The saying "When elephants fight, it is the grass that suffers" captures the potential global impact of U.S. President Donald Trump's decision to impose tariffs on China and the European Union. While Brussels and Beijing may bear the brunt of the consequences, economies worldwide, including those in Central Asia, could also be significantly affected, caught in the crossfire of the trade tensions.
Although no country in Central Asia sees the United States as its major economic partner, Trump’s trade war with the EU and China is expected to impact all Central Asian nations in one way or another. Their strong economic ties with China and the growing EU presence in the region were once seen as a strategic advantage. Now, it seems to represent a double-edged sword, The Caspian Post reports citing The Times of Central Asia.
As a result of the Russian invasion of Ukraine, all Central Asian states have sought to strengthen economic relations with Beijing and Brussels. Their partnerships with China and the EU have grown through trade and investments, but Washington’s tariffs on Chinese and European goods could result in a reduction in demand for various items in Central Asia.
Trump’s tariff policy could also give Beijing certain leverage over Washington in the strategically important region. According to Mark Temnycky, Nonresident Fellow at the Atlantic Council Eurasia Center, as a way to counter the impact of U.S. tariffs, the Chinese could increase their trade and energy relations with the countries of Central Asia.
“This would further accelerate China’s relationship with Central Asia, and it could result in the regional states becoming more dependent on the Chinese for trade. Given the proximity of China to Central Asia, this may also result in the regional nations reducing their trade relations with the European Union as well as with the United States, as they favor Chinese prices,” Temnycky told The Times of Central Asia in an interview.
U.S. bilateral trade in the region has never been particularly strong. The exception is Kazakhstan - the region’s largest economy - which is the only country in Central Asia whose trade with the U.S. exceeds one billion dollars. According to official statistics, in 2024 America’s total goods trade with Kazakhstan was estimated at $3.4 billion. Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan combined have a lower trade volume with the United States than Kazakhstan. But all that is just a drop in the ocean compared to the $89.4 billion trade China reached with Central Asian in 2023.
“Trump’s tariff policy could lead to an even greater Central Asian states’ dependency on China, potentially creating a Chinese monopoly on Central Asian trade and energy. In other words, regional countries would no longer have a diversified economy and market, thus tightening China’s control over the area,” Temnycky stressed.
That, however, does not necessarily mean that Beijing will, in the long term, benefit from Washington’s tariff policy. According to Tyler Schipper, an economist and Associate Professor at the University of St. Thomas, China is “arguably at one of its economically weakest points in the last several decades,” which means that any trade war with the United States will “further weaken its economy and reduce its demand for energy and mineral exports from Central Asia.”
“Both the Biden and Trump administrations have focused on creating relationships to secure access to rare earth minerals. Couple this desire with the current administration’s transactional approach to foreign policy, and there may be some potential to forge new trade relationships between the U.S. and Central Asian economies,” Schipper told The Times of Central Asia.
Kazakhstan, with its 15 rare earth deposits and significant raw material base, has a notably larger reserve compared to Ukraine, where rare earth minerals - though less prominent - have been a topic in U.S.-Russia peace negotiations. In fact, it could surpass China. Uzbekistan is also becoming a vital rare earth supplier, partnering with the EU to expand critical material production for green energy and tech.
Given that Central Asia is known for its rare earth minerals and energy exports, the United States has been proactive in strengthening ties with Central Asian nations, likely aiming to diversify its critical minerals supply chain and reduce dependency on Beijing. That is why the region, according to Pini Althaus, Chairman and Chief Executive Officer at Kaz Resources, holds significant geopolitical importance to Washington.
“In the early days of the Trump administration, executive orders have been issued as it pertains to obtaining critical minerals from mineral-rich countries. The C5 countries (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan) are the ‘lowest-hanging fruit’ for the United States due to the deposits that exist there, and the wide range of various critical minerals essential for advanced manufacturing, national security and renewable energy,” Althaus explained in an interview with The Times of Central Asia.
In his view, U.S. Secretary of State Marco Rubio’s recent phone call with Uzbekistan’s Foreign Minister, Bakhtiyor Saidov, in which critical minerals and the C5 were discussed and prioritized, further demonstrates that the region remains of strategic importance to the United States. Does that mean that Trump’s tariffs on the EU and Chinese goods will lead to a growing American economic presence in Central Asia?
“Current tariffs are part of a broader isolationist mood in Washington. It seems unlikely that private U.S. investment will materially increase in Central Asia under such conditions,” Schipper said.
As he sees it, the potential for additional tariffs against American trade partners, both big and small, will further deter new investment in markets with less U.S. presence, such as Central Asia.
“This will leave China, and potentially Russia - if it concludes its war in Ukraine - as the most likely sources of foreign direct investments in the region,” Schipper added.
There is no doubt that further economic decoupling between the U.S. and China will have consequences for Central Asia. It remains to be seen who will be the primary beneficiary of this shift - Washington, Beijing, Russia, or perhaps other emerging powers in the region.
