Economic potential amid strategic uncertainty – Firstpost

On January 21, one day after the inauguration of Donald Trump as the 47th President of the United States and hours after the Senate confirmed Marco Rubio as US Secretary of State (making Rubio Trump’s first cabinet member), the 10th meeting of the foreign ministers of the Quadrilateral Security Dialogue, or the QUAD, was held in Washington. A short, directionless joint statement was issued afterward.

Directionless

The brief, standard joint statement following the foreign ministers’ meeting contained the following points:

• A shared commitment to strengthening a Free and Open Indo-Pacific, where the rule of law, democratic values, sovereignty, and territorial integrity are upheld and defended.

• A commitment to strengthening regional security and opposing any unilateral actions that seek to change the status quo by force or coercion.

• Strengthening regional maritime, economic, and technology security in the face of increasing threats, while promoting reliable and resilient supply chains.

This directionless, short statement, which reveals little and conceals much, provides no clear path forward for the Quad. It also stands in stark contrast to the joint statement issued after the last foreign ministers’ meeting (held to commemorate the 20th anniversary of the Quad), which included more substantive, directional, and actionable measures.

Confusion and Chaos

This directionless joint statement is symptomatic of the confusion and chaos surrounding how Trump intends to handle foreign policy in his second term—relationships with friends, allies, and foes alike.

Obsessed with slogans like “Making America Great Again” and “America First”, the tone of Trump’s foreign policy in his second term is unmistakably clear: “uncertainty, uncertainty, and more uncertainty”.

In his very first week of Trump 2.0, he has already shaken the foundation of US foreign policy with early actions—walking away from the WHO and the Paris Climate Agreement, and putting NATO, Canada, Panama, Mexico, and Ukraine on notice. Although he has yet to unleash a full-scale trade war, his intentions are clear: “tariffs, tariffs, and more tariffs”. This may come sooner rather than later.

The Existential Question

Together with Trump’s recent overtures to China, the Quad now faces an existential dilemma, prompting the question: “Will the 20-year-old Quad grouping thrive, survive, or become a footnote in history under Trump 2.0?”

Mercurial and unpredictable as Trump is, there is no definitive answer. This piece, however, addresses this core issue.

Before delving into the future of the Quad, I briefly examine the tentative beginning of the Quad in 2004, its resurrection in 2017, its coming of age under the Biden administration, and the new uncertainties surrounding its existence.

The Focus

Aside from deliberating on the strategic future of the grouping, I delve deeper into whether the Quad’s Economic Agenda will survive under the disruptive and transactional Trump 2.0 regime. To explore this, I will examine areas like infrastructure development, supply chain diversification, resilience, and technology partnerships, analysing whether these initiatives can gain favor in an administration focused on transactional diplomacy and tangible benefits for the US from any grouping or alliance.

This piece also argues that demonstrating clear economic gains for all members, including the US, will be crucial for the Quad’s continued relevance.

I begin with “Quad: A Backgrounder.”

The Quad – An Idea 

While the Quad has gained prominence in the last five years, it first took shape in 2004 as Quad 1.0 after the devastating 2004 Indian Ocean tsunami. The four countries—US, Japan, Australia, and India—decided to form the “Tsunami Core Group” to coordinate the emergency response and humanitarian assistance.

Institutionalisation and Retaliation

The first attempt to institutionalise the Quad came from Japan’s Prime Minister Abe Shinzo during his first term (2006–2007). His intent was to promote an international rules-based order, asserting that China had become a threat to that order.

However, the very idea of Quad in its embryonic stage met with swift and decisive retaliation from China, which saw it as a US-led effort at “containment and suppression”, aimed at curbing China’s rise by creating an “Indo-Pacific NATO”.

Into the Deep Freezer

Soon, Quad 1.0 was consigned to history and put into deep freeze for nearly a decade due to China’s retaliation, the wavering of the four nations’ governments, Abe losing his premiership, and Australia’s withdrawal to mend its relationship with China.

The Resurrection

Undeterred by the demise of Quad 1.0, Abe revived the idea in 2012, proposing the “Democratic Security Diamond” to preserve the “common good” in the Indo-Pacific. Quad 2.0, in its present form, was resurrected by Abe in his second term in 2017, coinciding with the first term of President Trump.

The revival of the Quad coincided with China’s increasing military assertiveness in the East and South China Seas, as well as along the border with India.

Taking Roots

To revive the Quad, Japan in 2017 invited Australia, India, and the US to a joint working meeting on the margins of the ASEAN Summit. It was here that the idea began to take root, ultimately leading to the first formal meeting of Quad foreign ministers on the sidelines of the 2019 United Nations General Assembly.

Operationalisation

Quad, now a five-year-old grouping, is still uncertain about its future. Below is a brief overview of its operationalisation:

2. Summit Meetings: The first virtual “Quad Leaders’ Summit,” hosted by President Joe Biden on March 24, 2021, included Japanese Prime Minister Yoshihide Suga, Indian Prime Minister Narendra Modi, and Australian Prime Minister Scott Morrison. They laid out the “Spirit of the Quad”:

   • “We bring diverse perspectives and are united in a shared vision for a free and open Indo-Pacific. We strive for a region that is free, open, inclusive, healthy, anchored by democratic values, and unconstrained by coercion.”

Over the past four years, Quad leaders have met six times—four in person and twice virtually. The last meeting was hosted by Biden in Washington in September 2024, and the next is scheduled for New Delhi in 2025.

3. Foreign Ministers’ Meetings: The first formal Quad foreign ministers’ meeting was held on September 26, 2019, in New York. The latest took place on January 21, 2025, in Washington. The Quad foreign ministers have met ten times, playing a significant role in operationalising summit decisions.

4. Working Groups – Broadening the Agenda: The practical work of the Quad is carried out through leader-level working groups focusing on:

Is the Quad the Equivalent of “Asian NATO”?

While China views the Quad suspiciously as an “Asian NATO”, the Quad members emphasise that the group aims to foster deeper economic and diplomatic ties, with strategic military cooperation being just one aspect.

In its current form, the Quad is a relatively lightly institutionalised, loose grouping—neither a security arrangement nor a trade group. Its focus is on strengthening the economic resilience of its members and reducing dependencies on autocracies. The working groups are tools to achieve these goals.

Trump 2.0 and China: Shadow on the Quad

When Trump first joined the Quad formation (although Biden hosted the first official Quad Leaders’ Summit in 2021), his intent was to contain the growing Chinese threat. However, as Trump returns to the Oval Office, there are indications that his stance toward China may soften. Here are the key points:

• Days before the inauguration, Trump spoke with Xi Jinping to discuss trade, fentanyl, and TikTok—the Chinese-owned app Trump had sought to ban.

• Beijing’s reaction to the Trump-Xi conversation was unusually warm, with Chinese state media declaring that the two superpowers “can become partners and friends… prosper together, and benefit both countries and the world.”

• At the World Economic Forum, Trump stated, “I like President Xi very much. I’ve always liked him. We always had a very good relationship.”

• After the inauguration, Trump indicated 10 per cent tariffs on Chinese products, far lower than the 60 per cent he had threatened during the campaign.

If Trump and Xi follow through with these intentions, it could significantly reduce the strategic need for the Quad as a tool to contain China.

Other Developments Impacting the Quad’s Continued Relevance

Apart from Trump’s recent overtures to improve US-China relations, the following developments further dampen the strategic significance of the Quad:

5. AUKUS Compact: The emergence of AUKUS, a trilateral security partnership between Australia, the United Kingdom, and the United States, designed to allow Australia to acquire nuclear-powered attack submarines and other advanced weapons like hypersonic missiles.

6. Thaw in Indo-China Relations: After years of standoff, there is a tentative but distinct attempt at normalisation and improvement in India-China relations.

7. Japanese Defense Buildup: Japan is undergoing its largest military buildup since World War II, with plans to double defense spending by 2027.

These factors suggest that the strategic importance of the Quad may diminish in the next four years of Trump’s presidency. For the grouping to remain relevant, it must prioritise its economic agenda.

Quad Economic Imperative

The Asia-Pacific has evolved since Trump’s first term, and so have the priorities likely to influence his approach toward the Quad. One view is that under Trump’s new administration, the Indo-Pacific will remain a priority with bipartisan support, but with a sharper focus on hard power dynamics. The other view is that a potential Sino-US thaw and other developments will reduce the strategic value of the Quad to the US.

Even if the Quad’s value as a strategic counterbalance to China diminishes, the grouping still offers much on the economic front:

• The combined population of Quad nations is 1.9 billion, with a GDP of $34.8 trillion.

• Quad countries account for 44 per cent of two-way merchandise trade across the Indo-Pacific region.

• Quad nations hold 30 per cent of global FDI stock, with 22 per cent of that stock invested in the Indo-Pacific.

• Quad countries account for 18 per cent of global goods and services trade, amounting to $10 trillion.

Concrete Achievements

Starting with themes like Covid-19 vaccines, critical technologies, and climate change in 2021, the Quad has expanded its agenda to include fighting cancer, pandemics, bolstering quality infrastructure, maritime domain awareness, STEM education, counter-terrorism, cybersecurity, connectivity, healthcare, and more.

The grouping has also decided to expand its scope to include Commerce and Industry Ministers, with notable initiatives such as joint port development in the Indo-Pacific, creating an air logistics network, and cooperating in biotechnology and quantum computing.

Quad Economic Agenda and Transactional Trump

Amid these developments, the future of the Quad’s economic agenda must be assessed, focusing on:

• Infrastructure Development: Quad’s infrastructure financing initiatives and capacity-building efforts are critical but lag behind China’s Belt and Road Initiative (BRI).

• Resilient Supply Chain Initiative: The SCRI aims to reduce Quad nations’ dependence on China, and despite Trump’s tariffs, it is in the US’ best interest to actively participate in SCRI.

• Critical and Emerging Technologies: Cooperation on AI, cybersecurity, semiconductors, and Open RAN presents a win-win opportunity for all Quad members, including the US.

Conclusion

The Quad’s role as a strategic counter to a resurgent and belligerent China may increase or decrease depending on the unpredictable and transactional Trump, but the Quad nations have much to offer each other. It is imperative that the grouping strengthens its role significantly over the next four years of Trump 2.0.

The author is a multi-disciplinary thought leader with Action Bias and an India based impact consultant. He is a keen watcher of changing national and international scenarios. He works as President Advisory Services of Consulting Company BARSYL. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.