solomon Islands sends a lot of timber to China. I think those countries will primarily be impacted by the tariffs that the Trump administration is imposing."
However, Dayant believed not only the depreciation of demand for commodities would impact the Pacific.
"Many Pacific Island countries rely on tourism, for instance, and when you look at countries like Fiji, Vanuatu, and Palau, most of the domestic revenue is coming from tourism activities," he said.
"The impact of tariffs will mean that there will be a slowdown in the economies of China and the United States... and a lot of the tourists are coming from the US [and] some from China as well.
"You could expect that if the economy is going badly in the US, then Americans might have less money to spend travelling overseas, to travel to the Pacific and therefore there will be also an impact in the region."
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