Key Takeaways:
- U.S. allies in the Indo-Pacific are increasingly certain about the threat posed by China but increasingly uncertain about the reliability and predictability of U.S. policy.
- These conditions have produced a distinct pattern of behavior best described as allied hedging. Allied hedgers to varying degrees continue strengthening their alliances with Washington while simultaneously expanding alternate security partnerships, boosting independent capabilities, selectively refusing some U.S. requests, and tactically reaching out to Beijing.
- Allied hedging differs from traditional hedging because the source of uncertainty is not the adversary or the general strategic environment but the alliance patron. Absent this uncertainty, the Indo-Pacific allies would balance with the United States. Tactical outreach to Beijing may occur, but it should not be mistaken for strategic realignment.
- For policymakers in Washington, selective refusal or tactical engagement with Beijing should not automatically be interpreted as disloyalty. Punitive responses risk reinforcing the very dynamics that drive allied hedging. Burden sharing also produces more allied autonomy, and Washington must accept a greater degree of policy divergence.
- If perceptions of U.S. unreliability persist beyond the current administration, some Indo-Pacific allies may increasingly resemble traditional hedgers such as Thailand, while others will invest more heavily in regional security arrangements and middle-power coalitions that reduce dependence on Washington. This could have negative implications in a regional crisis, such as unreliable access to basing.
- The most effective response to allied hedging is predictability. Sustained bipartisan commitments, consistent signaling, and credible long-term
engagement (especially economic and political investments) in the Indo-Pacific will reduce incentives for allies to seek insurance against uncertainty from Washington.
Uncertainty is the defining characterization of American foreign policy in the second Trump administration. U.S. allies are adjusting. Analysts have described Indo-Pacific allies as balancing against China, engaging in hedging, or pursuing middle power strategic autonomy, while the Trump administration frames its actions as non-ideological, hard-nosed, clear-eyed, and realistic burden-sharing requests that produce more capable allies.
None of these frameworks adequately explain allied behavior, especially in the Indo-Pacific. Japan, Australia, South Korea, and the Philippines are simultaneously strengthening ties to the United States, expanding alternative security networks, selectively refusing some American requests, and balancing against China even as they seek tactical stability. Their approach is best understood as a distinct phenomenon, allied hedging, which is a response to uncertainty about the great power patron.
The defining feature of allied hedging is that uncertainty originates not from the adversary’s intentions, but from the allied patron, the United States. Allied hedging emerges when a common threat incentivizes balancing, but allies simultaneously face uncertainty regarding the reliability of their great power patron. This behavior operates on a continuum between balancing and traditional hedging rather than as a binary category.
Allied hedging is distinct from traditional hedging, which emerges in circumstances of general uncertainty about great power intent. Per Cheng-Chwee Kuik, traditional hedging is “insurance-seeking behavior with three attributes: a) an insistence on not taking sides or being locked into a rigid alignment; b) attempts to pursue opposite or contradicting measures to offset multiple risks across domains (security, political, and economic); and c) an inclination to diversify and cultivate a fallback position.” Hedging states have an abiding interest in pursuing balanced relations among the great powers to minimize danger and maximize advantage.
Along with India, Southeast Asian states are the canonical hedgers. Uncertainty amid high stakes incentivizes avoiding dependence and commitment via careful calibration of an ambiguous position. Indonesia, for example, has historically pursued a “free and active” foreign policy designed to maximize autonomy through relations with multiple major powers. In South Asia, President Trump’s recent handling of relations with India has reminded New Delhi of why it distrusts the United States. This has not led to India adopting an anti-U.S. policy, but it makes India more committed to preserving its non-aligned foreign policy, including its own détente with Beijing.
Thailand is an American ally that behaves not as an allied hedger but as a traditional hedger. This is because Thailand’s diminished threat perception of Beijing has reduced the importance of the U.S. alliance to Bangkok over the past two decades. This lowers its concerns over uncertainty emanating from Washington. Bangkok, less threatened by China than the other allies, instead practices “bamboo diplomacy” akin to its mainland Southeast Asian neighbors.
As conditions change or threats become more or less certain, hedgers may move toward balancing or bandwagoning. If China attains unchallenged dominance in Southeast Asia or the U.S. fails to adequately balance against Beijing, traditional hedging states might bandwagon with China. Indeed, as Alexander Korolev argues, “the room for hedging available to middle powers shrinks as great powers become competitive and attempt to openly challenge each other.”
Starting in the first Trump administration with “great power competition” and China’s wolf warrior diplomacy, U.S. Indo-Pacific allies—who were not hedging—moved toward balancing. The regional security network gradually transformed from a “hub-and-spoke” system into a denser “latticework.” However, under the second Trump administration, uncertainty emanating from the United States has pushed the Indo-Pacific allies toward hedging as insurance against abandonment.
Unlike traditional hedgers, however, allied hedgers are not responding by attempting to adopt a balanced position between the United States and China. Other studies of allied hedging diverge from this paper by arguing that continued economic dependence upon China is responsible for hedging behavior by U.S. allies: “For U.S. allies, the relevant risk is not simply China’s rise, but the uncertainty surrounding both Chinese intentions and U.S. reliability.” However, this does not fully capture the picture for Indo-Pacific allies, whose uncertainty regarding China's long-term intentions has diminished due to the continued security threat it poses.
By 2026, the Indo-Pacific allies have become increasingly clear-eyed that an Indo-Pacific dominated by China would be against their interests. Instead of attempting to present itself as a stable partner, as it has in places like Southeast Asia, Beijing has escalated its pressure on Australia, Japan, and the Philippines, as well as Taiwan. This is what Prime Minister Takaichi appeared to mean in November 2025 when she expounded upon Japan’s longstanding view of a Taiwan Strait crisis as a “survival threatening” situation. Despite how uncertain their alliances are with the United States, the days of ever-greater economic integration with China are over.
Increasingly uncertain about alliance reliability but still relatively sure about the threat from China, Indo-Pacific allies now hedge within the confines of their alliance, eager to keep Washington engaged. For one, the allies do not possess strong enough conventional militaries, logistical capabilities and industrial base, or nuclear arsenal to balance China on their own, thus necessitating alliance maintenance. Second, alliances create path dependencies toward balancing, and Indo-Pacific allies are also deep stakeholders in institutions and norms associated with the postwar order, with or without the United States. It is difficult to imagine Japan purchasing Russian S-400 missile defense systems. Finally, the United States remains reliable enough. Even as Washington pursues leader-level diplomacy with China, Washington publicly backed the Philippines during recent South China Sea flareups.
In this geopolitical environment, the allied hedgers – Australia, Japan, South Korea, and the Philippines – continue to shore up their alliance with the United States, expand their bilateral and minilateral ties with each other and other partners, boost their burden sharing in line with American expectations and their own defense interests, seek stability with China (for those that can, like South Korea), and selectively refuse particularly unwelcome U.S. requests (at the risk of retaliation).
Allied Hedging in Practice
Japan exemplifies allied hedging close to the balancing end of the spectrum. It is both accelerating its unprecedented efforts to embrace hard power, as well as emerging as the linchpin of the regional allied network. It has deepened defense relationships with Australia, the Philippines, and South Korea, and continued to foster ties in Southeast Asia and with New Delhi. Tokyo also loosened restrictions on arms sales overseas, including a landmark naval sale to Australia worth over $6.5 billion. These efforts are, as one study argues, hedging aimed at establishing “U.S.-plus deterrence.”
Yet, Tokyo also remains careful to avoid overcommitment as it keeps Washington satisfied. With burden sharing, Tokyo and Washington share a mutual interest in enhancing deterrence. However, regarding the Iran War and President Trump’s demands for hundreds of billions in return for lowered tariffs, Japan demonstrates effective selective refusal in a manner reminiscent of a hedger’s calibrated “yes, but no.”
During her March 2026 summit with President Trump, Prime Minister Takaichi deftly avoided President Trump’s personal requests for Japanese military assistance in reopening the Strait of Hormuz. Although Tokyo’s arguments centered upon its constitutional restrictions, precedent exists for non-combat Japanese assistance. During the 2003 invasion of Iraq, Tokyo supported Washington and reshaped its post-war foreign policy by deploying units from its Self-Defense Force in non-combat missions, while maritime forces have participated in anti-piracy operations off the coast of Somalia. Yet, while Prime Minister Takaichi appeared to agree to assist in Hormuz and joined other allies in a carefully worded joint statement, she actually meant “no” – and got away with it. Here, Japan signaled alignment while avoiding hard commitments, just as a traditional hedger might.
After months of difficult trade negotiations, Japan also satisfied Trump’s mercurial trade demands while bending the resulting deal to suit Tokyo’s interests. The Japanese pledge to provide $550 billion in financing for investments in the United States by 2029 is carefully calibrated to benefit Tokyo while meeting President Trump’s goals of reshoring and economic concessions in return for tariff relief. Announced projects center on energy and critical minerals in line with Japan’s economic security needs. Importantly, Japan has effectively demonstrated its commitment to the deal, keeping up a steady drumbeat of announcements to meet the White House’s expectations without expending too much capital too soon.
Australia, like Japan, focuses predominantly on alliance maintenance and efforts to deepen regional connections. Meeting U.S. expectations for burden sharing, Canberra’s 2026 National Defense Strategy and Integrated Investment Program aim to “develop greater self-reliance over the longer-term” to “more ably and independently deter force projection.” This includes $425 billion in investments over ten years to modernize its military. Australia continues to advance AUKUS (despite a potential close call during the Pentagon’s review), including enduring submarine access at HMAS Stirling in Western Australia.
In the regional neighborhood, Canberra has worked to deepen its relations with Japan and the Philippines, as well as push back on Chinese influence in Southeast Asia and the Pacific. Australia is reportedly assisting Japan with building a centralized intelligence agency and testing advanced weapons capabilities, while also announcing enhanced defense and security cooperation. In Oceania, Australia has secured several diplomatic victories with mutual defense treaties with Fiji and Papua New Guinea, renewed security ties with New Zealand, and courted the Solomon Islands and other Pacific states.
Like Tokyo, Canberra also has to deal with Washington’s war with Iran. However, Australia adopted a different policy response than Tokyo: minimal commitment calibrated to avoid signaling full alignment with an unpopular United States. Australia has deployed military assets to the Persian Gulf to assist with missile defense, but Canberra framed its actions as responding to the United Arab Emirates’ requests, not those of the U.S. It did so to avoid difficult domestic politics while minimizing the risk of alienating Washington with a refusal. This is classic hedging behavior: maintain ambiguity on potential overcommitments and do your best to minimize the risks of alignment, including for domestic audiences.
However, South Korea has fallen short of Japan and Australia’s effective selective refusals. President Trump’s recent punishment of South Korea highlights the consequences of failing to adequately manage the patron’s demands. In 2025, Seoul promised a $350 billion investment in the United States to buy down its tariff rate. Unlike Japan, however, South Korea has not announced specific projects. In January 2026, President Trump threatened tariffs due to Seoul’s delay in enacting the agreement. In August of the same year, President Trump triggered a serious bilateral rift by “substantially reducing” joint military exercises with South Korea, tying his decision to Seoul’s refusal to assist with the Iran War.
South Korea is arguably now as concerned about managing uncertainty from the allied patron as it is about threats from China. Tokyo carefully accommodated Trump administration demands while avoiding overcommitment, whereas Seoul’s slower and more public resistance generated retaliation. The risk of retaliation pushes allied hedging behavior beyond standard alliance management, because it necessitates a hedger’s commitment to ambiguous alignment that the great power would ideally interpret as a “yes” even if the hedging ally really means “no.”
Beyond selective refusal, Seoul’s positioning vis-à-vis China puts it closer to the traditional hedging side of the spectrum than Canberra and Tokyo, even as it remains an allied hedger. South Korea’s liberal government seeks warmer relations with China than the conservatives did, and President Lee Jae Myung recently visited Beijing. Seoul also faces the unique issue of North Korea, which incentivizes outreach to Beijing to manage Pyongyang.
Yet, South Korea has above all doubled down on its alliance with the United States. President Lee responded to President Trump’s downgrading of the joint military exercises by reiterating the importance of the alliance for South Korean national security. Its commitment to the alliance despite the uncertainty keeps it firmly on the allied hedger side of the spectrum.
The Philippines, the most vulnerable of these four allies, navigates ramped up pressure from Beijing amid U.S. uncertainty. These conditions recently drove similar maneuvering to South Korea. Like Tokyo, Manila lies on the frontline of China’s aggressiveness in the South China Sea. President Ferdinand Marcos Jr. has therefore bear hugged the United States after the alliance tumult of his predecessor, President Rodrigo Duterte, who behaved like a traditional hedger. Marcos’ efforts include expanded bilateral and multilateral military exercises such as Balikatan, as well as the continued development of Enhanced Defense Cooperation Agreement sites for U.S. military access and logistics. The Philippines, like the other allies, continues to expand its regional security relationships with Canberra and Tokyo, becoming the center of a burgeoning defense trilateral.
At the same time, Manila seeks stability with Beijing in an attempt to avoid further escalation. As ASEAN Chair for 2026, Manila desires a conclusion to the drawn-out negotiations with Beijing over a South China Sea Code of Conduct. Under a severe energy crisis caused by the Iran War, it has also signaled openness to joint offshore oil and gas exploration with China. After several years of strong statements on Philippine involvement in a Taiwan crisis, Marcos in August 2026 publicly reassured Beijing that U.S. military forces would not be allowed to launch strikes from its soil.
However, as with South Korea, these moves do not signal any real turn to China akin to the Duterte era but are rather tactical moves intended to manage risk. Indeed, other Indo-Pacific allies have also reached out to China during the second Trump administration. Australia and South Korea followed Canada and others in the European Union to Beijing for state visits in the past year, while Japan and South Korea engaged in trilateral trade talks with China.
Most notably, the Indo-Pacific allies remain committed to derisking away from China. President Lee’s speech at CSIS in Washington exemplifies the allies’ strategic commitment to the United States, stating that “it’s no longer possible to maintain” the logic of economic dependence on China and security integration with the United States. Accordingly, all four allied hedgers are eager participants in American initiatives like Pax Silica to derisk from Chinese supply chains. Continued economic dependence upon Beijing may mitigate the extent of the allies’ ability to push back, but they are not reversing toward China.
Why Allied Hedging Matters
In conversations with interlocutors and diplomats from the region, it becomes clear that the Indo-Pacific allies hope that the Trump administration is an aberration. They anticipate a future U.S. president returning to longstanding alliance norms. Yet, there are limits – and lingering concerns. The Trump administration’s willingness to punish allies and unpredictability could eventually undermine the alliance’s insurance value proposition.
Because ambiguity is a key feature of traditional and allied hedging, none of the allies clearly demarcate red lines vis-à-vis Washington, so predicting what might fundamentally damage allied confidence is difficult. Allied concerns about the credibility of U.S. military capability stirred up by years of overstretch, chronic industrial base limitations, and poor strategic performance in the Iran War only further damage faith in Washington. At the least, if uncertainty persists past the Trump administration, some allies may gradually resemble traditional hedgers such as Thailand, while others may increasingly seek additional security alternatives outside the U.S.-led system, such as a middle powers coalition proposed by Prime Minister Carney of Canada.
However, what is clearer are the negative impacts for U.S. interests if the Indo-Pacific allies remain as allied hedgers. For example, access to basing remains contingent upon allied goodwill and can no longer be assumed by Washington. The Iran War demonstrates the risks now borne by U.S. allies against adversaries with long-range missile capabilities, and some U.S. partners, such as Saudi Arabia, upended American war plans against Tehran by refusing access. Indo-Pacific allies who cannot rely upon the United States to defend them may not fully back Washington in the event of a military crisis with Beijing.
The Philippines is perhaps the best example of this risk among the allied hedgers. The pro-China Vice President Sara Duterte could conceivably win its 2028 election and downgrade Manila’s alliance with Washington, almost certainly denying U.S. military access to the Enhanced Defense Cooperation Agreement sites so critical for sustaining a Taiwan intervention. Yet, although the Trump administration has boosted relations with Manila, uncertainty continues to make President Marcos’ life harder. For instance, the administration has praised the Philippines as a “model ally,” but the same week that Secretary of State Marco Rubio visited Manila, the administration released its Section 301 tariffs on forced labor. The new tariffs assigned the Philippines a higher rate than Cambodia (12.5% to 10%). Instead of wanton tariffs, Washington should be doing what it can to support a Philippine economy already suffering from the Iran War’s energy crisis that the U.S. created.
For U.S. policymakers, the lesson of allied hedging is that predictability must be the priority. The security threat by China remains ever-present, regardless of Washington’s inattention. Without trust in the alliance guarantee, U.S. allies will change behavior to seek insurance in a high-stakes environment, just as traditional hedgers do. To reduce the allies’ sense of American unreliability and uncertainty, Washington must prioritize long-term signals of stability around which the allies can plan, invest, and strategize. A sustained, bipartisan U.S. strategy that spells out means, ways, and ends and commits the United States to the region will be necessary to stabilize damaged alliances, reassure partners, and undo the damage dealt by unpredictability.