New Japan-China Friction and U.S. Bilateralism Reshape Asian Trade Dynamics, Testing ASEAN’s Role

Asia’s complex trade environment is being reshaped by renewed tensions between its largest economies and a continued U.S. strategy of forging bilateral partnerships, putting regional blocs like ASEAN under increasing pressure to maintain unity and relevance.

In East Asia, trade friction that began in late 2025 is expected to be influenced by the landslide election victory of Japanese Prime Minister Sanae Takaichi on February 9, 2026. According to Discovery Alert, Takaichi’s firm stance on security and diplomatic issues, including trade disputes with China, has received a strong public mandate. Amid these rising tensions, South Korea is positioning itself as a potential mediator, hoping to leverage its deep supply chain relationships with both economic giants to encourage de-escalation.

This friction adds another layer of complexity for the Association of Southeast Asian Nations (ASEAN), which is already navigating the geopolitical competition of the U.S.-China trade squeeze, as reported by Mizzima. With the Philippines taking the chair for 2026, the bloc is focused on maintaining its centrality. While observers warn that ASEAN’s relevance is being tested by an increasingly transactional U.S. trade policy, data from 2025 showed regional resilience, with Southeast Asian exports to the U.S. growing and investment diversion from China continuing.

A clear example of Washington’s transactional approach is the new Agreement on Reciprocal Trade signed with Bangladesh on February 9, 2026. As reported by Supply Chain Dive, the pact is a “meaningful step forward” and the “first in South Asia,” according to U.S. Trade Representative Jamieson Greer. Under the deal, the U.S. will lower its reciprocal tariff rate on imports from Bangladesh to 19% and eliminate some duties entirely. In exchange, Bangladesh has committed to purchasing $15 billion in U.S. energy products over 15 years and will implement measures to address unfair trade practices by companies from third countries. For businesses operating in Asia, the landscape requires careful navigation of geopolitical risks in East Asia while simultaneously adapting to a U.S. policy that is creating specific, targeted market opportunities through bilateral agreements across South and Southeast Asia.