The Global Review - Farid Novin

Canada–U.S. Diplomacy in the Indo-Pacific: Strategic Divergence at the 2025 ASEAN Summit

The Kuala Lumpur Moment: Divergent Orders, Competing Visions

The 47th Association of Southeast Asian Nations (ASEAN) Summit, held in Kuala Lumpur from October 26–28, 2025, offered a revealing microcosm of the shifting strategic architecture of the Indo-Pacific. The simultaneous presence of U.S. President Donald Trump and Canadian Prime Minister Mark Carney—operating in parallel diplomatic tracks—illuminated not merely tactical disagreements but fundamental divergence in Western strategic orientation toward Asia. The summit served as a crystalline demonstration of two contrasting diplomatic models competing within a region increasingly defined by great-power rivalry, supply-chain securitization, and the erosion of multilateral institutional frameworks.

What emerged was not a contest for influence in the traditional sense, but rather a competition between two opposing conceptions of order: one transactional and coercive; the other incremental and rule-based. For ASEAN member states attempting to navigate between superpower pressures, the choice became increasingly binary. For Canada, the implications were structurally transformative.

Part I: Competing Logics, Divergent Outcomes

I.i. Trump's Strategy: Economic Coercion as Statecraft

Within six hours of landing in Kuala Lumpur, Trump announced trade deals with four countries, met regional leaders, and held talks with Brazilian President Luiz Inácio Lula da Silva. The velocity and breadth of these transactions reflected a deliberate strategic design: economic agreements weaponized as instruments of geopolitical ordering.

The Transactional Framework

Trump signed legally binding trade agreements with Malaysia and Cambodia, framework arrangements with Thailand and Vietnam, and memoranda of understanding on critical minerals with Malaysia and Thailand. These instruments were not conventional free trade agreements but rather conditional market-access arrangements embedded within explicit security matrices.

Trump's engagement with Xi Jinping produced immediate and tangible concessions: temporary suspension of China's rare-earth export restrictions, enhanced commitments on fentanyl precursor enforcement, and renewed agricultural purchases—exchanged for targeted U.S. tariff reductions. These outcomes aligned precisely with Trump's electoral calendar and domestic political imperatives. The transactional framing enabled the administration to claim immediate, measurable victories while treating economic policy explicitly as an instrument of national security coercion.

I.ii. Carney's Strategy: Institutional Repair and Long-Term Positioning

In sharp contrast, Carney arranged a meeting with Chinese President Xi Jinping at the APEC summit that followed, aiming primarily at re-establishing high-level communication channels and attempting to repair a six-year rupture in bilateral relations. This meeting constituted the first leader-level dialogue between Canada and China in eight years.

Calibrated Statecraft Under Constraint

Carney signed a letter of intent with Malaysia to deepen investment in liquified natural gas, nuclear, and renewable energy, signaling a commitment to long-term engagement rather than extractive transactionalism. Carney said he had arranged significant engagements with Singapore's leadership, the CEO of oil giant Petronas, and the chairman of Temasek Holdings, one of the world's biggest private equity firms.

Carney's approach emphasized structural trust-building and institutional repositioning: repairing bilateral channels dormant since 2019, initiating what Ottawa framed as a "roadmap for opportunities," and positioning Canada as a credible, autonomous actor capable of independent strategic reasoning. In relative terms, the absence of high-visibility trade concessions made the meetings appear modest when juxtaposed against Trump's orchestrated transactions. Yet this apparent modesty concealed a fundamentally different strategic temporality: Carney was investing in relational capital and institutional architecture designed to yield returns over years, not quarters.

The Contrast Clarified

The divergence between Washington and Ottawa reflected not differences in diplomatic acumen but in strategic orientation, institutional priorities, and domestic political constraints. Trump operated within an explicitly transactional frame, extracting immediate concessions and leveraging conditionality. Carney operated within an institutional frame, seeking to rebuild trust networks and position Canada for long-term influence within an increasingly fragmented global order.

Part II: The Architecture of American Economic-Security Dominance

Trump's most consequential initiatives at the summit were the bilateral Agreements on Reciprocal Trade (ARTs) concluded with Malaysia and Cambodia, alongside preliminary frameworks with Thailand and Vietnam. These agreements illuminate the trajectory of contemporary U.S. Indo-Pacific strategy: a decisive pivot from multilateral rulemaking toward bilateral economic-security compacts designed to restructure global supply chains and constrain Chinese regional influence.

II.i. Triff Power as Geopolitical Leverage: The Reciprocal Trade Architecture

Despite the agreements Trump signed with ASEAN member states, U.S. tariffs on those countries remained at 19 per cent for Malaysia, Thailand, and Cambodia, and 20 per cent for Vietnam. This apparent paradox—offering market-access agreements while maintaining elevated tariffs—reveals the true logic of U.S. economic statecraft under Trump.

The ARTs do not constitute conventional free trade agreements. Instead, they offer partner states conditional stability within a reciprocal tariff framework significantly elevated by historical standards but comparatively favorable relative to broader Trump tariff regimes. Tariff stability is treated as a scarce diplomatic commodity—something to be exchanged for explicit alignment on security-related objectives rather than distributed through universal rules.

This design reflects deliberate exploitation of U.S. market power. The promise of tariff predictability becomes the primary leverage mechanism: maintain alignment on security matters, facilitate critical mineral exports, and restrict engagement with China, or face escalating tariff escalation. The mechanism inverts traditional trade logic: instead of tariffs decreasing as countries liberalize markets, they become permanent features of coercive diplomacy, with marginal reductions offered as rewards for compliance.

II.ii. Resource Extraction and Supply-Chain Insulation

Trump signed bilateral memoranda of understanding with Malaysia and Thailand to diversify critical mineral supply chains, an attempt to counter China's export controls of rare earths. Malaysia's agreement to facilitate substantial U.S.-bound investment over the coming decade, alongside commitments to avoid export restrictions on critical minerals and rare earths, represents a direct effort to secure inputs essential to semiconductors, electric vehicles, and advanced manufacturing.

These provisions highlight the degree to which contemporary economic agreements have become embedded within national-security frameworks. Washington increasingly prioritizes resource access and supply-chain insulation over traditional trade liberalization. The asymmetry is intentional: developing economies gain tariff predictability; the United States gains supply-chain control and strategic leverage over competitors.

II.iii. The Third-Country Clause: Externalizing Coercive Power

The most innovative and consequential element of the agreements is the requirement that ASEAN partners adopt measures with "equivalent restrictive effect" against any third country targeted by U.S. tariffs, export controls, or sanctions imposed for national-security reasons.

This mechanism operates on three levels:

Externalization of Coercion. The clause effectively deputizes ASEAN partners to enforce elements of U.S. sanctions and export controls, extending American regulatory reach into regional economies without explicit negotiation or consent.

Regulatory Subordination. Partner states become embedded within a U.S.-centric regulatory environment, substantially constraining their capacity for autonomous engagement with China or other targets of American coercion.

Quasi-Alignment Through Incentive Structure. By tying tariff predictability to compliance with U.S. security-oriented restrictions, the mechanism creates durable structural incentives for alignment. Maintaining favorable tariff status requires continuous accommodation to shifting American preferences.

These agreements represent more than economic arrangements; they function as instruments of strategic ordering, establishing the foundations of a U.S.-anchored economic-security architecture within the Indo-Pacific.

Part III: Canada's Constricted Strategic Horizon

The Kuala Lumpur summit demonstrated both the continuing appeal of non-coercive, rules-based engagement among certain ASEAN constituencies and the intensifying pressure generated by U.S. unilateral bilateralism. Carney's emphasis on institutional rebuilding and long-term relationship management retained attraction for states seeking to mitigate great-power competition pressures. Yet the summit simultaneously revealed the narrowing policy space available to middle powers operating in an environment of structural bipolarity.

III.i. The Collapsing North American Economic Framework

The context was critical. A meeting with Canadian Prime Minister Mark Carney was not on the cards after talks between the neighbors came to an abrupt end, with Trump saying on Saturday he was increasing tariffs on Canada by an additional 10 percent "above what they're paying now".

The latest twist in the trade dispute came just as hopes had been raised that the two sides were very close to a deal on sectoral tariffs. Trump abruptly cut off trade talks with Canada, citing a $75-million ad campaign that appears to have angered the president, which featured clips of former president Ronald Reagan talking about tariffs.

This rupture occurred at precisely the moment when Canada was attempting to project regional engagement and diversification to Asian partners. Carney and Trump had not spoken since Thursday when negotiations were terminated, and the pair did not cross paths during the ASEAN summit.

III.ii. Regional Perceptions of Canadian Commitment

Asian capitals expressed skepticism about how truly committed Canada is to diversifying trade away from the U.S., with concerns about how rapprochement with China will affect not only trade but their growing desire for security assurances. Regional observers recognized an uncomfortable reality: Canada's Indo-Pacific diversification strategy was being pursued from a position of weakness rather than strength.

The announcement of new bilateral engagements—the Malaysia LNG letter of intent, investment commitments across the region, high-level business engagement—could not entirely obscure the deeper structural problem: Canada was attempting to build relationships of trust precisely when its own economic stability appeared compromised by its largest trading partner.

III.iii. The Collateral Damage: Economic Compression and Strategic Constraint

The domestic economic consequences of the U.S.–Canada rupture became progressively more visible. Carney said that Canada and the United States had made "considerable progress" in trade talks before Mr. Trump called them off, with the countries having negotiated for more than six months and Canada having made several concessions, including scrapping a digital services tax.

The economic data reflected deteriorating conditions: real GDP contraction, export volume decline to the United States, and sharp reductions in machinery and equipment investment. These developments compress both Canada's economic and diplomatic bandwidth. Efforts to present Canada as a stable and reliable partner in Southeast Asia are fundamentally undermined when its principal trading partner is simultaneously leveraging trade as an explicit coercive instrument. Although diversification remains strategically necessary, it is being pursued from a position of economic vulnerability rather than structural autonomy.

Part IV: Japan and the Architecture of Deference

The reported decision by Japan's new Prime Minister to decline a bilateral meeting with Carney—publicly justified as a need to consolidate domestic authority—raises important questions about diplomatic signaling and alliance hierarchy under conditions of asymmetric U.S. pressure.

Given the timing and regional context, the episode cannot be interpreted solely as a scheduling or administrative constraint. Japan's foreign policy operates within the structural parameters of its security alliance with the United States, which has become increasingly transactional under Trump. At a moment when U.S.–Canada trade negotiations had collapsed and the U.S. administration was publicly criticizing Ottawa, a high-profile meeting with Carney risked transmitting an unintended signal of neutrality or misalignment on a central U.S. priority. For Tokyo, the potential costs of such ambiguity exceeded any benefits of early engagement with Canada's new government.

This pattern of deference was not unique to Japan. Across the summit, ASEAN member states expressed comparable caution. Their willingness to conclude politically salient agreements with Washington—contrasted with procedural engagements with Canada—reflected the gravitational pull of American economic power. For countries attempting simultaneously to secure investment, de-risk supply chains, and navigate intensifying great-power rivalry, managing the perceived hierarchy of external partners has become a core diplomatic function. In this environment, abstaining from a meeting is itself an act of alignment.

Part V: Toward a New Canadian Strategic Doctrine

The 2025 ASEAN Summit illustrates a broader structural dilemma for Canadian foreign policy: how to maintain strategic autonomy in an international system increasingly defined by great-power rivalry, the securitization of trade, and U.S. transactionalism.

V.i. The Limitations of Institutional Incrementalism

Carney's approach—framed as "strategic internationalism"—offers a coherent long-term vision emphasizing rules-based cooperation, diversified partnerships, and diplomatic predictability. Yet its effectiveness is constrained by a global environment that increasingly rewards assertive signaling, rapid alignment choices, and the unambiguous articulation of national interests. Institutional approaches premised on trust-building and gradual norm-establishment are structurally disadvantaged in an era where coercive unilateralism has become the dominant language of great power statecraft.

V.ii. The Historical Precedent: Toward Trudeau-Era Independence

This moment invites comparison with an earlier period in Canadian statecraft. Pierre Elliott Trudeau's foreign policy—grounded in the assertion that Canada possessed sufficient structural capacity to conduct an independent external policy even at the risk of U.S. displeasure—offers a historical model for the type of strategic orientation Canada may now require. Trudeau's approach was neither anti-American nor naïvely autonomist; rather, it reflected a conviction that Canada's international agency depended fundamentally on its willingness to define its interests irrespective of U.S. preferences.

The Trudeau Doctrine rested on several foundational premises: that Canada's resource endowments, technological capacity, and democratic legitimacy provided sufficient structural foundation for independent statecraft; that credible autonomy required periodic willingness to accept economic costs rather than automatic accommodation; and that regional actors respected principled independence more than reactive alignment.

V.iii. Strategic Recalibration: The Case for Declaratory Independence

The current strategy, while analytically sophisticated, risks being interpreted as overly cautious in an environment where major powers expect unequivocal positioning. To capitalize on Canada's structural strengths—its critical mineral resources, technological capacity, human capital, and G7 status—a more declaratory and self-confident foreign policy may be essential.

Such a doctrine would not entail disengagement from the United States but would redefine the terms of engagement by clarifying that Canada's strategic decisions are derived from its own assessment of national interests rather than derivative of U.S. priorities. The distinction is fundamental: Canada would negotiate with the United States from the posture of an autonomous actor capable of imposing costs through non-cooperation rather than a subordinate supplicant requesting concessions.

V.iv. The Indo-Pacific as Test Case

The Indo-Pacific does not reward hesitation. A recalibrated approach that asserts Canadian priorities clearly, anticipates coercive pressure and responds through diversification rather than accommodation, and engages Asia from a position of strategic intention rather than reactive adjustment may be essential if Canada is to navigate the era of structural U.S.–China rivalry while preserving its international influence and economic resilience.

For Canada, the choice is not between alignment with Washington and autonomous statecraft, but rather between defining the terms of that alignment proactively or accepting perpetually constricting options offered by others. The 2025 ASEAN Summit suggests the window for the former choice may be narrowing rapidly.

VI. Conclusion: The Indo-Pacific as Strategic Laboratory

The events in Kuala Lumpur in October 2025 revealed not merely the current state of Asian regional politics but the fundamental trajectory of the international order. The United States is organizing allies through explicit coercion; China is offering an alternative framework of multilateral engagement; middle powers face an increasingly binary choice between accommodating one or the other.

Canada's historical strength has resided in its capacity to transcend such binaries through institutional creativity and strategic autonomy. Whether the next phase of Canadian foreign policy will reclaim that tradition or further entrench alignment-through-default remains an open question. The answer will be written not in Ottawa or Washington but in the Indo-Pacific—the region where the emerging international order is being constructed.