Moribund markets roared back to life in Southeast Asia with the news on April 7 of a US-Iran two-week ceasefire. Days ahead of the ceasefire, even a hitherto big Donald Trump booster like the Hoover Institution’s Niall Ferguson had concluded: “Time is not on the side of an overstretched hegemon, because the economic costs of war pile up faster than the strategic benefits can be reaped.” The region can lick its wounds as the ceasefire plays out, but this early on, it seems clear that ASEAN can only look askance at Washington moving forward.
The costs, just in the fiscal domain, have been astronomical for countries that subsidize fuel, for example, and they quickly had to limit, if not discard, those subsidies. Every government had to contend with unexpected, and uninvited, political tensions born of a deteriorating fiscal situation, and the specter of a global recession. As industry commentators repeatedly mentioned, Southeast Asia was among the first to bear the brunt of the disruption of fuel and other petroleum-based supplies.
Going into the crisis, the ISEAS Yusof Ishak Institute in Singapore polled the region and registered a shift in opinion, from China’s aggressive behavior in the South China Sea as the top concern in 2025 to US leadership under Trump as the biggest worry for 2026. Asked if a nation had to choose between strategic rivals, China or the United States, a slight majority overall opted for China over the US, which was the favorite the year before. In some countries, the standing of China, measured by the answer to this question, grew by double digits: Singapore and Thailand, for example and it even doubled in the traditionally pro-American Philippines.
Relations had been fraying even before Trump. Former President Barack Obama’s pivot to Asia hadn’t materialized and American efforts to negotiate an impasse between China and the Philippines saw Manila withdrawing while Beijing stayed and thus won a contested shoal. Trump initially seemed focused on countering China but the focus was accompanied by tactics and policies that were difficult to swallow. Throughout the Cold War and afterward, official relations between the two were buoyed by access to American schools and the country’s economy. Trump’s anti-immigration and anti-foreigner administration systematically treated both China and its allies with contempt and closed the doors to students and migrants, eroding soft power. Tariffs were wielded with brutal indifference.
Blindsided
The attack on Iran blindsided the region, with governments swiftly going into crisis mode. Philippine President Ferdinand Marcos Jr. made headlines saying a “very, very serious restructuring” (even a “reset”) of relations, with China, was in the cards. What took place was interesting, with the Chinese quite obviously less adept at pivoting: but pressure has been reduced, and talk has replaced the performative martyrdom that has long been Philippine policy.
Manila, however, secured waivers from Washington before purchasing sanctioned crude from Russia, and it was during the US-Israeli attack on Iran that Marcos met United States Undersecretary of Defense for Policy Elbridge Colby in New York City: there was, noticeably, no comment from Washington when Marcos made his China comments a couple of weeks later. When Manila eventually sealed a deal with Tehran it was after Washington had said countries could buy oil from Iran.
Does China benefit?
With so much risk to consider, Manila, the chair of ASEAN for 2026, announced it would conduct most of this year’s meetings virtually, an obvious disappointment to a status-conscious administration. If Manila is the bellwether of an old-school US ally, newer allies struck a more obviously unhappy note. Indonesia declined to pay the $1 billion fee for permanent membership in Trump’s Board of Peace, so as not to antagonize domestic opinion. But all things considered, if America caused disruption in ASEAN, it’s difficult to see how China would directly benefit.
Even as South Korea and Japan, on one hand, found American security reassurances made hollow by US forces packing up equipment to send to the Middle East, regional observers could not fail to notice it was Russian intelligence and Chinese supplies that helped keep the Iranian war machine going, while Ukrainian drone innovations have everyone scrambling to adopt the lessons for waging war.
If the crisis has stimulated anything, it is a realization that, in parallel to Trump’s blunt transactional policies, the region and its neighbors have been brought closer together by geographic and even strategic affinities. Japan used its significant strategic reserves to backstop regional allies’ oil needs, whether modestly in the case of the Philippines (but not Vietnam), or remarkably in the case of a panicky Australia. Even as Trump complained about South Korea declining (like Japan) to send warships to the Middle East, it stands to gain, like Japan and the Europeans, from a marked disinclination to buy American in terms of arms and ammunition: not just the Philippines, but Indonesia, are beefing up their military with Japanese and Korean technologies.
Still needing the US
Singapore, for its part, bucked the trend of seeking an accommodation with Iran by refusing to negotiate safe passage through the Strait of Hormuz. It can’t help but notice that hours before Trump’s deadline, China and Russia exercised their vetoes to kill a UN Security Council resolution calling for the reopening of the strait – thus undermining a principle Singapore believes is existentially important, because of the vulnerability of the Strait of Malacca.
Overall then, Washington may be facing diminished affection in the region but retains its centrality in the emerging architecture of deterrence to China. Beijing couldn’t offer many incentives to ASEAN because its own aspirations for self-sufficiency are still unfulfilled: it has to leverage its influence on Tehran to accept the ceasefire because it was hurting as much, and perhaps even more, than other nations because of the disruption of oil deliveries and other goods.
There remains a potential flashpoint in Taiwan, after all; the current crisis foreshadows the effects of a disruption closer to home for ASEAN. The solution lies in arrangements with the Gulf States antagonized by Iran (itself working closely with Russia and China), and a more robust regional defense than the hollow and ultimately paltry capabilities Europe has demonstrated. Dissatisfaction with Washington is thus tempered by continuing caution toward Beijing, and the realization that whatever happens, the region’s economies need to retain access to American markets.
