Global Risk Indexes (07-02-2025)

Global 98 (0 —)
MENA 98 ( —)
APAC 97 ( —)
Europe 97 (-1 ▼)
Africa 96 ( —)
AMERs 98 ( —)
Markets 99 ( —)
Mei Ling, Asia Pacific region analyst at Worldwise Analytica

Mei Ling

Empowering minds, shaping decisions: Insights from the heart of geopolitics

Trade Wars, Regional Security Crises, and Political Instability Heighten Asia-Pacific Uncertainty

The Asia-Pacific region remains on edge as trade tensions, military incidents, and political crises continue to shape its geopolitical and economic trajectory. With U.S.-China trade hostilities escalating and regional security dynamics shifting, the coming months will likely see further realignments in alliances, economic dependencies, and military posturing.

Trade War Deepens: U.S. Tariffs on China Extend to Pharmaceuticals

The U.S. pharmaceutical industry and hospitals are lobbying to exempt medical goods from Washington's latest round of tariffs on Chinese imports. Trump's decision to impose a 10% tariff on all Chinese goods has triggered concerns over potential drug shortages, given that nearly 30% of raw ingredients for critical medicines originate in China. While exemptions may be considered for some medical products, the broader impact of these tariffs will further disrupt global supply chains, especially for generics and hospital essentials.

In parallel, Beijing is strategizing countermeasures, including potential export restrictions on rare earth minerals and technology components, which could deal a significant blow to the U.S. tech sector. The retaliatory cycle between the world's two largest economies is entering a more complex and damaging phase, with long-term consequences for global trade stability.

China-Hong Kong-U.S. Tensions: Postal Suspension and Trade Barriers

Hong Kong's postal service has opted to continue its suspension of shipments to the U.S., despite Washington reversing an earlier decision that halted packages from China and Hong Kong. The policy chaos underscores the unpredictable nature of U.S.-China economic relations, with Hong Kong's long-standing role as a global trade hub facing increasing pressure from geopolitical disruptions.

Philippines-U.S. Security Cooperation and Military Incident

The Philippines remains a focal point in regional security developments following the crash of a U.S. military aircraft conducting intelligence operations in Mindanao. The incident, which resulted in the deaths of one U.S. service member and three defense contractors, highlights the growing strategic cooperation between Washington and Manila. The U.S. military's expanded footprint in the Philippines is a direct countermeasure to China's assertiveness in the South China Sea. However, this presence also raises risks of potential flashpoints between the U.S. and Chinese forces in contested waters.

Political Unrest in the Philippines and Bangladesh

Political instability is deepening in the region. In the Philippines, Vice President Sara Duterte is preparing for a high-profile impeachment trial, while in Bangladesh, tensions between the interim government and ousted former Prime Minister Sheikh Hasina have reached new levels. The Bangladeshi government has formally requested India to curb Hasina's statements, reflecting the wider regional ramifications of Dhaka's internal strife.

China's Position on Gaza and Global Diplomatic Maneuvering

China's foreign ministry has reaffirmed its opposition to U.S. proposals regarding the future of Gaza, underscoring Beijing's broader strategy of positioning itself as a champion of the Global South. By supporting a two-state solution and opposing forced displacement, China is aligning itself with much of the Arab world, potentially enhancing its diplomatic influence in the Middle East.

Conclusion: An Increasingly Fragmented Global Order

The ongoing trade war, strategic military posturing, and political instability across Asia-Pacific reinforce the notion that the region is navigating an increasingly fragmented global order. The next phase of U.S.-China economic rivalry, coupled with emerging security challenges in Southeast Asia, will determine how the Asia-Pacific reshapes its political and economic landscape in the months ahead.

Geopolitical Risk Assessment for the Asia Pacific
(07-02-2025)

The Asia-Pacific region continues to face significant geopolitical and economic turbulence. The intensifying U.S.-China trade war, coupled with new tariffs and retaliatory measures, is reshaping global trade flows, particularly in energy and pharmaceuticals. Security concerns remain high as U.S. military operations in the Philippines highlight the evolving regional security landscape. Additionally, political instability in South and Southeast Asia, particularly in the Philippines and Bangladesh, is contributing to a complex risk environment that could have long-term implications for governance and regional alignments.

Geopolitical Risk Index

Developments to Follow for the Asia Pacific (See All Global)

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