In East Asia, power plays are no longer staged in military barracks but in boardrooms, trade expos, and marathon diplomatic banquets. Welcome to the age of tariffs and tango. Seoul, with Lee Jae-myung’s election, engages in a diplomatic exercise that would make even the most experienced acrobat break into a sweat. President Lee, through what he calls “pragmatic diplomacy,” seeks to secure South Korea’s national interests while maintaining a delicate equilibrium between traditional allies and emerging powers. This Asian Dynamic demands subtle manoeuvring, as the country attempts to strengthen relations with China and Russia without disrupting its unwavering alliance with the United States.
South Korea’s relationship with China exemplifies this diplomatic complexity perfectly. China, as Seoul’s largest trading partner, inevitably wields significant economic influence. Lee Jae-myung, recognising this reality, pursues enhanced economic cooperation and the promotion of a strategic partnership. Indeed, discussions for a trilateral free trade agreement between China, Japan, and South Korea are underway, highlighting the desire for deeper economic integration. However, historical, political, and cultural differences, alongside Beijing’s close relationship with North Korea, complicate this Asian Dynamic, requiring constant attention and negotiations.
Meanwhile, relations with Japan present their own challenges and opportunities. Lee has expressed desire for closer cooperation with Tokyo, despite “sensitive” historical differences and territorial disputes surrounding the Dokdo/Takeshima islands. Both countries recognise the need for cooperation on security matters, particularly against North Korean threats. Nevertheless, historical disagreements, such as Japanese colonialism and compensation issues, remain a thorn in relations, despite efforts toward a “future-oriented” relationship.
Trilateral cooperation as diplomatic shock absorber
The trilateral cooperation between China, Japan, and South Korea constitutes one of the region’s most intriguing mechanisms for defusing geopolitical tensions. The three countries’ foreign ministers met in Tokyo in March 2025, the first meeting since 2023, discussing the importance of trilateral cooperation amid geopolitical changes. They have agreed to promote economic integration, including resuming negotiations for a free trade agreement.
This cooperation is considered vital for the three countries’ long-term development and for regional peace and prosperity. Despite efforts, trilateral cooperation continues to suffer from tensions between China and Japan, as well as between Japan and South Korea, due to historical and territorial differences. The three countries seek common ground in areas such as population ageing, declining birth rates, natural disasters, and the green economy. Recent diplomatic initiatives have focused on strengthening these cooperative frameworks, with ongoing discussions about future summit meetings that could provide new momentum for trilateral cooperation.
U.S. trade policies and Vietnam’s role
While the Asian Dynamic evolves in the region, the United States under Donald Trump implements a trade policy that could be characterised as “creative destruction.” Trump’s “reciprocal tariffs” philosophy aims at renegotiating trade agreements and reducing trade deficits, but simultaneously creates economic uncertainty and potential price increases for U.S. consumers.
The U.S.–Vietnam trade agreement exemplifies this approach perfectly. According to the agreement, a 20% tariff applies to Vietnamese imports to the U.S., while for “transshipping”—the process of circumventing trade barriers through third countries—the tariff rises to 40%. In exchange, Vietnam provides full U.S. access to its markets with zero tariffs, something that, according to Trump, has never happened before.
Vietnam’s significance in the global supply chain is indisputable, as its exports to the U.S. represent approximately 30% of the country’s GDP. This makes Vietnam particularly vulnerable to U.S. tariffs, while simultaneously positioning it at the centre of U.S. efforts to address tariff circumvention, especially from China. China, as a top exporter to the U.S., has reportedly used Vietnam as a transshipment hub, something the new agreement seeks to limit.
Implications and interactions in the broader landscape
Vietnam is both a prize and a pawn in this high-stakes chess game—caught between economic opportunity and strategic exposure. The U.S.–Vietnam agreement’s implications extend beyond the two countries, affecting the entire Asian Dynamic. Increased costs for U.S. importers may roll over to consumers or suppliers, with examples such as price increases in products like men’s sweaters. According to a pricing model created for CNBC by AlixPartners, a 10% tariff on Vietnamese products would cause an imported men’s sweater price to rise by approximately 8%.
Uncertainty regarding the agreement’s effective date and official signing creates additional market pressures. Trump has indicated he may ignore or revise the upcoming deadline for his “reciprocal” tariffs to snap back to higher levels. The 90-day pause, which lowered tariffs on nearly all other countries to a blanket 10% rate, was imposed in early April to give countries breathing room while they negotiate deals with the U.S.
With the deadline approaching, the Trump administration has only achieved revised trade frameworks with China and the United Kingdom, although it has repeatedly stated that the U.S. is close to deals with numerous other countries. This situation creates an environment of uncertainty that affects regional countries’ strategic decisions.
Bending without breaking: Asia’s diplomatic tightrope
As East Asia’s economic ballet unfolds across boardrooms and summit halls, it becomes clear that the region’s future will hinge less on ideology than on agility. The so-called Asian Dynamic is not merely a shift in trade routes or diplomatic phrases—it’s a real-time strategy game where yesterday’s rules no longer apply, and the stakes are regional stability and global influence.
With Trump reshaping trade one tariff at a time, and regional actors like South Korea and Vietnam walking tightropes between power poles, success depends not on rigidity, but on the ability to bend without breaking. Those who master this rhythm may yet steer the region’s course. The rest risk being outpaced by history—or outmaneuvered by those who read its signals more deftly.