On April 2, 2025, President Donald Trump announced a new tariff policy known as "Liberation Day." This policy includes a 10% base tariff on nearly all imports to the United States, with higher additional tariffs for countries considered to engage in unfair trade practices.
he goal of this move is said to be increasing domestic production and reducing the U.S. trade deficit. However, this policy has also sparked global concerns about economic stability and the potential for a trade war.
Rising Tariffs, Falling Markets
The new tariff policy has far-reaching effects on the global economy, particularly for countries that rely on exports to the U.S. Countries with strong manufacturing sectors, especially in Asia, face significant challenges as the increase in tariffs could undermine the competitiveness of their products.
Investors and economic analysts have also highlighted the potential for inflation and market instability due to this protectionist approach.
According to a Bloomberg report, Southeast Asian currencies and stock markets have come under pressure due to these tariffs, reflecting investor concerns about the regional economic outlook. Meanwhile, The Guardian reported that the new tariffs could lead to higher prices for imported goods in the U.S., potentially triggering higher inflation.
Reuters also noted that several Southeast Asian countries have expressed their intent to negotiate with the U.S. government to find solutions to mitigate the negative impact of these tariffs.
Controversy Over U.S. Tariff Calculations
Of the countries most affected, Vietnam, Thailand and Indonesia are among those at the top of the list released by the White House. The U.S. accuses these countries of imposing high tariffs on American products and using non-tariff trade barriers, including currency manipulation.
Vietnam is said to impose an effective tariff of 90% on U.S. goods, followed by Thailand (72%), Indonesia (63%), and Malaysia (47%).
However, a report by The Diplomat reveals that these figures are actually calculated based on the trade surplus of these countries with the U.S., rather than the tariffs directly applied. The White House itself later confirmed this method of calculation.
As a result, the U.S. tariff policy is considered flawed and inaccurate in assessing the actual trade impact. Mike Bird of The Economist even described this calculation method as a form of manipulation, which could be more harmful than the tariffs themselves.
How U.S. Tariffs Affect Southeast Asia
According to the tariff list released by the White House, several Southeast Asian countries are significantly impacted by the U.S. trade policy. Cambodia is the most affected, with a tariff of 49%, followed by Laos (48%) and Vietnam (46%).
Vietnam, which heavily relies on exports to the U.S.—accounting for 29% of total exports and 30% of its GDP—will be significantly impacted by these tariffs. This policy has the potential to damage the hard-earned bilateral relationship and destroy the newly established Comprehensive Strategic Partnership in 2023.
Cambodia will also face substantial consequences with the 49% tariff, which could shake the garment and apparel manufacturing industry that is heavily dependent on exports to the U.S. Mass layoffs in this sector could lead to economic hardship and potentially heighten political tensions.
Myanmar, despite having limited trade volume with the U.S. due to various sanctions, still faces a high tariff of 44%.
Furthermore, Thailand is subject to a tariff of 36%, while Indonesia faces a 32% tariff. Brunei and Malaysia are both subject to a tariff of 24%.
On the other hand, some countries in the region face lower tariffs, such as the Philippines with 17%, and Timor-Leste and Singapore, which are only subject to the base tariff of 10%. Singapore and Timor-Leste are also the only Southeast Asian nations currently recording a trade surplus with the U.S., giving them a more stable position in dealing with these tariff policies.
Although these tariffs may be seen as an initial negotiation stance to force Southeast Asian countries to make concessions, the policy nonetheless signals a retreat from the U.S.'s commitment to free trade principles. This further diminishes U.S. economic influence in the region, creating space for China to strengthen its position as a more stable and predictable economic partner.
