The re-election of Donald Trump as the next president of the U.S last November has brought the slogan” Make America great again”back, raising concerns and anticipations on what’s going to happen next.
One of the highly-anticipated moves from the upcoming Trump’s administration is about import tariffs During his first term, the 78-year-old real estate mogul slapped tariffs on multiple industries, such as 25% import tariffs on steel and 10% on aluminum from various countries such as the EU, Canada, and Mexico.
Southeast Asia will likely be vulnerable to the impact of tariff policy amid the forecast from the International Monetary Fund (IMF) that the ASEAN economy will grow 4.5% in 2025.
“I cannot say that ASEAN will not be affected by Trump’s tariffs given that he is targeting Viet Nam due to the country’s trade surplus with the U.S,” said Stephan Becker, an international trade expert and a lawyer at Pillsbury Winthrop Shaw Pittman LLPin an interview, Wednesday (11 December).
The official data revealed that Viet Nam enjoyed a trade surplus during the first ten month of 2024, reaching around US$ 102 billion (a 20% increase from the previous year). Becker stated that for those countries who have surplus with the U.S, the incoming president may suspect they are assisting Chinese companies.
Meanwhile, UOB ASEAN economist Enrico Tanuwijaya said in a discussion on Thursday (5 December) that Viet Nam would be the ASEAN-6 country with the highest growth (6.6%) in 2025, followed by the Philippines (6.5%), Indonesia (5.3%), Malaysia (4.7%), Thailand (2.9%), and Singapore (2.5%).
Big Opportunity for the ASEAN Manufacturing Sector
Despite Trump’s wave of tariffs, ASEAN nations can benefit from such a situation, reflecting the vital role of Southeast Asia in the global trade.
“ASEAN countries could benefit from Trump's tariff policy because many companies are relocating their factories out of China and into Southeast Asia. This shift happens because Trump’s tariffs on China make it more expensive to import from there. As a result, countries like Viet Nam, Thailand, and Cambodia have seen an increase in production as companies try to avoid these duties,” Becker said.
Relocating manufacturing hubs to ASEAN nations such as Indonesia, Malaysia, and Viet Nam can be the best alternative, thanks to to their competitive labor cost and growing infrastructure, leading to the increase in Foreign Direct Investment (FDI) and opening job opportunities in the region.
ASEAN’s manufacturing sector is predicted to rise from US$ 1.7T in 2018 to $2.3T by 2029, strengthening its position in global supply chain, as cited from Statista.
The IMF stated that the U.S-China trade dispute—triggered by Trump’s suspicion over China’s deficit that led to the rise in import tariffs starting in 2018--will not severely affect ASEAN as the bloc has adapted and cooperated well with both world’s economic powerhouses.
“Despite geopolitical tensions, ASEAN has continued to strengthen trade and investment links with both China and the U.S.,” the report stated.
What to Anticipate
Despite the opportunity for ASEAN as the potential manufacturing hub, Trump will investigate any countries suspected of taking advantage of the situation like in the solar panel industry.
In 2017, Suniva filed a petition due to surge of low-cost import, leading to significant job losses and lower manufacturing capacity. The company demanded protection under Section 201 of the Trade Act, which allows the implementation of import tariffs aimed to protect domestic workers.
SolarWorldAmerica later joined Suniva, leading to the announcement of tariffs imposed on imported solar panels a year later.
ASEAN can eliminate trade barriers among members and strengthen cooperation with major economies such as South Korea, Japan, India, and the European Union (EU), reducing dependence on the U.S markets.
“There should be efforts to promote economic integration through reduced non-tariff measures, improved trade facilitation and better coordination of regional value chains,” said Jaideep Singh, analyst at the Institute of Strategic & International Studies, Malaysia.
