Trump's Endgame For Southeast Asia - Steven Okun

Steven Okun, is the Founder and CEO of APAC Advisors.

He is a recognized expert on U.S. foreign policy, global trade, sustainability, and corporate public affairs across the Asia-Pacific region. With over 25 years of experience spanning government and private sectors, he excels at turning complex policy changes into actionable business strategies. Based in Singapore since 2003, Steven has consistently forecasted major geopolitical trends, including reciprocal tariffs, trade policy shifts under a second Trump administration, and U.S.-China decoupling—well ahead of mainstream adoption.

CHAPTERS:
00:00 Trailer & Intro
01:24 What Was It Like Under Clinton Administration
05:02 Campaigning in the U.S. vs. Singapore
09:05 How Civil Service Works in The US
11:07 U.S. Foreign Policy
14:12 The Rise of Donald Trump
20:17 Hyper-Partisanship in American Politics
23:37 Lessons from Trump 1.0 to Trump 2.0
27:51 Trump's Intellectual Influences
30:23 The Power Dynamics in Congress and the Presidency
32:39 Understanding Trump's Tariff Strategy
38:26 The China Plus One Strategy
43:39 American Inertia To Industrial Policy
47:02 How US Businesses Adapt
54:55 Opportunities Amidst Geopolitical Uncertainty
01:00:02 How To Get Trump To Cut Tariffs
01:02:21 Advice For Fresh Grads

Keith 00:39

Today I'm joined by Steven Okun, the CEO of APEC Advisors. The thing I really like about Steven actually is that you provide such great commentary on the inner workings of American politics. As a Singaporean, it feels so complicated and complex just watching it as an outsider and you help us understand and dissect its implications for not just Singapore but Southeast Asia as a region. So I'm really grateful that you come on today Steven.

Steve 01:04

I'm so happy to hear that. That's kind of what I'm able to do because I worked in government and was in Washington, DC and grew up in the US, but I've lived here for 23 years now. So I feel like I can try and be that bridge between the US and Singapore in particular and Southeast Asia. I'm very happy to hear that.

Keith 01:24

I'm going to start off with actually something that brings you back all the way maybe to the 90s, which is that you were involved in the Clinton administration. Tell me more about what was it like behind the scenes of working in the Clinton administration?

Steve 01:39

My whole life I wanted to be in government and politics. One of my early memories, when I was in first grade, I remember reading about President Kennedy. He had died a decade earlier, but he was still that hero, certainly to Democrats and to many Americans about what government should be, how it can make a difference, how it can make the world a better place. So that's what I always aspired to.

I went to college and law school always with the thought that I would work in government. It just happened when I graduated from law school in 1991, Bill Clinton, then Governor Clinton was running for president. I found him to be inspirational in terms of public service, in terms of what government can do. So I immediately started working on his campaign. That's what got me started on it. Fortunately, we won.

Then I went to the White House and was there for about five months doing vetting. We could talk about what that means and what you do in the White House when it comes to appointing people to the administration. And then I spent five years at the Department of Transportation, including as Deputy General Counsel.

Keith 02:57

Take me back to when you first started campaigning for him. What was it like? What is it about campaigning that you think maybe an average voter wouldn't really understand if you were to peek behind the curtain?

Steve 03:08

In Singapore, you do campaigns the right way. You spend a few weeks, maybe a month on a campaign. We spend months and months and months on campaigns in the United States. So it's just a totally different way of doing things. One, it costs a lot more money. You need a lot more infrastructure to do so. You need a lot more volunteers. You need a lot more campaign staff.

I was probably about your age at the time. For somebody like me, you did advance work. When then-Governor Clinton would go out into a campaign event, you had to set everything up to make sure it's right. You'd have to build a crowd. You'd have to know where the cameras go. You would need to know who else is going to be there that the candidate needs to recognize. What is the shot going to look like? What is the message you want to get out to the media?

The basics of that - who gets the crowd there? Where do you set it up? That's what you call advance work and the advanced teams. I would do advance work and then I would also do fundraising at a relatively small level because you need to raise a lot of money, even more now. But back then you still needed to raise money.

Something that you have no idea what we would do is called "the clips." You would literally have to get newspapers because the internet didn't exist back then. And you'd have to clip out newspaper articles that you thought might be relevant to the campaign. I would send those from Washington, D.C. to Little Rock where the campaign headquarters was.

So campaigns need so many more people, need so much more money, so much goes into them in a U.S. campaign as opposed to Singapore, which is - there's a lot to say for the way campaigns are done here.

Keith 05:02

Yeah, Singapore is small so I think you enjoy the benefit of being in a small city-state. That's why campaigns are probably shorter. And then you went into the Department of Transport. Bill Clinton ran on this kind of campaign focusing on the economy. Right? Back then I think there was this famous line, "It's the economy, stupid." So you went into transportation. Why transportation and what did you learn when you were actually working within the administration?

Steve 05:35

Why transportation? It was just by chance. After we won, I went to the White House, to the White House Counsel's Office, and that's what young lawyers would do. Before you would appoint somebody to a position, you wanted to make sure that there's nothing in their background that would preclude them from government service. It could be for legal reasons, it could be for financial reasons, it could be for political reasons.

You would have to go through extensive background checks before you would get to serve in the administration. So the FBI would do their check, the IRS would do their check. And the check that we did was a little bit more political in nature. Did they take positions that weren't a threat to national security, but might've been a political issue that would preclude them from serving? So that's the type of work I did.

In the White House, most of the jobs are relatively junior. The really fun jobs, of course, you read about - chief of staff or staff secretary or the White House counsel. There are very few senior jobs. So most of the way you work in the administration is you go to the White House, you get in at a young level that needs to get that work done. Then you go out into the administration. You go out into the cabinet departments or the agencies, where the real work gets done, where you really make a difference for the American people.

The way the process would work is that the Department of Transportation would call the White House and say, we have an opening for a position, in this case, the deputy to the general counsel that's a political position. Do you have people who are qualified from an administration perspective to serve? Then the White House would send a group of names over. I happened to be one of the names that they sent to DOT and so I met with the general counsel and he said, "You're gonna be really useful even though you don't know anything about transportation."

I knew nothing, I was a 26-year-old lawyer. I didn't know anything about transportation. He said, "But you know the White House, you have friends in different agencies, you're a smart, young, hardworking person and that's what I need." That's how I got the job. No clue about transportation at all before I got to DOT.

Keith 08:02

So you spent five years there, what did you learn and how did the administration try to tangibly improve the transportation system within the US?

Steve 08:12

I'll give you a couple different examples. My role was in the general counsel's office which had about 65 lawyers. There were only two of us who were political. Everybody else was a career civil servant. And they're there regardless of whether it's a Democrat or Republican.

We came in in '92 after George H.W. Bush and there were eight years of Ronald Reagan before that, so there had been 12 years of Republicans, but all of those people worked with us because they're there to make a difference for the American people. Now it's the politicals who decide what that difference is. The politicals decide what is the public interest from a Clinton perspective or a Bush perspective or a Reagan perspective back then, and certainly now from a Trump perspective, which is very different than what a Clinton perspective or a Biden perspective was.

So as a political, you work with the career civil servants who are truly dedicated and truly expert in that area. And then you decide what is it that we should be doing. Some things are going to be very common in transportation between Republicans and Democrats. You don't want planes crashing. You need to have the safest aviation system possible. So ensuring aviation safety, that's not Democratic or Republican. That is something that you do regardless of your party.

In the Clinton administration, where we would differ from the Republicans a lot was on things like consumer protection. One of our big initiatives was to make sure that airlines would serve the entire country and that the incumbent airlines, the big airlines everybody knows, United and American, wouldn't force out these new entrant carriers. And so we focused a lot on aviation competition and airline competition.

Something that the Republicans would typically say, leave that to the market, the market will decide. Our view was, you know what? You have to have a referee when it comes to competition and we need to make sure that aviation is there for all Americans. So that's one of the things that I worked on. That was a priority we had in the Clinton administration that they did not have in previous administrations.

Keith 10:31

It's interesting that you share that because I think in Singapore, our touchstone or touching point with President Clinton back then was known as the famous golf game that started it all. In Brunei, November 2000, Goh Chok Tong, back then our Prime Minister had a golf game after a huge thunderstorm and it was in that golf game that the US-Singapore Free Trade Agreement was kickstarted and it was concluded during the Bush administration.

Although we had to straddle the two administrations, we still managed to converge on the interest of increased free trade and economic liberalization.

Steve 11:07

One of the things that you hit on was that the Clinton administration started the U.S.-Singapore FTA, but the Bush administration concluded it. Back then, U.S. foreign policy was pretty much agreed upon between Democrats and Republicans. It didn't change from administration to administration because the view of the United States, and this pretty much was the view almost from the end of World War II through Barack Obama, was that the US benefited from a global rules-based system.

The US benefited from a global trading system and what the US wanted to do was to have free trade with certain rules, but that free trade was what an American view was. And so long as you had free trade where the other governments followed the rules, and you had as many governments involved as possible, certainly like-minded partners such as the US and Singapore, that advanced the US interest.

What we called NAFTA back then, the North America Free Trade Agreement, now the US-Mexico-Canada Agreement, NAFTA was started by President George H.W. Bush, signed by President Clinton. US-Singapore FTA started by President Clinton, signed by President George W. Bush. So it was very much a global rules-based system that advantaged the United States.

Totally different under Donald Trump, totally different under an America first trade policy. And so that is something I spend a lot of time on now trying to figure out what it is that the US is doing, how is it impacting us here in the region? And is there a way we can try and engage an America first trade policy that can still benefit the world? It's a lot harder than we did back in the 90s and really through President Obama.

Keith 13:06

It is true that it's been quite consistent throughout the different administrations that they wanted to pursue greater economic liberalisation. In Singapore, during that negotiation process, especially as part of the MTI (Ministry of Trade and Industry) led efforts, they realised that actually there needed to be more involvement between the government and the business community in the US and in Singapore as well because there were nuances on the ground that we had to iron out.

For it to be an effective free trade agreement there were details to resolve - such as financial liberalization. The Singapore government was very against foreign acquisition of local banks and that was one area that we had to eventually resolve. So there was a very rich history of having that rules-based trading system but at the same time negotiating on the minor nuances.

It's interesting that you say that now we're transiting into a different era. I'd like to first ask you, what do you think led to the emergence of someone like President Donald Trump? Not just in his 2016 election, but his return now.

Steve 14:12

There's a slew of different reasons that we ended up with President Trump and that President Trump has now won a second time in the United States. What happens with trade in particular over time is that the benefits of trade are very wide, but shallow.

So everybody benefits from slightly lower prices when it comes to washing machines, refrigerators, cars, iPhones. So everybody gets a little bit of a benefit, but nobody's saying "this is benefiting me because of trade." So there really isn't much of a domestic constituency in the United States for trade.

However, where trade has losers - and you have winners and losers in trade - the losers in trade are concentrated and you know who they are and it really hurts them a lot. That's through job losses, factories shut down and moved to Mexico, factories shut down and moved to China. So over time, while there was a net benefit to the United States from trade, we - United States, Democrats, Republicans alike - would all say we didn't do enough of a job of helping those who got harmed by trade.

How do you make sure that they can get new jobs in a world where their old jobs in factories, textiles, whatever it may be, those go away. How do you help them? How do you help those communities? That wasn't done at all. Or it may have been done a little bit. We had things called trade assistance, where we would help. It wasn't enough.

And so Donald Trump seized on that, recognized that there were people who were not benefiting from trade, who lost their jobs. And he could really hit on that very hard. He took away what used to be considered the Democrats' base - the blue collar workers, labor unions. He peeled off just enough of those votes because we didn't do enough. Republicans and Democrats who believe in trade didn't do enough to show the benefits and to mitigate the harm that comes from it.

The second thing that was an issue that he really rode was immigration. The United States has become more and more diverse and people for various reasons see that not as a benefit to them. Those people have moved over to Donald Trump as well. The Democrats started to skew away from working people to more higher educated people, to wealthy people, and Donald Trump was able to build a coalition similar to what Ronald Reagan did in a different way in the 80s where he was able to expand the Republican base. Donald Trump has done that too.

Keith 17:27

What prevented both Republican and Democrat governments prior to Trump from doing more to help those who are affected by trade? Was it just a blind spot or was it just something that they thought that they have done sufficiently?

Steve 17:40

Part of it was a little bit of a blind spot. Part of it was - and another reason why the United States has changed drastically since I was in government - we've become very hyper-partisan. When I was at Department of Transportation, we were working on an aviation competition rulemaking. The Democrats in the House, the staff of the Democrats in the House of Representatives asked me to come up and do a briefing for them on what we were working on and why.

So I go up and the Democrats there on the aviation committee said, "Let me go get my Republican counterpart to listen." And I'm like, "You want me to debrief both the Democrats and Republicans at the same time?" He's like, "Well, of course, why would we make you come up here twice and waste your time? Just do one." So I briefed them both, answered their questions.

This was in the days before email. There were some questions I couldn't answer. Then David, the Democrat said to me, "OK, well, I'll go back, talk to the experts and I will fax you back the answers." I said, "What's your fax number?" And he gives me a number. And then I go to the Republican. "What's your fax number?" He's like, "Well, same as his." I'm like, "You guys share a fax machine?" He says, "Yeah, why would we waste government money on two fax machines? If his name's on it, I don't read it. If my name's on it, he doesn't read it." Things were bipartisan then.

We were Americans across a lot of issues then. And that has totally changed. The Republicans in the Congress now are much more conservative. And the Democrats in the Congress are much more liberal. Moderate Democrats, moderate Republicans mostly don't exist anymore. And so we've become very divided. And it's very hard to get anything done in Washington right now. It's very hard for the Congress to pass anything anymore.

So working on mitigating the harms that trade can cause takes a lot of resources, a lot of politicking on it, saying, "Hey, this is an American issue, we both have to agree." That doesn't happen so much anymore. It rarely happens in the United States anymore. So part of it was a blind spot. Part of it is structural. And that's just where the US has gotten in this hyper partisanship.

Donald Trump has made it even worse. We thought it was kind of bad during the Clinton days. And if you remember Monica Lewinsky and Whitewater, we kind of thought things were kind of political back then. Nothing like it is now. And that's another reason why we're just not able to get anything done.

Keith 20:17

What explains this rise of hyperpartisanship then from your perspective?

Steve 20:21

Well, I blame social media for everything. I blame you. You're on YouTube. And all the Reels and Instagram and Facebook and Twitter, now X. And now you have Twitter for the Republicans and Blue Sky for the Democrats. Social media has made it so you can just listen to people that you agree with.

It used to be in the United States, and I'm sure it was the same in Singapore, you had one or two newspapers, you had one or two television stations, everybody got the same news. Now you might interpret the facts differently, but the facts were the facts. The news was the news. And so you certainly had Republicans and Democrats, but you had a common base. You don't have that anymore.

You've got the bifurcation of media. So the Democrats watch MSNBC in the United States and maybe to some degree, CNN has gotten to be more Democratic, and then you get Fox and OAN and Newsmax on the Republican side. People don't watch the same thing. They don't get the same news. They don't share the same facts. So a lot of it is social media. Some of it is mainstream media has split into half.

And then the third overlay in the United States that you don't have here is campaign finance and all the money that can now just pour in to the conservatives on the Republican side, the liberals on the Democratic side. And that kind of explains why we have this era of hyper-partisanship and difficult decisions don't get done anymore.

Keith 21:58

When you were talking about the story of the fax machine, it just reminded me of the time where you had Reagan and O'Neill, right? They were known as the people who stood on the opposite sides, but they could still occasionally and more often than not come to consensus.

Steve 22:16

We used to have a saying in Washington, there are no Republicans or Democrats after five o'clock. From nine o'clock to five o'clock, you're a Democrat or Republican. After five, you're an American and you'd go out to the bar, you'd go out to the restaurant or whatever it is that you would do socially.

It just doesn't happen so much, barely at all anymore. Unlike Ronald Reagan and Tip O'Neill, who were real fierce competitors. Tip O'Neill is the Speaker of the House, the Democrat from Massachusetts, Ronald Reagan, the conservative president from California. Yet they could come together afterwards to get things done.

Even in the 90s, even with Newt Gingrich and the Republican Revolution and the Contract for America and him flipping the House from Democrats to Republicans, Clinton and Gingrich could still negotiate and get things done. But Trump and Pelosi, that really didn't happen.

Keith 23:15

So if we could maybe go to President Trump today, what has changed in game plans compared to 1.0? Now there is a lot of intellectual influence from I think the America First Foundation, right? So maybe could you help us understand what influences him and how has he changed his game plan from 1.0?

Steve 23:37

Yeah, well, the former Trump administration, as they were preparing for the current administration, they learned three lessons from Trump 1.0. You can read this anywhere, I've certainly had discussions with my friends on the Republican side, and they said they learned three things from President Trump's first term.

The first thing they learned was that they had no idea how government works and they had no idea how to use the levers of power. A lot of the people in Trump 1.0 had no government experience, including, of course, President Trump, who's one of the first people to ever run who had never run for office before. And certainly one of the first, maybe the first ever non-military non-government official. So they didn't know how government worked. So that was one lesson they learned from Trump 1.0. We now know how government works.

The second lesson learned from Trump 1.0 was that they had people in the Trump administration who were not from the America First camp. You had people from Goldman Sachs and people from the Defense Department, career military officials. You had business executives like Secretary Tillerson, the first Secretary of State in Trump administration. And they did not agree with America First so much.

They were more of the traditional Republican approach, which was very similar to the traditional Democratic approach, especially when it comes to foreign policy, when it comes to the military, when it comes to immigration. And so there was a lot of tension in Trump 1.0.

And then the third lesson that they learned was that there was something that they called the deep state and that these were all of these career civil servants. When I was at the Department of Transportation, there were two of us in the General Counsel's office out of 65 who were political of a cabinet department that had a hundred thousand people. Now a lot of those were air traffic controllers and Coast Guard, but of a hundred thousand people, there were a hundred politicals. That's it.

What the Trump administration said they learned from the first term was that those hundreds of thousands of people throughout government were blocking them. They were part of the deep state. They were liberal. They were Democrats. They didn't do what the elected officials were telling them to do.

So Trump 2.0 said, we're going to fix those three things. First, we're going to hit the ground running. We are going to work on executive orders in particular, dozens, if not hundreds of them, so that we can implement them as soon as we get into office. Unlike last time, where it took us years before we issued executive orders, here we're going to do it in the first weeks and months, and we're seeing that happen.

Second thing is no more what they would call RINOs (Republicans in name only). We're not going to have any of these Cohns and McMasters and Mattises and Espers and Tillersons this time around. We are only going to have the true believers in Donald Trump. And so we are going to have not so much an America first administration, we're going to have a Trump first administration and we certainly have seen that happen this time.

The third lesson is we're going to eliminate the deep state. We are not going to let those government officials, those civil servants who are there from administration to administration block us anymore. So we're going to eliminate them or we're going to change their job classification and be able to fire them if they don't do exactly what we want them to do.

So Trump 2.0 is very different from Trump 1.0 and you can't look at Trump 2.0 as a continuation of Trump 1.0. It is a much different impact and we've seen this in less than a hundred days of how they are executing now versus how they executed back in 2016 or 2017.

Keith 27:51

Who are the foundations, the thinkers that are the ones kind of developing his thinking or framework?

Steve 27:57

He is. When I give my speeches and presentations or interviews, I say, look, it's very simple. What Donald Trump says, believe him. This is what he means. And he has been saying this in some parts since the 1980s. He believes in a strong manufacturing base in the United States. He believes that we should be making things ourselves in the United States. He believes that immigration is overall, the way it has been done, detrimental to the United States. He believes that countries take advantage of us through trade, and the way to fix that is tariffs.

It's not that hard to figure out what his positions are and what he's going to do about that, because he tells you. There are certain advisors that seem to have a bit more influence with him, but they're telling him what he already knows. They're telling him what he believes and has believed for decades. So if you look at trade, you'd look to somebody like Peter Navarro in the White House, and Peter Navarro is very clear, what Peter Navarro says lines up with what Donald Trump says. So it's really Donald Trump.

Keith 29:24

He's only listening to himself, I suppose.

Steve 29:26

If you want to think about it, yes, but the way our system works in the United States is very different from Singapore. You have a parliamentary system. Our system is different. We have a system of checks and balances. We have three branches of government. You have the executive branch led by the president. You have the judicial branch of which the Supreme court sits on top of, and you have Congress, the legislative branch. Those three branches in the United States are co-equal, or they're supposed to be co-equal branches.

Each one has certain authorities of which it is in charge of, but they are all supposed to serve as a check on one of the other. And right now, that system has fallen apart in the United States, certainly when it comes to the Congress and the president, because the Congress is controlled by the Republicans.

Both the House and the Senate, the two Houses of the Congress, both of those are controlled by Republicans, and the Republicans in the Congress have basically said they're going to give a blank check to Donald Trump. That has never been how it has worked in the past.

When I was in the Clinton administration, we were completely frustrated by the Democratic Senate because we wanted to do things as a Democratic administration. And the Democratic Senate said, "No, we disagree with you on certain things" - like privatizing air traffic control would be an example of where you had a check from a Democratic Senate on a Democratic White House.

Here, there has yet to be seen any check whatsoever from the Republican Congress on the executive branch. And that's what makes Donald Trump so powerful, more powerful, I would argue, than any president we've had since Franklin Roosevelt.

Franklin Roosevelt was our president during the Great Depression and during World War II, so he got powers from the Congress and from the Constitution because of those two issues. Donald Trump is taking the power from himself through those executive orders that we talked about. So there's basically no check right now on Donald Trump, except for one. The one check that seems to be working to some degree on Donald Trump is the market.

When the market reacts, he has responded. And you saw him pause tariffs when the bond market got, I think the word he used was "yippy." So the bond market got yippy because he put on tariffs that we've never seen literally in the history of the United States. And he had to pull those back and he had to put a pause on those. He's had to pause some other things because of market reaction. We're gonna have to see if the market will be the check on him.

That's the one check that is working right now. Maybe the Republicans in the Congress will serve as a check going forward. They haven't yet. I don't know that we want to wait until the Democrats presumably get the White House or at least the House of Representatives back, but that's not for another year and a half, almost two years from now. So a lot can happen between now and waiting for the Democrats to serve as a check. So we really need to see what the Republicans are going to do.

Keith 32:39

He went on liberation day, he unleashed basically a rampage of tariffs only to walk it back - walk it back to some extent just days later. Is there a grand strategy in his pursuit of tariffs or is it really as some people call it, rather erratic, just an erratic approach?

Steve 32:57

Can it be both a strategy and erratic? So we need to start, when we talk about tariffs, we need to start with where the US is with China and what China has done to the US. Let's go back to 2015. Actually, let's go back even before that - President Clinton, President George H.W. Bush, President Bush, President Obama. The view of the United States was that the United States will be better off working with China, engaging with China, accommodating China as it rises economically, because when it integrates into the global rules-based trading system, China will become more like us. That was the bipartisan view in the United States.

That turned out not to be the case. It turned out not to be the case that China became more like us from an economic and human rights perspective. It was very different. So that is where the United States made a mistake. Now, was it that the United States misread China and that was never gonna happen? Or was China on track to change and something happened within China that prevented the rise that the United States wanted or envisioned? It's irrelevant why it changed. The fact is that China did change.

And if you want to look at a date in particular, we could say you could start around 2012, 2015, somewhere in there where China started to shift. And the reason I would say 2015 is because that is when China came out with its Made in China 2025 policy. And China said in 2015, over the next decade, we are going to dominate the key sectors of the 21st century.

We're gonna dominate on technology. We're gonna dominate on renewables. We're gonna dominate on electric vehicles. We're gonna dominate on pharma. And we are going to use the full power of the state to subsidize those Chinese industries to become dominant globally. And at the same time that we're gonna use the power of the state to subsidize those sectors, we are also gonna prevent competition coming in from not just the United States, but from other governments and other countries as well.

And so that is when the United States under President Obama said, we have to shift away from engage and accommodate. That failed. That isn't working anymore. So what the Obama administration said they were going to do was let's work with partners and allies to box out China. And if they're not going to play by the international rules-based trading system, then we're going to create our own system.

And we did that. The United States started to do that through something called the TPP, the Trans-Pacific Partnership, of which Singapore was a party, United States was a party, Canada, Mexico, Japan, Australia, New Zealand, Malaysia, Vietnam, and others. And that was the Obama administration approach. Work with partners and allies to counter China and then do some targeted work against China with sanctions with regard to their unfair trade practices and their human rights violations.

Donald Trump recognized that China competes unfairly with the United States. It steals its intellectual property. It's sending fentanyl precursors into the United States or allowing that to happen and that we are going to combat China. But it's not going to be through working with partners and allies. It's not going to be through a plurilateral or multilateral system. It is going to be on tariffs and it's going to be on sanctions.

And that's what the Trump administration did in the first term. Now, what the Biden administration did after the Trump administration was it kept everything that Donald Trump did. So there is a strategy, which is you use tariffs to get China to either change their behavior or to prevent the use of those state subsidies from coming into the United States. And you have to protect certain sectors or prevent China from advancing in certain sectors that are really critical when it comes to geopolitics and national security. AI would be in that category, chips would be in that category.

Now, Donald Trump is continuing that, but he's taken it up to a whole other level. We're taking tariffs from 20% to 165%. Some astronomical numbers. And so Donald Trump is going much, much harder on tariffs, it's having a much bigger economic impact in the United States vis-a-vis China.

Now what Donald Trump is doing very differently than he did in his first term, something that Joe Biden never would have done or Kamala Harris would have done is he's going after everybody on tariffs. He's going after Singapore on tariffs. The US and Singapore have a free trade agreement. Singapore actually has a trade deficit with the United States. The US has a trade surplus with Singapore. Yet he's tariffing Singapore as part of his universal tariffs.

So to give a long answer to your question, there are some things that I think really are erratic when it comes to those types of tariffs. There are some things that there's a very clear strategy on, especially when it comes to China, when it comes to addressing unfair competition, and when it comes to addressing US national security issues.

Keith 38:26

It seems that the containment of China is something that has been a specific thread in US foreign policy for very long and I think Donald Trump continues in that direction. But many parts of Southeast Asia, when they see him tariff, for example, Vietnam and Cambodia, recently the solar panels, there was an example where you have up to 3000%, right? And they almost just came out like that with no warning.

It does appear quite confusing to many parts of Southeast Asia. What would then be the fallout? How are the different Southeast Asian countries responding? How do you see them responding?

Steve 39:05

We are in a new world, and that's the thing that we all have to adjust to. And part of what's happening and why Southeast Asia is such a focal point, both for the US and for China, is that businesses, investors, companies are diversifying out of China.

They are all going with this China plus one strategy because let's go pre-COVID. Everybody, not just Americans, but everybody looked at China and said, let's put all our eggs in the China basket. Why? Because China has got a large market, so we can use it both for the domestic market and for an export market. Two, it's got very talented people. Three, it's got a lot of people.

Four, those state subsidies have created this ecosystem where you can have all of your suppliers in one place. So it really made sense to put all your eggs in the China basket, source from China, have your factories in China, everything's in China. Now two, maybe three or four things have changed and people have woken up and said, we need a China plus one strategy. And why do you need a China plus one strategy?

One is the tariffs, because it's now much more expensive to export from China to the US. Two is that China's getting more expensive. And as China's economy is growing, labor costs are going up. So it's probably cheaper now to manufacture in Vietnam or Cambodia as opposed to manufacturing in China. So part of it is the natural evolution of what happens. Same thing happened in Japan in the 70s and 80s - manufacturing moved out of Japan because it got too expensive.

And three is that you have a lot of political risk in China. And that became clear with COVID zero because COVID zero, there was no scientific basis for that. There was no medical basis for that. That was a political decision that really hurt businesses and businesses are saying, "Well, there's some political issues here in China that we have to be worried about." So you've got political risk in China, and then you have economic risk in China - the property sector and the like.

So people are moving out of China and you now have a China plus one strategy. But the China plus one strategy isn't just the Americans and the Europeans and the Japanese and the Koreans who are diversifying out of China. It's the Chinese who are diversifying out of China. China is moving out of China for all of those reasons to then export to the US and other places.

Now the question becomes, what is a Chinese company? So if a Chinese manufacturer comes to Malaysia or comes to Cambodia and uses all of the power that it got from the state and just puts manufacturing in Cambodia and does everything and exports to the US, is that a Cambodian solar panel or is that a Chinese solar panel? And that's what these tariffs are all about. It's all about, from a US perspective, are these trans-shipments.

Are these just Chinese products flowing through? And that's why you hit with now 3000% - in a way, I hate using the word incredible because everything that the Trump administration does is believable, but almost incredible - a 3000% plus tariff on certain of these solar panels, but they're not thought of as Cambodian solar panels. They're Chinese solar panels that just happened to be transiting through Cambodia.

And now the real question going forward is as you get this China plus one strategy - solar panels is one thing. But what about other manufacturing? What about services as they get set up in Southeast Asia? Are these Singapore companies or Chinese companies? Are they Malaysian companies or Chinese companies? There's going to be so much work that needs to get done in terms of diligence on who owns it. Where's the product from? What do the contracts say? Who's on the boards? All of this is going to be a different way of doing business now.

Keith 43:13

A tangential point I'm really curious about is why do you think that Americans or the American policymakers are not as comfortable with industrial policy as many in the region are? For example, something like a CHIPS Act only happened within the Biden administration. It was an attempt to kind of catch up on the Foundry Revolution that it has missed and that was very deliberate industrial policy.

But if you really look back at maybe the past, maybe in Trump 1.0, even the past two decades, there hasn't been that much of a push for industrial policy. What do you think explains that reason why you're not very keen on that?

Steve 43:52

I think it goes back to part of our earlier discussion. It's because if the Democrats are for it, the Republicans are against it. And if the Republicans are for it, the Democrats are against it. When I was in Washington last summer as part of what we call a door knock, I led a group of American businesses to meet with members of Congress to talk about what's happening on the ground in Asia and what we see happening. And then we would ask them, before the election, what do you think of the CHIPS Act?

Every Republican that we talked to said, this is important. This is bringing jobs to my district. We are going to protect this regardless of who wins. And so part of this is that there is a huge recognition we need more investment into the United States. We need to incentivize it either directly or through tax breaks, whichever way you want to bring that in. And so if Biden's name wasn't on it and Trump's name had been on it, the Republicans would have been in favor of it.

And the Democrats, unfortunately, might have been opposed to it. But now that people see the benefits, I think we're going to be able to keep some of what we've had, if not all of it, when it comes to the infrastructure investment, because we need that in the United States.

Keith 45:03

Will you see a successful reindustrialization of the US coming out of his tariffs?

Steve 45:07

We have no idea and here's why. Because he says, and he was asked this question and he said, basically I'm gonna paraphrase, but he said, what is the purpose of the tariff? Is the purpose of the tariff to say that the US has a trade imbalance with Cambodia, the US has a trade imbalance with Vietnam, the US has a trade imbalance with Thailand, Korea, Japan, et cetera, and that the purpose of the tariffs is to get those countries to negotiate so that they will then lower their trade imbalance?

So they'll either cut their tariffs, they'll buy more goods from us, it'll be one of those two things, right? You're either gonna cut your tariffs or you're gonna buy more goods from us. And when we lower the trade deficit, I'll get rid of the tariffs. Well, now, if the purpose of your tariffs is to address the trade imbalance in goods that the United States has, no one's gonna invest in the United States because you're gonna lose the tariffs.

Now, if the tariffs are not there because of the trade imbalance, if the tariffs are there for bringing investment to the United States, well then why are we negotiating with 80 countries or whatever it is right now to lower the tariffs? Well, you can't do both. The tariffs can't be there to lower the trade imbalance and bring investment back to the United States. It's one or the other. We don't know which one it is for the United States. And because we have no clue what is going to come next with regards to tariffs, it is freezing investment. It's freezing trade. It's freezing new investment. It's freezing capital expenditures. And it's really harming the economy right now. And we're going to see this really kick in over time until we get clarity from the Trump administration as to what is the purpose of these tariffs. And we don't know right now.

Keith 47:02

So in the meantime, how are the American businesses in APEC especially in Singapore because they form such a huge part of Singapore's economic footprint, how are they adapting to the change in tariffs or how are you advising them to adapt?

Steve 47:14

Obviously business is going on, you still do what you are doing. But businesses aren't going to make new investments because there is so much uncertainty and there is so much volatility that you can't make a new investment. You need to have some good idea, really good idea of what the world's gonna look like two years from now, three years from now, five years from now. If you're gonna build a factory in Vietnam, but you don't know if the goods that it exports are going to be subject to a 50% tariff, you're not going to build it because then it becomes economically unviable. If you think, well, we're going to go back to what the tariffs used to be, then you put the factory in there. You don't know. No one knows what's going to happen.

So right now, everybody is just redoing their scenario planning. What is it that we need to do with tariffs? What is it we need to do with ownership restrictions? What is it that we need to do if there is going to be geopolitical risk that we've never had to deal with before?

One of the things that we're watching right now is what is the world gonna look like from a geopolitical perspective? Is the US gonna continue to work with partners and allies as it has done basically since World War II, or are we gonna shift to something that we call Yalta 2.0? Yalta, the agreement signed towards the end of World War II by Stalin and Churchill and Roosevelt, split the world basically into spheres of influence. Russia had, or the Soviets had their sphere of influence, the West had their sphere of influence. You of course had the Berlin Wall as the physical manifestation of Yalta.

Are we moving to a world of spheres of influence where the United States is going to say, "Russia, Putin, you do what you want in Europe. It's up to the Europeans to deal with, not us." And do you say to the Chinese, "Party Secretary Xi, you do what you want in the South China Sea and the Straits. That's not a real concern to us. And if we want Greenland and we want Canada and we want Panama, that's not of concern to you."

Are we headed to this world of spheres of influence, of Yalta 2.0 intentionally or otherwise? Because if we are, that has huge ramifications for business and something that we never had to deal with in our lifetime.

Keith 49:58

I guess in the near term, the approach is just to hold on to cash and I suppose freeze your investments and try to operate business as usual as much as you can. In response to tariffs, the different governments of Southeast Asia have different responses. Some have chosen to kind of be more proactive, go and negotiate directly. Some have said, let's wait and see.

How are you analyzing or assessing the different responses in the region?

Steve 50:27

Well, one thing I want to point out is just because Donald Trump says something doesn't make it wrong. Just because Peter Navarro says something doesn't make it wrong. There are a lot of trade issues that companies have, not just American companies, even local companies have in Southeast Asia that we put into this bucket called non-tariff barriers.

So what is it that prevents you from investing in countries? What prevents you from doing business in countries? There's all sorts of non-tariff barriers. We can focus on Southeast Asia. There's FDI restrictions. There's restrictions on how much a foreigner can invest in certain sectors. There are restrictions when it comes to cross-border data flows. There are data localization requirements. There is a lack of protection of intellectual property.

So there's all of these barriers that exist that prevent businesses from investing, that prevent businesses from maximizing. And a lot of the governments here want to address those issues. They recognize these barriers are harmful for their economy, but there's political issues that are preventing them from doing what they should be doing, the same as we have political issues in the United States preventing us from doing what we should be doing.

So one of the things that we're looking at from a broader business community perspective is can we take this opportunity to address those challenges that will benefit the governments here, that will benefit business and investors here, that will benefit workers here. So there are things that we can do - it's not just being the ostrich and putting your head in the sand, or it's not just we can't do anything, let's just put everything on hold and see.

Are there ways we can constructively engage in this era of volatility? And we do think that there are. And so we'd be hopeful that as Thailand and Vietnam and Malaysia and Japan and Korea engage with USTR and the Department of Commerce in Washington, that these non-tariff barrier issues are addressed and it's not just all about tariffs.

Keith 52:42

You're right. In some cases, the way the Trump administration has qualified non-tariff barriers might be a bit too much. For example, they say if you have a value-added tax, that's a non-tariff barrier. But in Singapore, that's like a GST. And in that case, a GST is universally applied. It's something that's actually fair in that sense. It's a tax that you impose.

If let's say you were to have the ear of President Trump and say you know what, you should rethink the way you approach trade, what kind of advice would you give him from the perspective of someone who's been here in Southeast Asia?

Steve 53:20

The business community works with the US government, works with USTR, comes up with these lists of non-tariff barriers. It could be in terms of counterfeits and the way we don't compete fairly, because the US goods aren't counterfeit. They're legitimate, as are other goods, not just US, of course. But there's a lot of counterfeit goods here.

How do we make sure that governments take action to prevent those counterfeit goods from basically stealing from foreign companies that have the protection, have the trademark, spend the money, do it the right way. So there's all sorts of ways that we are continually working with the US government. And this benefits everybody. This benefits consumers. They don't want to think they're going to go online and buy something and then get something that falls apart. And they're like, "That's not what I paid for. That's not what the product was advertised."

Those are all non-tariff barriers. So what we need to do is focus on what are those non-tariff barriers that we need to address, that governments here should be addressing, and then that benefits everybody. So I agree with you. GSTs are - if it's something that's imposed on everybody, that's on a level playing field, that's very different than something when it comes to intellectual property protection, when it comes to foreign investment restrictions, when it comes to data localization rules. Those things are what we should be focusing on.

Keith 54:55

Are there any kind of tailwinds that we can look at or try to leverage for growth in the coming years with the US?

Steve 55:03

One is we should have been diversifying our supply chains. You shouldn't have had all of your resilience and all your reliance in one bucket. So making your supply chains more resilient, that is a good thing to do. It's something that is overdue. It's something that companies are doing now. It's gonna be more expensive. And so we're gonna have to recognize that it might be more expensive to have a diversified, resilient supply chain. But over the long run, it's necessary and will pay for itself. So that's one opportunity that is there that businesses are looking at. It's going to be a cost, but it's something that over time will benefit themselves and the governments where they're operating.

I think a second thing that businesses are looking at is certainly going to be AI. That is something that is going to be a real opportunity. It is also going to be a risk. Certain businesses are going to be very much disrupted when it comes to AI. Certain sectors are going to be disrupted, but there's opportunities in a lot of sectors. So there's still an exciting time to be here.

Climate resilience is going to be something that is an opportunity because one, we're going to have to adapt to the climate disaster that's really starting to hit hard in Southeast Asia. Not so much in Singapore, although it seems to be raining a lot more this time of year than it normally does, right? But Singapore has the infrastructure to deal with excessive rain and an increased intensity of storms and excessive heat. Governments like Indonesia, the Philippines, Thailand, Malaysia, they don't have the infrastructure. They don't have the money that Singapore has. Businesses need to get on top of that.

And there may be opportunities there when it comes to addressing the physical risk of climate change. There's new products to offer as a result of the physical risk of climate change. There is still - as much as we're in a geopolitical era of uncertainty, a lot of that used to be driven out of Beijing. Now it's driven mostly out of Washington, but it's still also driven out of both. So there's a lot more geopolitical risk than there's ever been, but that doesn't mean that there's not opportunity for businesses and investors at the same time.

Keith 57:25

When we look at President Trump's policy moves, you previously gave us advice that we should just listen to him and take and believe in what he says. But also, can you help us kind of understand what are some of his immediate priorities in the coming months that we should expect out of him, of his administration?

Steve 57:44

Donald Trump ran on two things in particular. He ran on immigration and he ran on inflation. He is addressing immigration, certainly in ways most Americans disagree with - the majority of Americans, maybe not a majority of Republicans.

But the way that he's said he would address inflation - he hasn't gotten to that yet so much because the tariffs are inflationary, right? There's no question when you put tariffs on, they're a tax that's primarily paid by U.S. citizens, it's not so much that the businesses are going to eat that cost. So tariffs are inflationary. However, he wants to do things that are deflationary. He wants to cut government regulations. It takes a while to cut government regulations, but if you cut government regulations, you can then increase investment and you can grow the economy that way.

He wants to have more energy independence. He's talking about "drill baby drill," and "mine baby mine." And so those things could be bad for the environment, but could be something that would be a plus for the economy. The other thing that he wants to do is cut taxes. When he ran for president, he said he was basically going to cut taxes for everybody. We're going to have no tax on tips. We're going to have no tax on overtime. I think he said we're going to have no tax on auto loans, no double tax for expats.

I do agree with part of his tax cut proposals. But certainly if he cuts the taxes and he continues the existing tax cuts that were passed in 2017 that expire this year, that could also add to the economy. It might be that the things that he wants to do that will come later in his term could lead to some economic growth in the United States. Maybe we can argue whether it's the good type or bad type of growth, but there might be some opportunities coming that way. So it's still, look, it's less than 100 days. We'll see what comes out going forward, but there's a lot to watch.

Keith 1:00:02

For Trump to reduce his tariffs, what would be the things that he would watch out for in order to reduce tariffs or maybe reopen American markets?

Steve 1:00:17

What happens to the bond market? What happens to the stock market? That will be the check on him more than anything else. So watch the economic indicators. Now, you can go one of two approaches as a government. You could take the Canada, EU, China approach, which is if you're going to tariff us, we're going to tariff you back.

And then it gets to be a question of who can take more tariff pain, the United States or in particular China. Now I would argue, the US can take much more economic pain than China because the US economy is much stronger than the Chinese economy. It's much larger than the Chinese economy. And the Americans can take that economic pain if they want to.

But you could probably also argue the Chinese and Xi Jinping in particular can take the political pain. He doesn't run for election. He really doesn't run for election. And it is single party rule. And if he can get the Chinese people to rally behind him, probably he can do that more effectively than Donald Trump can get all of the American people to rally behind him.

Now we're gonna have to watch who breaks first, the Chinese or the Americans? Is it the economic pain or the political pain? What weighs out and how does that work? So all of these things are things we're gonna be watching. What happens with US-China? What happens with the markets? Do countries start to individually make concessions? Will the Vietnamese make concessions? Will the Cambodians make concessions? And if they start to make concessions, will that mean other governments will make concessions?

So we're in a period where we're gonna be watching everything, which means we get no sleep.

Keith 1:02:13

Alright, last question. I always ask all my guests, what's that one piece of advice that you would give to someone who's a fresh grad and entering the workforce?

Steve 1:02:21

I give the same advice to everybody and that's based off of my experiences. It's not what I realized when I was doing it, but it's what I realized looking back. Make yourself unique. The more unique you are, the more opportunity you will get. You asked me the question about an hour ago, right? Why did you go to Department of Transportation? Because they asked me to go. I had no clue that I wanted to ever work at the Department of Transportation.

I didn't know where it was. I kind of knew what it did a little bit, but because I had, as a lawyer and then I worked on the campaign and then I was at the White House, that gave me the opportunity to go to DOT. And then when I left DOT, UPS called me up and said, "Will you run our international aviation negotiating team?" And I'm like, "I can't do that." "Don't worry about it. You know how government thinks, we'll teach you the rest." So that's how I got to UPS.

Then UPS said, "Will you move to Singapore and build and lead public affairs for UPS in Asia?" And I said, "I've been to Asia literally once. I'm not an Asia person." "Don't worry about it. You know UPS, you know public affairs, you'll learn Asia when you're there." And then when I was here, KKR, the private equity firm called me up and said, "Will you build public affairs for us?" I said, "Well, I don't know anything about private equity." "Don't worry about it. You know Asia, you know public affairs, we'll teach you private equity."

So looking back and saying, I made myself unique and then it gave me opportunities I never thought I would have. So whatever it is that you feel passionate about - what do you feel passionate about? Do it not because you think it's good for you to do. Do it because you want to do it, because it's something that will make you unique from everybody else - learning a language, working in government, working for an NGO, working in media, meeting new people, going to new places, all of those things make you unique. And then over time, you're gonna get opportunities you never thought you were gonna get.

Keith 1:04:23

Wow, with that, thank you Steve for coming.

Steve 1:04:25

Keep going, Keith. Thank you. Great being here.