In March 2025, as cutting-edge South Korean semiconductors were loaded for Chinese ports, the echoes of fighter jets streaking across the skies near Seoul served as a stark reminder of the region’s precarious equilibrium. Days earlier, South Korea had finalized the deployment of advanced U.S. stealth aircraft on its soil, and joined the U.S. Air Force for exercises involving F-35 fighters — a move viewed from Beijing as “destabilizing provocation.” This duality, where billion-dollar trade partnerships coexist with escalating military posturing, defines the Asia-Pacific’s existential dilemma: how to sustain economic lifelines to China while sheltering under the U.S. security umbrella in an era of great power rivalry.
The Asia-Pacific is no stranger to geopolitical tightropes, but the stakes have never been higher. China, the region’s economic engine, accounts for some 20-30 plus percent of trade in countries like Japan, Australia, and South Korea, binding their prosperity to Beijing’s market. Unlike Canada and Mexico, which rely on the U.S. for a staggering 75 percent and more of their total trade, Asia-Pacific nations face no comparable single-country dependency. Yet China’s neighbours recognize a harder truth: its market is both irreplaceable and irresistible. With a consumer base of 1.4 billion and control over critical supply chains from rare earths to batteries, no alternative — not the U.S., nor India, nor ASEAN — can fully substitute what Beijing offers. The Chinese market is “too large for us to ignore,” acknowledged one senior Japanese manufacturing executive. “Given its size and the pace of growth, there would no choice but to develop products for that market, in addition to ones for the western and Japanese market.”
From Tokyo to Jakarta, leaders are rewriting the playbook on diplomacy. Japan invests billions to untangle supply chains from China while ramping up defence spending to record levels. Australia replaces lost Chinese markets with Indian buyers as it welcomes U.S. nuclear submarines to its shores. Vietnam, once a battlefield in a Cold War proxy conflict, now courts both Chinese factories and American tech giants, threading a needle between growth and sovereignty. Meanwhile, ASEAN, the 10-nation bloc at the heart of Southeast Asia, insists on neutrality while quietly funnelling Chinese investment into infrastructure and U.S. partnerships into cybersecurity.
This high-wire act has global consequences. The region’s success — or failure — in balancing these forces will shape everything from the price of semiconductors to the security of sea lanes that carry half the world’s trade. For nations like Canada and Mexico, whose own fortunes hinge on navigating U.S. dominance, the Asia-Pacific offers a cautionary tale and a roadmap: diversify or face vulnerability. While Asian nations juggle two giants, Ottawa and Mexico City remain yoked to one — a risk underscored by U.S. President Donald Trump’s newly launched and escalating trade war against its closest and largest trading partners.
As U.S.-China tensions persist, the question is no longer whether the Asia-Pacific can maintain its balancing act, but how long — and at what cost. The answers lie in the boardrooms of Seoul’s tech giants, the docks of Vietnamese factories, and the negotiating tables of ASEAN summits, where the future of globalization is being rewritten one trade deal and one security pact at a time.
In the bustling port of Ho Chi Minh, Vietnamese factory owners track shipments of Chinese raw textiles with the same urgency as they monitor typhoon warnings. A single delay can ripple across supply chains, idling workers and stalling deliveries to Zara and H&M stores in Europe. Vietnam’s predicament is emblematic of a regional truth: China isn’t just Asia’s largest trading partner — it is the gravitational centre of its economic universe.
The numbers paint an unambiguous picture. In 2023, China accounted for about 24 percent of South Korea’s total trade, 21 percent of Japan’s, and a staggering 34 percent of Vietnam’s. For Australia, whose iron ore fuelled China’s construction boom, bilateral trade hit $325 billion in 2024, though Canberra’s push to diversify has trimmed China’s share of its exports from 43 percent to 36 percent from 2020 to 2023. Even ASEAN, a bloc of 670 million people, conducts more than $900 billion in annual trade with China — more than twice its trade with the U.S.
This dependence is both a lifeline and a vulnerability. Take South Korea: semiconductors, the backbone of its economy, made up 51 percent of its $141 billion in exports to China in 2024. “The supply chain stuff is really tricky!” as Elon Musk was quoted on the complexities of the global supply chain. And for those chips shipping to China, South Korea meets around 95 percent of its mineral demand through imports, and China is by far and away the country on which Seoul is most dependent. Similarly, Japan’s increasing exports to China in recent years propped up industries from robotics to automotive manufacturing, but Tokyo has offered subsidies for companies relocating production to India, signaling growing unease.
Washington views these deepening ties through a geopolitical prism. A 2023 U.S. International Trade Commission report warned that China’s dominance in critical minerals and manufacturing components gave it “disproportionate leverage to coerce neighbours during disputes” — a veiled critique of Beijing’s ability to weaponize trade. This fear underpins U.S. efforts to rally allies like Japan and Australia into initiatives such as the Indo-Pacific Economic Framework (IPEF), aimed at reducing reliance on Chinese supply chains. “We have all experienced the fragility of our dispersed supply chains in recent years… we’ve become too reliant, we have discovered, on certain countries for the supply of critical minerals needed to fuel our clean energy future,” argued former U.S. Trade Representative Katherine Tai during a 2023 speech in Tokyo.
Beijing, however, frames its economic relationships as symbiotic. When Australia faced Chinese tariffs on wine, coal, and barley between 2020–2023 — a move widely perceived in the West as punishment for Canberra’s calls to investigate COVID-19’s origins — Chinese officials defended the measures as legitimate regulatory actions. “We will not allow any country to reap benefits from doing business with China while groundlessly accusing and smearing China and undermining China’s core interests based on ideology,” declared China’s hawkish Foreign Ministry spokesman Zhao Lijian in 2021, referencing Australia’s criticism of Beijing’s pandemic response. The episode laid bare a central tension: China demands that trading partners separate economic engagement from political friction, a line smaller nations often struggle to walk.
While former Prime Minister Scott Morrison argued that Beijing’s move was aimed at eroding the country’s values, his government’s Covid-19 investigation posturing proved costly. While Canberra eventually diversified exports to India and Southeast Asia, the $20 billion cost of the dispute underscored the risks of political confrontation while keeping economic harmony. Yet decoupling remains a fantasy for most. Vietnam, despite attracting well over $10 billion in U.S. investment in recent years, still sources around 50 percent of its machinery parts from China. Even ASEAN’s much-touted neutrality masks nuance: while Indonesia positions itself as a mediator, its nickel exports to China — critical for electric vehicle batteries — rose 53 percent in 2004, accounting for 92 percent of the country’s total nickel export tonnage, tying Jakarta closer to Beijing .
For all the risks, Asia-Pacific nations recognize a hard truth: no alternative market matches China’s scale. Regional US allies such as Japan, South Korea and Australia, rely on Beijing on trade far more than Washington. The U.S., despite its security assurances, cannot absorb ASEAN’s nearly $1 trillion in annual trade with China, which is about 20 percent of the block’s total trade. India, often touted as a “China alternative,” bought just $120 billion from the region in 2024—a fraction of China’s imports. The trend has been clear: China emerged as ASEAN’s largest trading partner in 2009, and trade between the two economies more than quadrupled by 2022. China’s trade with ASEAN countries has also seen a corresponding rise. ASEAN became its largest trading partner in 2020, accounting for 11.4 percent of China’s total trade volume in 2022.
The region’s trade data reveals a paradox: economic prosperity hinges on China, but survival instincts are driving diversification. As Asian Development Bank chief economist Albert Park noted, China remains the key growth driver of global economy, accounting for “nearly half of Asia and the Pacific’s GDP.” The question is whether these nations can rebalance their economies before the next crisis—be it a Chinese slowdown, a blockade of Taiwan, or another trade war—forces their hand. This delicate dance between profit and risk sets the stage for the region’s next challenge: aligning with the U.S. on security without severing ties to the Chinese economy that keeps their factories humming and workers employed.
Under President Trump’s “America First” doctrine, the US has demanded, other than NATO members, that allies like Japan and South Korea “pay their fair share” for U.S. military protection or risk reduced strategic commitments. Trump has personally complained that neither Japan nor South Korea treat the US well in this this regard. Simultaneously, China’s Global Times warned regional nations: “Those who… naively believe that ‘playing the China card’ will earn them favour from the US will inevitably bear the consequences.”
This dual pressure — Washington’s transactional demands and Beijing’s economic leverage — has forced Asia-Pacific nations into a high-stakes recalibration of their geopolitical playbooks.
For Japan, the stakes are existential. With 20 percent of its foreign trade depending on the Chinese market, its trade volume with China grew twice as fast its trade to the US in as shown in early 2024 statistics, including tens of billions in high-precision machinery critical to Chinese manufacturing. Yet Tokyo has simultaneously ramped up defence spending by 9.4 percent in fiscal year 2025, marching toward its goal of reaching 2 percent of GDP by 2027, the highest since World War II. Tokyo also joined U.S.-led initiatives like the Quad to counter China’s growing maritime presence. Japan clearly does not want to choose between security and prosperity, but intend on pursuing both, even if it means walking a razor’s edge. Beijing, however, dismisses this balancing act as hypocrisy. “Japan and the United States were compromising the security interests of other countries in the name of promoting a rules-based international order,” stated Chinese Foreign Ministry spokesman Lin Jian.
South Korea faces a similar paradox. In 2024, Seoul exported $142 billion in semiconductors, much of which to China, a 43.9 percent increase from the previous year, and a lifeline for its tech giants like Samsung and SK Hynix. But when South Korea joined the U.S.-backed Chip 4 Alliance — a coalition to secure semiconductor supply chains — it also signed up with former Biden administration on an alliance to limit China’s access to advanced chips. Obviously, South Korea is threading a needle, and it cannot afford to pursue security at the cost of economic suicide.
Australia’s trajectory reveals the risks of overcommitment. After weathering China’s 2020–2023 trade embargoes, Canberra doubled down on its U.S. alliance. Yet even as Australian Defence Minister Richard Marles praised the AUKUS nuclear submarines as a key component of the country’s future defence capabilities, his counterpart in trade quietly finalized a deal to resume Chinese coal imports, signalling pragmatism over ideological rigidity. And Prime Minister Anthony Albanese marked a very different tone on China than his predecessor: “In a world of increasing complexity, the true measure of foreign policy strength is the ability to effectively manage differences, not manufacture confrontations.”
Smaller nations like Vietnam and ASEAN states face sharper dilemmas. “Vietnam continues to strike a balance between China and the U.S.,” stressed General Secretary of the Communist Party of Vietnam and President To Lam. He, noted that Hanoi characterizes ties with Beijing and Washington respectively as “strategic choice” and “strategic priority,” adding that “choice essentially takes precedence over priority.” Meanwhile, ASEAN’s collective neutrality masks quiet fractures: while Indonesia and Malaysia resist U.S. pressure to exclude Huawei from 5G networks, the Philippines has granted the U.S. access to four new military bases near the contested South China Sea. For ASEAN, the balancing act is difficult, and the apparent unity is fragile.
The U.S., for its part, frames its alliances as a stabilizing force. “We’re not asking nations to decouple from China,” former U.S. Secretary of State Antony Blinken stated during a 2024 press conference in Beijing, and that U.S. actions in the region were not aimed at decoupling from China but at offering alternatives to ensure nations are not overly dependent on a single economy. But Beijing counters that Washington’s strategy is inherently divisive. It views the U.S. Indo-Pacific framework as a kind of Trojan horse for containment, through regional “bloc politics”
For Asia-Pacific nations, the calculus is less ideological than survivalist. ASEAN countries do not want to see the U.S. and China as rivals but rather, as customers. Yet this pragmatism has limits. When Taiwan tensions flared in late 2024, Japanese and Australian warships joined U.S. patrols in the Taiwan Strait — a move marking a significant shift in Japan’s defence posture, as it was the first time a Japanese destroyer transited the Taiwan Strait. Beijing saw it, as always the case, a provocation led by the US. The Asia-Pacific’s balancing act is difficult and costly, but the options are limited. Nations are pouring billions into defence partnerships with the U.S. while scrambling to retain access to China’s market — a strategy that risks economic and political exhaustion. For middle powers, the lesson is clear: survival in an age of great power rivalry demands not just agility, but audacity.
In the sunbaked vineyards of South Australia, winemakers still recall the “frost” of 2020–2023, when China’s tariffs on Australian wine crushed a $1.2 billion export industry overnight. Yet just a year later, cranes in the port of Darwin loaded record shipments of Australian iron ore bound for Chinese steel mills — a paradox that encapsulates Beijing’s dual-edged trade strategy. Far from a monolithic aggressor, China wields trade as both a scalpel and a magnet: punishing adversary behaviour while rewarding cooperation, all within a framework of calculated pragmatism.
The Australia-China saga, often framed in the West as unvarnished coercion, tells only half the story. Even at the height of tensions, Beijing exempted Australian iron ore — a commodity critical to China’s construction sector — from tariffs, allowing exports to surge to $120 billion in 2024. By 2025, as China quietly lifted barley tariffs and Australian coal shipments resumed, bilateral trade had grown 8 percent year-on-year — proof that Beijing’s punishments are often temporary and targeted, designed to signal displeasure rather than sever ties.
This duality extends across the region. During the 2017 THAAD dispute, China’s boycott of South Korean cosmetics and K-pop erased $6.8 billion from Seoul’s GDP. Yet by 2023, bilateral trade recovered to around $310 billion, driven by semiconductor and electric vehicle battery sales. Similarly, Japan’s machinery exports to China, more than 10 percent of its total export share in 2023, continued unabated despite Tokyo’s participation in U.S.-led tech restrictions. Beijing exempted critical imports like industrial robots from retaliation, prioritizing economic pragmatism over political posturing.
For ASEAN, China’s trade strategy has been more carrot than stick. The China-led Regional Comprehensive Economic Partnership (RCEP) fueled a 12 percent jump in ASEAN-China trade toward $1 trillion mark in 2024. Vietnam’s exports to China grew 18 percent, while Indonesia’s nickel shipments — essential for Chinese EV batteries — soared 25 percent, even as Jakarta resisted Beijing’s territorial claims in the South China Sea. RCEP is widely seen as promoting mutual benefit of its members through tariff reductions and streamlined customs procedures.
Western critics, however, warn against overlooking Beijing’s leverage. A 2025 U.S. Congressional report accused China of weaponizing interdependence, citing its dominance in rare earth metals, 90 percent of global processing, and lithium-ion batteries, 75 percent of production, as tools to coerce other countries. Yet Chinese officials counter that such critiques ignore the region’s agency. They argue that no nation is forced to trade with China, and their partners choose cooperation because it serves their development.
The reality lies in between. China’s trade playbook blends punishment and partnership, tailored to maximize influence without triggering outright defiance. When Malaysia renegotiated Belt and Road Initiative (BRI) loans in 2023, Beijing absorbed the blow but slashed future funding — a warning to others. Yet in Indonesia, Chinese investment in the Jakarta-Bandung high-speed rail created 45,000 jobs, earning praise even from skeptics. For Asia-Pacific nations, navigating this duality demands nuance. Engaging China means accepting complexity. The lesson is clear: Beijing’s trade tools are neither purely coercive nor benevolent. They are instruments of pragmatic statecraft, wielded to shape behaviour while preserving interdependence — a tightrope walk that leaves neighbours balancing risk against reward, and opportunity against vulnerability.
In the neon-lit factories of Vietnam’s Bac Ninh province, workers assemble Samsung smartphones bound for California, using components shipped from Shenzhen. Nearby, billboards advertise a new industrial park funded by Chinese tech giant Huawei — a microcosm of Vietnam’s delicate dance between East and West. This balancing act, repeated across the Asia-Pacific, is less a diplomatic feat than a survival strategy. For nations tethered to China’s economy but wary of its powerful rise, neutrality is not an ideal; it’s an imperative.
Japan’s strategy hinges on a paradox: reduce reliance on China without severing ties. In 2020, Tokyo allocated $2 billion in subsidies to companies relocating production from China to India and ASEAN. Over the years, Japan has slashed its rare earth imports from China from 90 percent to 60 percent. Yet, Japan remains China’s second-largest trading partner (not counting EU and ASEAN groups), with significant machinery and electronics exports. Nowadays, from the top US officials to their allied counterparts, “we are not decoupling but de-risking,” seem to be the talking point when it comes to delicate trade relations with China, as Japan joined the U.S.-led Chip 4 Alliance while lobbying Beijing to ease restrictions on semiconductor materials.
For Seoul, semiconductors are both a lifeline and a vulnerability. In 2024, more than 50 percent of South Korea’s chips was shipped to China, but the memory of Beijing’s 2017 THAAD retaliation — a $7.5 billion economic blow — looms large. Dubbed as the New Southern Policy 2.0, South Korea’s trade with ASEAN has risen by 25 percent while maintaining China as its top market. Seoul’s exemption of legacy chip sales to China from U.S. export controls underscores its pragmatic duality: innovate with America, profit with China.
Australia’s 2025 playbook is a masterclass in adaptation. After trade disputes with China, Canberra pivoted to India, signing a Critical Minerals Partnership to supply lithium for Delhi’s electric vehicle ambitions. Yet, even as Australian warships joined U.S. patrols in the South China Sea in recent years as part of the US-Japan-India-Australia Quad activities, China remained its largest iron ore customer. Facing President Trump’s tariff threat on April 2 that will include Australia, Resources Minister Madeleine King warned that “We would very much like to have a partnership with the US, but if they don’t want to do that, then that’s up to them and we’ll continue to work with other nations as well.” China is clearly in the play even Australia has tightened its foreign investment rules lately.
Vietnam’s rise as the seventh-largest trading parter of the U.S. (ahead of United Kingdom and India) is a testament to its agility. Hanoi leverages U.S. tariffs on Chinese goods to attract manufacturers like Intel and Apple, while sourcing much of machinery parts and other supply chain materials from China. Vietnam has also welcomed the relocation of Chinese manufacturing plants as Chinese enterprises were outsourcing their productions to cope with the U.S.-China trade war.
“Centrality and unity, or “prosperity, not polarity” are kind of ASEAN’s collective mantra now, masking a mosaic of divergent interests. While Indonesia mediates U.S.-China spats, its primary nickel production rose by a staggering 53 percent, mostly fuelled by Chinese investment with exports to China surging in 2024, feeding Beijing’s electric vehicle boom. Meanwhile, the Regional Comprehensive Economic Partnership (RCEP), championed by China, has become ASEAN’s insurance policy, binding 15 economies into a $26 trillion bloc that dilutes Beijing’s unilateral leverage. ASEAN surely hopes that RCEP will let them dine with China without becoming the main course.
Washington frames its Indo-Pacific partnerships as risk mitigation, not containment. “we are for de-risking and diversifying, not decoupling.” said US National Security Advisor Jake Sullivan in 2023. Beijing, however, dismisses such claims. Chinese Foreign Minister Wang Yi made it clear: “The real purpose of the ‘Indo-Pacific Strategy’ is to try to create an Indo-Pacific version of Nato. It maintains the US-led hegemonic system, impacts the ASEAN-centred regional cooperation structure, and damages overall and long-term interests.”
For Asia-Pacific nations, the balancing act is less about ideology than about cold calculus. But the region’s pragmatism has limits. The Chinese navy’s high profile voyage around Australia recently, with live firing drills, is a response to Canberra’s repeated participation of U.S. led military exercises in the South China Sea, even as bilateral trade ties continue to improve. The Asia-Pacific’s balancing act is a high-stakes experiment in realpolitik. Whether it can endure may depend less on diplomatic finesse than on the world’s appetite for Taiwanese semiconductors, Australian lithium, and Vietnamese smartphones — and the willingness of great powers to keep their rivalries in check.
Shortly after returning to office, President Trump not only began to launch another round of trade war on China, but also vowed to impose 25 percent tariffs on Canada and Mexico, sending shockwaves around the world. Ottawa and Mexico City faced a familiar dilemma: How do you placate a superpower that is both your largest customer and your greatest vulnerability? For Canada and Mexico — nations tethered to the U.S. economy but eyeing China’s rise — the Asia-Pacific’s balancing act offers a partial roadmap to navigate an era where economic dependence is synonymous with strategic risk.
Canada’s predicament does not really mirror Australia’s in 2020. It is far worse. Nearly 75 percent of Canadian exports flow to the U.S., a dependency starkly exposed during the 2018–2019 NAFTA renegotiations, when Washington weaponized tariff threats to extract concessions. As the popular saying in Canada goes: we are like a mouse sleeping next to an elephant, every twitch matters. Mexico, despite its tens of billions dollars near-shoring boom since the U.S.-China trade war, remains hostage to Washington’s whims. When the U.S. banned Chinese electric vehicles (EVs) in 2024, it pressured both Mexico and Canada to block Chinese automakers from its factories — a move that stalled several billions in planned Chinese investments and the creation of 10,000 jobs in Mexico. Canada too, suffered the consequences of following the U.S. move to impose 100 percent tariffs on Chinese EVs as Beijing, after an unprecedented anti-discrimination investigation, retaliated by putting 100 percent tariffs on Canadian canola imports and various of other tariffs targeting at key Canadian products.
The lesson from the Asia-Pacific is clear: diversification is survival. Australia’s pivot from Chinese coal to Indian lithium and ASEAN partnerships offers a template. Canada has taken tentative steps, joining the CPTPP trade bloc (which includes Japan and Vietnam) and launching an Indo-Pacific Strategy to boost ties with India and ASEAN. But progress is slow — China still accounts for just 5 percent of Canada’s exports, compared to Australia’s 30 percent. Canada, despite occasional trade diversification efforts in recent decades, little progress has been made.
Mexico’s approach is more pragmatic. While leveraging its USMCA access to attract manufacturers fleeing China, it has quietly deepened ties with Beijing. Although the China-Mexico free trade agreement, which was launch in 2017, has not been moving forward, bilateral economic relations have boomed. Yet Mexico’s balancing act is precarious. While President Claudia Sheinbaum’s administration approved Tesla’s $5 billion gigafactory in Monterrey, it also sought Chinese EV giant BYD to build a plant in Sonora. But U.S. lawmakers threatened to revoke Mexico’s auto tariff exemptions — a reminder that proximity to the U.S. comes with strings. And despite President Sheinbaum’s skilled handling of President Trump in the latest round of US tariff wars, Mexico is not being exempted from the 25 percent tariffs.
For middle powers, the Asia-Pacific underscores that alignment is not allegiance. South Korea’s New Southern Policy — boosting ASEAN trade while retaining China as its top market — shows how to engage rivals without entanglement. Similarly, Canada’s recent Critical Minerals Partnership with the EU, Japan and South Korea reduces reliance on U.S. tech giants while avoiding overt confrontation with Washington.
Mexico, meanwhile, has turned to Brazil and Argentina to offset U.S. dominance in agriculture. It hopes to partner with the Mercosur bloc to balance its dependence on the U.S. corn. Yet unlike Vietnam, which thrives as a neutral hub for U.S. and Chinese investment, Mexico’s geographic fate binds it to Washington’s orbit, but it has worked hard to build bridges elsewhere.
The Asia-Pacific’s greatest lesson is that siding with one superpower often backfires. When Australia officially endorsed a COVID-19 origins inquiry, China’s retaliation cost billions. When the Philippines hosted U.S. bases, Beijing blockaded its fishing fleets. For Canada and Mexico, the risks are no less acute. Ottawa’s 2024 tariffs on Chinese EVs and iron and aluminum, seen by Beijing as following the priorities of Washington DC, triggered Chinese retaliatory tariffs on Canadian canola and other products, while Mexico’s refusal to follow the U.S. in condemning China’s Taiwan policy has drawn bipartisan ire in Washington. Former Australian Prime Minister Kevin Rudd may hit the right tone when he sees it necessary by making concessions to prevent further escalation while not compromising on what he regards as core national economic and political interests.
The answer lies in strategic hedging — a term now more and more seen in Canadian and Mexican policy discussion in the middle of President Trump’s intensifying trade war. For Canada, this means accelerating trade deals with the Asia Pacific, including China while expanding energy exports to Europe. For Mexico, it is about becoming a “nearshore bridge” for both U.S. and Chinese firms, as Vietnam has done. Yet hedging requires investment Canada and Mexico have been slow to make. Canada’s Indo-Pacific Strategy allocates just $500 million a year. Mexico, meanwhile, lags in infrastructure to rival Vietnam’s ports or India’s tech hubs. The World Bank’s 2020 statement highlights that while economic diversification can be costly in the short term, it is crucial for long-term resilience and sustainable economic development.
As the dust settles on another round of U.S.-imposed tariffs — this time targeting Canadian dairy and Mexican autos — the Asia-Pacific’s balancing act offers a stark contrast to North America’s lopsided dependencies. For Canada and Mexico, the risks of over-reliance are existential. Yet, as Ottawa and Mexico City grapple with Trump’s “America First 2.0” agenda — including his inflammatory rhetoric about annexing Canada as the “51st State” — they might find both a warning and a roadmap in the region’s pragmatic approach to navigating great power rivalry.
Canada’s Indo-Pacific Strategy, released in November 2022, now appears dangerously outdated. Framed as a response to China’s “disruptive” rise, the strategy subordinated Ottawa’s Asia-Pacific policy to U.S. objectives, treating Beijing as an adversary rather than a partner. Yet, as Trump’s threats to Canadian sovereignty and trade make clear, the greatest risk to Canada’s national interest may not lie across the Pacific, but south of the border. Has Canadians been so focused on China as a threat that they ignored the elephant in the room? The U.S. under Trump 2.0 looks like both Canada lifeline and its Achilles’ heel.
This reality demands a fundamental rethinking of Canada’s Asia-Pacific strategy. China, despite its growing economic clout and the second largest trading partner, remains a relatively minor player in Canada’s trade portfolio, accounting for just 5 percent of total exports and 7 percent of imports in 2024. Even with recent retaliatory tariffs on Canadian canola and pork — a response to Ottawa’s levies on Chinese electric vehicles and aluminum — bilateral trade has continued to grow, reaching over $120 billion in 2024, up from $86 billion in 2021. In contrast to Trump’s tariffs or his threats to Canadian sovereignty, China’s trade actions are more like irritants than existential threats. And even China’s counter tariffs have left door open for a negotiated settlement.
The Asia-Pacific offers a model for recalibration. Nations like Japan, South Korea, and ASEAN members have mastered the art of strategic hedging, balancing economic ties with China against security alliances with the U.S. without surrendering their autonomy. Australia, despite its 2020 trade frictions with Beijing, has maintained robust iron ore exports to China while diversifying into Indian and Southeast Asian markets. Vietnam, meanwhile, thrives as a neutral hub for U.S. and Chinese investment, leveraging its strategic location to attract manufacturers fleeing geopolitical tensions.
For Canada, the path forward begins with a new Asia-Pacific Strategy — one that prioritizes national sovereignty and economic resilience over alignment with U.S. objectives. Key pillars should include:
Yet Canada’s new Prime Minister Mark Carney remarked that when it comes to trade, China does not share Canada’s values. Is this a calculated election campaign move aimed at preemptively shutting down any criticism of his potential rapprochement with Beijing? Or Mr. Carney, despite his bold statement that Canada-US alliance will no longer as it used to be, has at the same time excluded China from Canada’s future global diversification strategy? In any case, it is worth comparing what values the world’s two superpowers attach to international trade.
Far from being benign, but in stark contrast to President Trump’s trade war rhetoric, China’s approach to trade reflects a distinct strategic calculus:
Mexico, too, must rethink its approach. By further pursuing its China-Mexico Free Trade Agreement and expanding ties with Mercosur, it can reduce dependence on the U.S. while attracting investment from both superpowers. There is a future where Mexico serves as a neutral hub for U.S. and Chinese firms alike.
Yet time is running out. With Trump’s April 2 tariffs looming, Canada and Mexico must act decisively. Australia’s $3 billion diversification fund and Vietnam’s multi-alignment strategy offer proven templates, but they require bold investments and political will. For middle powers in an age of giants, the path forward is neither alignment nor defiance, but strategic agility. By diversifying trade, deepening regional partnerships, and leveraging their unique assets — from Canada’s critical minerals to Mexico’s near-shoring potential — Ottawa and Mexico City can reduce their vulnerability to superpower whims. As the saying goes in Southeast Asia: “Survival is not about being the strongest, but about being the most adaptable.” For Canada and Mexico, the time to adapt — or perish — had arrived.
The Western powers have failed to effectively manage the increasing threat of proliferation in the Middle East. While the international community is concerned with Iran’s nuclear program, Saudi Arabia has moved forward with developing its own nuclear program, and independent studies show that Israel has longed possessed dozens of nuclear warheads. The former is a member of the treaty on the Non-Proliferation of Nuclear Weapons (NPT), while the latter has refused to sign the international agreement.
On Middle East policy, the Biden campaign had staunchly criticized the Trump administration’s unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA), more commonly known as the Iran Nuclear Deal and it has begun re-engaging Iran on the nuclear dossier since assuming office in January 2021. However, serious obstacles remain for responsible actors in expanding non-proliferation efforts toward a nuclear-free zone in the Middle East.
This panel will discuss how Western powers and multilateral institutions, such as the IAEA, can play a more effective role in managing non-proliferation efforts in the Middle East.
Panelists:
– Peggy Mason: Canada’s former Ambassador to the UN for Disarmament
– Mark Fitzpatrick: Associate Fellow & Former Executive Director, International Institute for Strategic Studies (IISS)
– Ali Vaez: Iran Project Director, International Crisis Group
– Negar Mortazavi: Journalist and Political Analyst, Host of Iran Podcast
– David Albright: Founder and President of the Institute for Science and International Security
Closing (5:45 PM – 6:00 PM ET)
What is the current economic landscape in the Middle East? While global foreign direct investment is expected to fall drastically in the post-COVID era, the World Bank reported a 5% contraction in the economic output of the Middle East and North African (MENA) countries in 2020 due to the pandemic. While oil prices are expected to rebound with normalization in demand, political instability, regional and geopolitical tensions, domestic corruption, and a volatile regulatory and legal environment all threaten economic recovery in the Middle East. What is the prospect for economic growth and development in the region post-pandemic, and how could MENA nations promote sustainable growth and regional trade moving forward?
At the same time, Middle Eastern diaspora communities have become financially successful and can help promote trade between North America and the region. In this respect, the diaspora can become vital intermediaries for advancing U.S. and Canada’s business interests abroad. Promoting business diplomacy can both benefit the MENA region and be an effective and positive way to advance engagement and achieve foreign policy goals of the North Atlantic.
This panel will investigate the trade and investment opportunities in the Middle East, discuss how facilitating economic engagement with the region can benefit Canadian and American national interests, and explore relevant policy prescriptions.
Panelists:
– Hon. Sergio Marchi: Canada’s Former Minister of International Trade
– Scott Jolliffe: Chairperson, Canada Arab Business Council
– Esfandyar Batmanghelidj: Founder and Publisher of Bourse & Bazaar
– Nizar Ghanem: Director of Research and Co-founder at Triangle
– Nicki Siamaki: Researcher at Control Risks
The Middle East continues to grapple with violence and instability, particularly in Yemen, Syria and Iraq. Fueled by government incompetence and foreign interventions, terrorist insurgencies have imposed severe humanitarian and economic costs on the region. Meanwhile, regional actors have engaged in an unprecedented pursuit of arms accumulation. Saudi Arabia and the United Arab Emirates have imported billions of both Western and Russian-made weapons and funded militant groups across the region, intending to contain their regional adversaries, particularly Iran. Tehran has also provided sophisticated weaponry to various militia groups across the region to strengthen its geopolitical position against Saudi Arabia, UAE, and Israel.
On the other hand, with international terrorist networks and intense regional rivalry in the Middle East, it is impractical to discuss peace and security without addressing terrorism and the arms race in the region. This panel will primarily discuss the implications of the ongoing arms race in the region and the role of Western powers and multilateral organizations in facilitating trust-building security arrangements among regional stakeholders to limit the proliferation of arms across the Middle East.
Panelists:
Luciano Zaccara: Assistant Professor, Qatar University
Dania Thafer: Executive Director, Gulf International Forum
Kayhan Barzegar: Professor and Chair of the Department of Political Science and International Relations at the Science and Research Branch of Azad University
Barbara Slavin: Director of Iran Initiative, Atlantic Council
Sanam Shantyaei: Senior Journalist at France24 & host of Middle East Matters
The emerging regional order in West Asia will have wide-ranging implications for global security. The Biden administration has begun re-engaging Iran on the nuclear dossier, an initiative staunchly opposed by Israel, while also taking a harder line on Saudi Arabia’s intervention in Yemen. Meanwhile, key regional actors, including Qatar, Iraq, and Oman, have engaged in backchannel efforts to bring Iran and Saudi Arabia to the negotiating table. From a broader geopolitical perspective, with the need to secure its energy imports, China is also expected to increase its footprint in the region and influence the mentioned challenges.
In this evolving landscape, Western powers will be compelled to redefine their strategic priorities and adjust their policies with the new realities in the region. In this panel, we will discuss how the West, including the United States and its allies, can utilize multilateral diplomacy with its adversaries to prevent military escalation in the region. Most importantly, the panel will discuss if a multilateral security dialogue in the Persian Gulf region, proposed by some regional actors, can help reduce tensions among regional foes and produce sustainable peace and development for the region.
Panelists:
– Abdullah Baabood: Academic Researcher and Former Director of the Centre for Gulf Studies, Qatar University
– Trita Parsi: Executive Vice-President, Quincy Institute for Responsible Statecraft
– Ebtesam Al-Ketbi: President, Emirates Policy Centre
– Jon Allen: Canada’s Former Ambassador to Israel
– Elizabeth Hagedorn: Washington correspondent for Al-Monitor
Military interventions, political and economic instabilities, and civil unrest in the Middle East have led to a global refugee crisis with an increasing wave of refugees and asylum seekers to Europe and Canada. Moreover, the COVID-19 pandemic has, in myriad ways, exacerbated and contributed to the ongoing security threats and destabilization of the region.
While these challenges pose serious risks to Canadian security, Ottawa will also have the opportunity to limit such risks and prevent a spillover effect vis-à-vis effective humanitarian initiatives in the region. In this panel, we will primarily investigate Canada’s Middle East Strategy’s degree of success in providing humanitarian aid to the region. Secondly, the panel will discuss what programs and initiatives Canada can introduce to further build on the renewed strategy. and more specifically, how Canada can utilize its policy instruments to more effectively deal with the increasing influx of refugees from the Middle East.
Panelists:
Erica Di Ruggiero: Director of Centre for Global Health, University of Toronto
Reyhana Patel: Head of Communications & Government Relations, Islamic Relief Canada
Amir Barmaki: Former Head of UN OCHA in Iran
Catherine Gribbin: Senior Legal Advisor for International and Humanitarian Law, Canadian Red Cross
In 2016, Canada launched an ambitious five-year “Middle East Engagement Strategy” (2016-2021), committing to investing CA$3.5 billion over five years to help establish the necessary conditions for security and stability, alleviate human suffering and enable stabilization programs in the region. In the latest development, during the meeting of the Global Coalition against ISIS, Minister of Foreign Affairs Marc Garneau announced more than $43.6 million in Peace and Stabilization Operations Program funding for 11 projects in Syria and Iraq.
With Canada’s Middle East Engagement Strategy expiring this year, it is time to examine and evaluate this massive investment in the Middle East region in the past five years. More importantly, the panel will discuss a principled and strategic roadmap for the future of Canada’s short-term and long-term engagement in the Middle East.
Panelists:
– Ferry de Kerckhove: Canada’s Former Ambassador to Egypt
– Dennis Horak: Canada’s Former Ambassador to Saudi Arabia
– Chris Kilford: Former Canadian Defence Attaché in Turkey, member of the national board of the Canadian International Council (CIC)
– David Dewitt: University Professor Emeritus, York University
While the United States continues to pull back from certain regional conflicts, reflected by the Biden administration’s decision to halt American backing for Saudi Arabia’s intervention in Yemen and the expected withdrawal from Afghanistan, US troops continue to be stationed across the region. Meanwhile, Russia and China have significantly maintained and even expanded their regional activities. On one hand, the Kremlin has maintained its military presence in Syria, and on the other hand, China has signed an unprecedented 25-year strategic agreement with Iran.
As the global power structure continues to shift, it is essential to analyze the future of the US regional presence under the Biden administration, explore the emerging global rivalry with Russia and China, and at last, investigate the implications of such competition for peace and security in the Middle East.
Panelists:
– Dmitri Trenin: Director of Carnegie Moscow Center
– Joost R. Hiltermann: Director of MENA Programme, International Crisis Group
– Roxane Farmanfarmaian: Affiliated Lecturer in International Relations of the Middle East and North Africa, University of Cambridge
– Andrew A. Michta: Dean of the College of International and Security Studies at Marshall Center
– Kelley Vlahos: Senior Advisor, Quincy Institute
The security architecture of the Middle East has undergone rapid transformations in an exceptionally short period. Notable developments include the United States gradual withdrawal from the region, rapprochement between Israel and some GCC states through the Abraham Accords and the rise of Chinese and Russian regional engagement.
With these new trends in the Middle East, it is timely to investigate the security implications of the Biden administration’s Middle East policy. In this respect, we will discuss the Biden team’s new approach vis-à-vis Iran, Yemen, Saudi Arabia, and Israel. The panel will also discuss the role of other major powers, including China and Russia in shaping this new security environment in the region, and how the Biden administration will respond to these powers’ increasing regional presence.
Panelists:
– Sanam Vakil: Deputy Director of MENA Programme at Chatham House
– Denise Natali: Acting Director, Institute for National Strategic Studies & Director of the Center for Strategic Research, National Defense University
– Hassan Ahmadian: Professor of the Middle East and North Africa Studies, University of Tehran
– Abdulaziz Sagar: Chairman, Gulf Research Center
– Andrew Parasiliti: President, Al-Monitor
