Southeast Asia prepares for Trump’s tariff threats

, November 8, 2024, 0 Comments

trump-china-trade-war-marketexpress-inSoutheast Asian leaders are bracing for potential tariffs and shifting US alliances following Donald Trump’s reelection. Could his return bring heightened economic risks or unexpected opportunities for the region?

Southeast Asian leaders joined their counterparts worldwide in congratulating Donald Trump on his US presidential victory, while nervously waiting to see if his promised tariffs and protectionist measures were mere campaign politicking or accurate forecasts of how he intends to govern.

Philippine President Ferdinand Marcos Jr. said he hoped the “unshakable alliance” between the two Mutual Defense Treaty allies would continue to “be a force for good, blazing a path of prosperity and amity in the region, and both sides of the Pacific.”

Malaysian Prime Minister Anwar Ibrahim congratulated Trump on a “remarkable political comeback and victory,” while Hun Manet, the Cambodian premier, said he is “confident that the indispensable US role in promoting stability, security and prosperity will be further strengthened.”

Southeast Asia’s trade concerns

During the US election campaign, most Southeast Asians were paying close attention to Trump’s campaign promises to impose a blanket 10%-20% tariff on imports from all countries — a daunting proposition for a region heavily reliant on exports to the US.

“Southeast Asia has had prior experience dealing with Trump and his administration, meaning that they are better prepared for the second Trump administration,” Le Hong Hiep, a senior fellow at the ISEAS – Yusof Ishak Institute’s Vietnam Studies Program in Singapore, told DW.

“While his victory may be disappointing to some countries, it is not a surprise,” Hiep added. “They will quickly adapt to the new reality and protect their interests.”

Bridget Welsh, an honorary research associate at the University of Nottingham Asia Research Institute Malaysia, told DW that a second Trump presidency will impact countries differently, with some focused entirely on trade aspects.

For others, like the Philippines, Malaysia and Vietnam, there will be “heightened security risks,” as US defense ties are central for their security amid China’s growing economic and military power.

Turbulent economic times

Zachary Abuza, a professor at the National War College in Washington, told DW that Trump’s victory is “less consequential” for Southeast Asia than for Europe or Northeast Asia, where America’s alliances, particularly with Ukraine in its fight against Russia’s ongoing invasion, will be under considerable stress.

But Vietnam, in particular, should be very concerned, analysts say. It is the region’s largest exporter to the United States and, after Singapore, the country most reliant on trade for economic growth.

During his first term, Trump initially had good relations with Vietnam. However, relations soured in 2019 as Trump became increasingly frustrated at countries that enjoyed large trade surpluses with the US. That year, Trump called Vietnam the world’s “worst abuser” of US trade, worse than China, as the country’s trade surplus with America stood at around €51 billion ($54 billion) that year.

In its final months, the first Trump administration started formal proceedings to sanction Vietnam for alleged currency manipulation, although the Biden administration abandoned this.

Hanoi has waited nervously for the US elections, knowing that its trade surplus with the US spiked to €96 billion last year.

But almost every other Southeast Asian country is also a net exporter to the US, so they will also face the consequences if Trump goes ahead with his threat to impose a 10%-20% tariff on imports of all goods from all countries, on top of his 60% tariff on all Chinese imports.

In its final months, the first Trump administration started formal proceedings to sanction Vietnam for alleged currency manipulation, although the Biden administration abandoned this.

Hanoi has waited nervously for the US elections, knowing that its trade surplus with the US spiked to €96 billion last year.

But almost every other Southeast Asian country is also a net exporter to the US, so they will also face the consequences if Trump goes ahead with his threat to impose a 10%-20% tariff on imports of all goods from all countries, on top of his 60% tariff on all Chinese imports.

Not so dissimilar

Analysts DW spoke to agreed that while Trump is a more “transactional” president than his predecessors, such diplomacy is normal in Southeast Asia.

Since most Southeast Asian states are either outright autocracies or, at best, failed democracies, many leaders in the region may welcome a less values-focused US foreign policy.

“We do not have [democracy] here, we do not wish to adopt it, and we do not think of foreign affairs in value terms. Southeast Asian states, by and large, think in terms of national interest, just like Trump,” said Kleim.

A much-reported survey of Southeast Asian elites this year found that, for the first time, respondents would choose China over the United States.

Only 49.5% of the respondents favored the US in the 2024 iteration of the State of Southeast Asia Report, produced by the ISEAS-Yusof Ishak Institute in Singapore, compared to 61% in 2023.