Trump’s AI policy and strategic choices in the Indo-Pacific

By Sachin Tiwari

Published on April 2, 2025

In Jan 2025, DeepSeek, a large language AI model from China upended the stock markets. The achievement provided a much needed breakthrough to China amidst the intensifying tech competition with the US. This was followed by the Trump administration announcement of a $500 billion investment dubbed ‘Stargate’ to lead the AI race. Given the centrality of the US and China in the AI economy, the developments are not limited to two powers but evident in the Indo-Pacific where the projected growth in AI investment is set to grow five times to $117 billion in 2030. The dynamism is reflected across the region where all 10 ASEAN countries have adopted AI strategies and are pushing for major investments in infrastructure, and research in AI technologies.

Yet, the enthusiasm for achieving tech development is surrounded by complex choices. The influence of the US and China ranges from investment to pressure tactics favouring their policies. During the first Trump administration, officials pressed countries not to opt for Chinese telecom networks under the Clean network initiative. With the return of Trump, his America First agenda has led to coercion through tariffs even on allies and partners. The uncertainty has led to questions over export control on key technologies vital for AI development. The differences were notable at the recent AI summit in Paris co-hosted by India and France, where the US and the UK failed to sign the joint declaration citing differences over prioritising innovation. Within the EU, there are voices that have called for cutting the red tape and easing rules around AI. France as the leading member state of the EU in AI has proposed an investment of $113 billion for its development. A similar approach is emerging in the Indo-Pacific states that have pushed to build their capabilities.

Derisking in the Indo-Pacific

The emerging pattern is to de-risk focusing on national development and local strategies. The Indian government has announced the development of an AI model within a larger focus to support Digital India mission. In Southeast Asia, major investments by the US and Chinese tech firms are shaping the digital industry in the region. Yet, AI development is a capital-intensive industry that has posed limitations to develop the industry for emerging economies. This is visible in US and Chinese investment that are largely directed to their tech firms, leaving the development of local industry.While some have successfully pushed for AI adoption including Singapore, Japan and India leading the AI readiness index while Philippines struggles to develop and integrate AI. The ability to scale and manage large tech infrastructures running AI systems have pushed countries to look for other options.  

To overcome the uncertainty, there are emerging partnerships within the Indo-Pacific states. Singapore President Tharman Shanmugaratnam's visit to India highlighted the focus on training AI, setup of data centres and production of semiconductors. Australia has partnered with India allowing access to critical minerals and push for AI in public delivery services. Japan has launched its first Global South strategy expanding its international partnership in critical industries allowing for mobilization of private funds.

Emerging patterns of cooperation

The choices are also being shaped through formation of strategic alliances such as QUAD and AUKUS that have centred around democracy pushing for a liberal value based technology development. Security risks rank high for AI systems that affect the ability to trust, investment opportunities and have control over the system. These have also fuelled the integration of AI in defence across the region that has multiple conflict hotspots. NATO outreach in the Indo-Pacific with Japan, South Korea, Australia and New Zealand in AI has led to emergence to another strategic cooperation.

At the governance level also, there is momentum to shape the rules for AI. The Trump administration’s decision to remove the guardrails for AI security have raised questions. This comes at a time when the administration headed by the Silicon Valley leaders has embraced a radical pro-innovation policy. In China, in a major turn President Xi endorsed the private sector companies with the presence of major tech entrepreneurs in February, a major change after crackdown on major tech firms. China has emerged among the leading powers to release several AI policy papers and guidelines to maintain its stance on promoting innovation but also state control over AI. India’s and ASEAN focus on public services based on its socio-economic development has led to a soft approach to AI regulation. The recent debates on AI regulation have caught up over stifling innovation and responsible AI development. 

The idea of a sovereign AI runs high across the region, with the launch of AI projects and regulations. Still, the required infrastructure, technology and capital have forced governments to make choices. The results are not only binary but have also benefited with the US- China competition attracting investment and presence of major tech firms. In Southeast Asia, major data centres, AI training and research institutes are fuelling productivity in the region. Even in small island states in the Pacific that lack any infrastructure to support it the prospects for AI adoption has increased with Australian support to support the AI use for disaster management and public services. The debates are raging over the successful attempts to integrate AI and in some cases building of base AI models. The integration across the Indo-Pacific remains a tight balancing to catch the frenzy AI race with its widespread adoption. A multi alignment is emerging engaging both the US and China but also not trapped with cooperation with different powers to insulate from the uncertainty.  

Dr. Sachin Tiwari is a Research Fellow at the Kalinga Institute of Indo-Pacific Studies, India. He is concurrently a 2024-25 fellow at the Network for Advanced Studies of Technology Geopolitics at the Takshashila Institution, Bengaluru.