Trump’s tariffs will push Southeast Asia uncomfortably close to China

[jon.wallace]

Trump's tariffs will push Southeast Asia uncomfortably close to China

Trump's tariffs will push Southeast Asia uncomfortably close to China
Expert comment
jon.wallace
8 April 2025

ASEAN countries fear being caught in a US–China trade war – punished by US tariffs while being flooded with Chinese goods. They will need to band together to preserve their impressive economies.



Southeast Asian leaders have long argued that they should not have to choose sides between the US and China. Indeed, trading nations such as Malaysia and Vietnam have arguably profited from heightened China–US rivalry over the last few years, attracting manufacturers keen to diversify away from China in order to maintain access to the US market. 

Beijing has long been the major target of US President Donald Trump's opprobrium on trade. However, Trump's so-called reciprocal tariffs, announced on 2 April, have hit Southeast Asia  particularly hard, throwing countries' short-term economic plans into disarray, undermining the basis of their long-term development models, and pushing them further into an uncomfortable embrace with China, their largest trading partner.

Many regional officials feel they are being unfairly punished for helping American companies shift their production out of China.

Southeast Asian governments were shocked to be targeted with tariff rates similar to or higher than China's 34 per cent, from Cambodia (at 49 per cent) to Vietnam (at 46 per cent) and Indonesia (at 32 per cent). Many regional officials feel they are being unfairly punished for helping American companies shift their production out of China , in line with Washington's call for de-risking of US supply chains.
China's positioning
Even as it frets about the impact on its own economy, Beijing is seeking to make political capital from Trump's missteps. China is positioning itself to Southeast Asia, and the rest of the world, as the responsible defender of the global trading system and rules-based order, in contrast to American unilateralism and economic coercion. 

Xi Jinping...wants to see greater economic integration with Southeast Asia and more market access for Chinese companies.

Xi Jinping, the General Secretary of the Chinese Communist Party, is likely to emphasize that message if he proceeds with a possible visit to Cambodia, Malaysia and Vietnam later this month. 

As China and its neighbours risk being squeezed out of the US market, he wants to see greater economic integration with Southeast Asia and more market access for Chinese companies. Xi will also advance his vision of an 'Asia for Asians', where China dominates and the US is marginalized.   

His Southeast Asian counterparts will be receptive to the economic offer but wary of the broader strategic implications. Frustration with the US runs deep in Southeast Asia, but there is justified concern about Beijing's response to the intensifying trade and technology war, and how it will affect the region. 

Southeast Asian government officials and local manufacturers fear that Chinese factories will flood their markets with cheap goods, seeking alternatives to the heavily tariffed US. They also worry that Beijing will have the financial firepower to support its industries through a period of trade war, while their own fiscally and monetarily constrained governments will struggle. 

And they are concerned that a broader breakdown of the open global trading system will irreparably harm their development models. All are based on integrating production with China and exporting to the US, Europe and other advanced economies.



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The trajectory of the trade and technology war in Southeast Asia will have major global implications. The regional body, the Association of Southeast Asian Nations (ASEAN), is not as integrated as the European Union . But taken together it represents the world's fifth biggest economy, with 680 million people. 

Southeast Asia has become an increasingly important connector in global supply chains, producing semiconductors for Intel, high-end trainers for Nike and smartphones for Samsung, among other goods. 

Geopolitically, the region has become the main crucible for competition between China, on one hand, and the US and its allies on the other. Territorial and sovereignty disputes over the South China Sea and Taiwan are shaping the nature of economic competition and cooperation in the region, and vice versa. And the extent and character of China's rise will be determined, in many ways, by the conduct of its relationships with its Asian neighbours.


Source: https://www.chathamhouse.org/2025/04/trumps-tariffs-will-push-southeast-asia-uncomfortably-close-china Apr 08, 2025, 11:45 AM