US Midterms Offer Asia-Pacific Little Relief From Iran War and Tariffs, Analysts Say

In Kuala Lumpur and capitals across the Asia-Pacific, governments and businesses still dealing with the energy shock from the US-Israeli war on Iran are following Tuesday's US midterm elections closely. Democrats are poised to take the House of Representatives from President Donald Trump's Republican Party, and possibly the Senate. Analysts say that is unlikely to deliver what the region most wants.

Outside the Middle East, no region has been hit harder by the war. Before the conflict began in January, the Asia-Pacific took in most of the Gulf oil and gas that moved through the Strait of Hormuz. When Iran closed the chokepoint in response to the US and Israeli strikes, much of the region faced shortages. The Philippines, which depends on the Gulf for more than 90 percent of its crude imports, has been under a national energy emergency since March.

The Institute of Southeast Asian Studies (ISEAS)-Yusof Ishak Institute in Singapore says soaring fuel costs have drained the foreign exchange reserves of the region's poorest economies: Cambodia, Laos, Myanmar and East Timor. Indonesia, Malaysia, Thailand and Vietnam have spent heavily on fuel subsidies to cushion consumers. Public opinion across the region remains firmly against the war, now eight months old.

Steven Okun, a trade specialist and chief executive of the Singapore-based consultancy APAC Advisors, called the election "great political theatre" but doubts a Democratic Congress could end the war. He expects investigations and oversight hearings, and perhaps even an impeachment of the secretary of defence, but not a change in the war's overall impact. Congress holds the constitutional power to declare war, yet Trump has described the attacks as self-defence and so far ignored congressional resolutions directing him to withdraw US forces. Any bill restricting operations or funding could be vetoed, and overriding a veto takes two-thirds of both chambers, a threshold Democrats are almost certain to miss.

Trade looks similarly fixed. Last year Trump imposed "reciprocal" tariffs of 10 to 50 percent on some 90 countries to shrink the US trade deficit. Cambodia faced 49 percent, Laos 48, Vietnam 46 and Myanmar 45. The Supreme Court struck those tariffs down in February, and the administration turned to other tools. In July it imposed tariffs of 10 and 12.5 percent on goods from 60 trading partners, accusing them of failing to stop imports made with forced labour. The Asian targets include China, Japan, South Korea, and seven Southeast Asian nations: Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. "Tariffs don't change. The war doesn't change," Okun said.

Some see a narrow opening. Stephen Olson, a visiting fellow at ISEAS-Yusof Ishak, wrote that a strong rebuke of "Trumpism" could embolden a pro-free-trade Republican wing that has been intimidated into standing down. He called that "a glimmer of hope" and said a Democratic Congress could push for carve-outs giving exporters "a modicum of relief." Deeper change, he said, must wait for the 2028 presidential election.

Joshua Kurlantzick of the Council on Foreign Relations said the region's wishes extend to security. Nearly all of Asia, he said, would like enormous changes in the rest of Trump's term, but much of it believes they will not come. Governments want steadier trade policy, firmer security guarantees, and a clearer US presence in the South China Sea, where China's claims overlap with those of five Southeast Asian nations, and in the Taiwan Strait. Businesses will watch whether a big Republican loss makes the GOP more willing to join Democrats in resisting Trump on tariffs, arms sales and economic unpredictability.

One area where analysts expect movement is Chinese technology. Okun says the next Congress, whoever controls it, will pass tougher curbs because both parties agree: the Remote Access Security Act, the Chip Security Act, and the MATCH Act, which would press allies to align their chipmaking equipment controls with Washington's. He noted that the least restrictive figure on China is the president, who has met Xi Jinping twice this year after last year's costly trade war and has held off approving a $14bn arms package for Taiwan, which would be the largest ever, to protect the trade truce.

Some worry a lame-duck Trump hemmed in at home may turn more forcefully abroad. James Guild of the Indonesian International Islamic University said not to expect anything but continued erratic foreign policy, and that Democrats have a poor record of holding Trump accountable through conventional oversight. Whether they do so this time, he said, remains to be seen.