China-Proofing Asia
How the Indo-Pacific Economic Framework balances American interests in East and South Asia.
China's Belt and Road Initiative (BRI), Beijing’s ambitious international infrastructure strategy, prompted a scramble in Washington and Brussels for a Western response. Perceived as a comprehensive Chinese statecraft initiative aimed at reshaping Eurasia's geoeconomic and geopolitical landscape, every Chinese overseas investment became, in Western eyes, part of the BRI. Indeed, the BRI itself became a catch-all for Western anxieties about Chinese economic power and influence, both justified and unfounded, leading to misinterpretations of Chinese actions and, more importantly, trepidation about China's rise and the West’s own relative decline.
The BRI's launch coincided with a seismic shift in American trade policy. The 2016 U.S. presidential election saw both Republican candidate Donald Trump and Democratic primary contender Sen. Bernie Sanders (I-VT) criticize free trade's impact on America. Former Secretary of State Hillary Clinton, the eventual Democratic nominee, remained the sole national voice in favor of free trade—but she had to pivot her messaging and policy proposals to adjust to the new realities of American politics. The bipartisan consensus on trade fractured, and Trump ushered in a new era of growing support for industrial policy and trade restrictions. This shift continued under the Biden administration with in policies like the Inflation Reduction Act, the CHIPS Act, and a cautious approach to new trade deals due to domestic political considerations.
But the BRI also spurred the United States, alongside allies and partners in Asia and Europe, to put forward its own vision of an Indo-Pacific economic architecture, one that prioritizes closer alignment of strategic and economic interests beyond what most trade economists typically advocate. The result was the Indo-Pacific Economic Framework (IPEF), launched by the Biden administration in May 2022. IPEF consists of four key pillars: fair and resilient trade; supply chain resilience; clean infrastructure and decarbonization; and fair taxation and anti-corruption practices.
While warily eyeing China's economic influence, IPEF differs significantly from the Trans-Pacific Partnership (TPP) negotiated by the Obama administration and then abandoned by the Trump administration in 2017. Unlike the TPP, IPEF serves as a foundation for future negotiations and does not include immediate, across-the-board tariff reductions—marking a departure from the traditional U.S. trade approach of granting market access in exchange for geopolitical alignment, despite potential drawbacks for American workers. However, this shift has been met with skepticism from U.S. allies and partners who expect tariff reductions as part of any Washington-led economic initiative.
Instead, IPEF prioritizes a closer alignment of strategic and economic interests, reflecting the driving force of policy and political leadership. But the Indo-Pacific economic architecture's long-term viability hinges on its ability to deliver tangible economic benefits for all participant countries. While China's current dominance in many sectors of regional and global production is undeniable, a purely defensive strategy focused on economic containment is unlikely to foster lasting prosperity. For the United States and its allies, the central challenge lies in finding the right balance between de-risking supply chains as China's growth slows while avoiding a breakdown in extensive supply chain networks akin to the COVID-19 disruption. Meeting this challenge will be crucial to prevent the fragmentation of the broader economic architecture that Washington and its allies strive to build and strengthen.
The IPEF framework's true value lies in its potential to equip all regional economies with the tools they need to thrive in the face of emerging challenges. A focus on future-proofing the region through structural reforms and workforce development policies to ensure the region remains competitive in the digital age and the era of artificial intelligence will be needed to achieve this objective.
The unresolved question of tariffs remains a central challenge for initiatives like the IPEF, the I2U2 grouping, the India-Middle East-Europe Corridor (IMEC), and the Partnership for Atlantic Cooperation. These initiatives all grapple with how to balance U.S.-led efforts to counter China's influence with the broader goal of reshaping the global economic order. A key concern is reconciling this with prioritizing American economic resilience and reindustrialization. Further complicating matters, America's allies appear wedded to a bygone era. They continue to view the United States primarily as a market for their goods and services, neglecting the need for reciprocity, a long-standing point of contention. Their expectation of the previous status quo–market access in exchange for political alignment with Washington—which ironically remains the primary security guarantor for many—has few, if any, takers in the current American political and even policy discourse.
Their portrayal of an America embracing isolationism and protectionism might be a projection of their own anxieties. Their inability to shift away from the traditional paradigm has exposed their economic vulnerabilities. Meanwhile, since the 2008 financial crisis there has been a growing backlash against the economic and trade status quo in the United States, which in part manifested itself in the 2016 elections. There is a new emerging consensus across the political spectrum in Washington, one involving more targeted industrial policy to prepare America for a new era of strategic and economic competition with China. This move is coupled with domestic policies focused on working-class families, reflecting America’s own evolving domestic politics.
Leveraging its predominant global position, the United States is steering the economic and geopolitical integration among the Eurasian and Atlantic littoral states in alignment with its interests, as seen by the U.S. announcement of IPEF, IMEC, and the Atlantic Partnership. IMEC, for instance, marks the resurgence of ancient overland and maritime routes encircling the Eurasian rimland, where West Asia—the convergence between the Middle East and South Asia—emerges as a geopolitical and geoeconomic pivot region between Europe and the Indo-Pacific. Beyond Eurasia, the United States is reshaping its transatlantic engagement, shifting focus from the traditional U.S.-Europe axis to include Africa and Latin America in a broader Atlantic framework.
The biggest challenge for Washington now is how to build a blueprint for geoeconomic coalitions in the context of domestic realities of working-class anxieties about trade and the strategic imperative behind the current heavy-handed approach to industrial policy, which IPEF, IMEC, Atlantic Partnership, and I2U2 hope to collectively achieve. In addition to domestic politics, the United States urgently requires a central coordinating mechanism for the “minilateral” formats it has cultivated. This central mechanism would function as the primary hub, with the minilaterals serving as the spokes. Such an arrangement will hopefully create greater synergy between the IPEF, IMEC, and the Atlantic Partnership, helping realize various U.S. thematic and geographic priorities. However, this recommendation is not without risks. To begin with, it may challenge the autonomy of participant countries who align with the U.S. on specific thematic and geographic issues but not necessarily with Washington's overall strategic posture or priorities—pivotal states like Brazil, India, Nigeria, Saudi Arabia, and many others. Second, implementing such a major hub-and-spoke approach with minilateral formats is an ambitious and unprecedented endeavor—not a guaranteed success.
These initiatives may, in the long run, address deficiencies in America's international economic policy and enjoy bipartisan backing. But they also present a formidable challenge for Washington: integrating geographically disparate efforts into a coherent global geoeconomic strategy.
Mohammed Soliman is a director at the Middle East Institute, a member of McLarty Associates, and a visiting fellow at Third Way. Follow him on X @ThisIsSoliman.