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One of the potential challenges facing East Asian governments like South Korea, Japan and Taiwan is being forced to choose between the US and China. While the US is typically the largest military supporter for many countries in East Asia and a counterweight to rising Chinese influence, the economic interdependency between East Asian countries and China is significant (Figure 1). Should the geopolitical situation between the US and China continue to deteriorate, it could become increasingly difficult for East Asian governments to placate both powers.
Another awkward scenario emerges when production moves from China to one of these countries ― perhaps the best example right now is Vietnam ― thereby upsetting both China and the US. Meanwhile, rising tensions in Hong Kong and Taiwan are only adding to uneasiness in the region. A forceful intervention by China in either place would be likely to provoke an equally potent US-led response, making the fallout from trade tariffs seem minor by comparison.
Trade wars, not unlike divorces, also disrupt secondary relationships. When US President Donald Trump pulled out of the Trans-Pacific Partnership in early 2017, East Asian countries lost their American heavyweight but still kept a solid bloc together, including Australia, Canada and Mexico. What was designed to counterbalance China, however, may not be able to continue to function in the same way if tensions keep ratcheting higher. The bottom line, of course, is about money and access to growing markets: China pays a lot of bills and continues to grow, albeit at a more quotidian rate than over the past few decades.