2025 ASEAN Summit opened on October 26. However, before Trump's "Air Force One" arrived in Kuala Lumpur, Southeast Asia had already felt the shockwaves of the "Trump Effect":

Trump's tariff bomb dropped in April this year still has a lasting impact. It not only put ASEAN countries into a dilemma between "economic dependence and strategic autonomy", but also highlighted the internal divisions within ASEAN, as Vietnam and the United States reached a compromise first in tariff negotiations.

How will Trump's tariff pressure on Vietnam and other ASEAN countries affect the subsequent regional trade and economic trends? How will ASEAN, which is deeply integrated economically with China and the United States and emphasizes independent autonomy, find its way to survive between the giants? Observer Net interviewed Professor Zhao Weihua, Director of the Center for China-Regional Relations Studies at Fudan University, to analyze the dual challenges and strategic choices facing Vietnam and ASEAN.

【Interview/Observer Net Li Ling】

"Vietnam cannot fully implement the US requirements"

Observer Net: According to recent official information from Vietnam, it is expected that Vietnam's GDP can achieve an 8% growth this year, which is also their target set at the beginning of the year. In the context of global economic protectionism, what supports Vietnam's high-speed economic growth?

Zhao Weihua: Vietnam indeed set a target of 8% GDP growth this year, but whether it can be achieved remains to be seen. Overall, this is related to its stage of economic development. Vietnam's economy has maintained medium-to-high growth for nearly 20 years, especially after the pandemic, the growth rate increased from 5%-6% to 7%-8%. In my view, the acceleration of Vietnam's economic growth mainly comes from two factors:

First, the industrial transfer caused by the US-China trade war.

In fact, even without the US trade and technology offensive against China, under the natural operation of economic laws, as China's economy develops and labor costs rise, many industries would naturally shift to other developing countries such as Vietnam, Laos, and Cambodia. However, the US trade war against China added an external push. Many Chinese and foreign enterprises that previously invested in China have moved a lot of production to Vietnam - among the Southeast Asian countries, especially those in the Indochina Peninsula, due to Vietnam's young and well-educated labor force, as well as its similar systems, customs, and culture to China, Chinese enterprises are relatively more adaptable to Vietnam's environment, thus enabling Vietnam to take over most of the industries moving out of China.

Bar chart of Vietnam's average monthly wage (vertical axis unit: thousand VND/month). Currently, Vietnam's average monthly wage is about 7,326,000 VND, equivalent to about 300 USD. Source: "Report on the Development of Chinese Enterprises in Vietnam (2023-2024)"

Second, foreign investment has flooded into Vietnam in recent years.

Since the US launched a trade war and tech war against China, for security reasons, countries have implemented the "China+1" strategy, avoiding putting all eggs in one basket. Vietnam is connected to China geographically, and it is connected to the Chinese market. Investing in Vietnam allows companies to maximize the convenience of the Chinese market while ensuring the safety of the enterprise. Therefore, in this situation, many enterprises that originally wanted to invest in China have chosen to invest in Vietnam. Domestic Western and Japanese and South Korean enterprises have also started to layout Vietnam out of observation and prevention considerations, which has played an important role in driving Vietnam's economic growth at a higher speed.

Observer Net: Speaking of the trade war, several months ago there was news that both US and Vietnamese representatives had agreed that the US would impose a 11% tariff on Vietnam, but Trump suddenly changed his mind on social media, stating that it was 20%, and the Vietnamese people were very confused. Is this true?

Zhao Weihua: Trump's "reciprocal tariff" policy has a basic tariff of 10%. For example, Singapore, the most friendly country in Southeast Asia to the US, is a US ally, and its tariff is 10%. Perhaps during the negotiation between Vietnam and the US, the Americans gave a commitment of 11% or 10%, but finally Trump gave 20%, which may have included the 10% basic tariff.

Of course, when Trump announced the 20% tariff on Vietnam, different Vietnamese people had different reactions. Some felt they had been deceived by Trump, while others thought reducing the tariff from 46% to 20% was a diplomatic achievement. There is an opinion that countries like the Philippines, which are US allies, have only managed to get a 19% tariff, and Vietnam is only one point higher than the Philippines. Since Vietnam's manufacturing cost is far lower than that of the US, the impact on Vietnam's exports and overall economy is not significant.

Observer Net: The impact on US exports is not significant, but the US also requires Vietnam to impose a 40% tariff on all transshipment goods. What impact will this have on Sino-Vietnamese trade?

Zhao Weihua: Imposing a 40% tariff on all products from China is the US requirement, and Vietnam may not fully implement it.

Vietnam is an export-oriented country - in fact, so is the entire Southeast Asia - and is very sensitive to export volume. At present, Vietnam only sees the US as its largest export market. According to Vietnam's statistics, its exports to the US in 2024 amounted to 119.2 billion USD (the US side's statistics are slightly higher, at 125 billion USD). But according to China's customs statistics, China's exports to Vietnam amounted to more than 150 billion USD, and imports from Vietnam amounted to 97 billion USD. Calculated this way, China's ability to absorb Vietnamese goods has already reached more than 82% of the US market, and the import of Vietnamese goods is still increasing. Vietnam is unlikely to offend China for the sake of US interests.

Additionally, although China has a trade surplus of nearly 60 billion USD with Vietnam, China's labor costs are relatively lower compared to countries such as the US, EU, and Japan. The goods exported to Vietnam are mostly affordable and quality products, many of which are intermediate goods. These intermediate goods are processed in Vietnam and then exported to Europe and the US. That is to say, China's supply chain is the key factor for Vietnam to maintain its trade surplus with the US. Without these intermediate products from China, Vietnam would not be able to maintain its trade surplus with the US. Therefore, for Vietnam, the Chinese market is actually much more important than the US market.

Additionally, according to the RCEP agreement, many ASEAN countries' exports to China are zero-tariff (some have a temporary rate of 3%). The tariffs for China's exports to them are slightly higher but still favorable. Overall, the RCEP agreement benefits ASEAN countries including Vietnam. The RCEP tariff is reciprocal. If Vietnam imposes a 40% tariff on Chinese goods, it will also be unable to enjoy China's preferential tariffs, which will undoubtedly cause heavy losses.

The US used the wording "trade fraud" when making demands. Literally, the impact on Chinese goods mainly refers to those branded goods. After Trump's first term, some Chinese companies exported finished goods manufactured domestically to Vietnam, then rebranded them as "Made in Vietnam" and sold them to Europe and the US. The 40% tariff should be targeting such goods. In the future, part of the Chinese enterprises' path of exporting through Vietnam with branding may no longer be feasible. However, regardless of anything, as long as the goods exported from China to Vietnam meet the origin principles and the procedures are legal, Vietnam has no reason to impose a 40% tariff on them. Doing so would bring no benefit to Vietnam.

The Van Don Calcium Phosphate International Container Port in Quang Ninh welcomes cargo ships. Source: Vietnamese media

Observer Net: Does this also mean that more and more Chinese enterprises will move more processing links to Vietnam in the future? Have you learned about this situation in some industrial parks in Vietnam recently?

Zhao Weihua: The US has a definition, if more than 50% of the components of a product are produced in China, it will be considered as originating from China. Therefore, even if Chinese enterprises produce in Vietnam, they may face this regulation. However, I think that when implementing it, Vietnam will comprehensively consider its own interests. It values exports, but also needs to consider the cost-benefit issue. Therefore, I think it is unlikely to fully implement the US requirements.

Here, we can take the automobile industry as an example. Currently, Vietnam imposes zero tariffs on all US goods, including automobiles. Although Vietnam has abolished high tariffs on cars, car buyers have not felt that car prices have become significantly cheaper, because Vietnam has added a 40% special consumption tax in the domestic consumption link. In other words, Vietnam has found another way to block the negative consequences brought by unilateral zero tariffs to the US.

Observer Net: I remember that you once proposed in a paper that Vietnam implements a "two-way balancing" strategy towards China and the US, that is, to unite with China to prevent American "peaceful evolution" and to use the US to balance China's influence.

Zhao Weihua: Yes, I think this strategy of Vietnam will not change. Although Vietnam faces great pressure from the US, as Pham Binh Minh said, Vietnam can only maintain its own interests to the greatest extent by maintaining a balance between China and the US. If it slightly leans towards either side, it will lead to an imbalance in relations and damage its own interests. His view is still applicable now. Now, China is an extremely important part of Vietnam's supply chain. Overall, China is more important to Vietnam than the US, and Vietnam cannot risk damaging its relationship with China to cater to the US.

In fact, this time Vietnam was the first to compromise with the US, which is determined by the fragility of the Vietnam-US trade. Vietnam exports about 120 billion USD worth of goods to the US annually, but only imports 15 billion USD from the US, forming a one-sided dependence on the US market. Second, the decision-making of Southeast Asian countries, including Vietnam, is influenced by past experiences. They believe that even a major power like China could not gain an advantage in tariff negotiations with the US during Trump's first term, and as a small country, they could not confront the US. Therefore, in this negotiation, Vietnam, Indonesia, Thailand, and Cambodia basically compromised with the US. China's approach to dealing with the US in Trump's second term was unexpected in March and April.

No matter what, as a small country, Vietnam must play the characteristics of "bamboo diplomacy," and face US pressure, they can only rely on diplomatic negotiations to minimize the damage to Vietnam. Initially, Su Lin also proposed a zero-tariff plan for both sides, but Trump did not agree. Now, Vietnam has a zero-tariff arrangement with the US alone, and the US only reduced the tariff points by 26%. However, as mentioned earlier, Vietnam has offset the negative impact of unilateral zero tariffs by imposing a special consumption tax on certain goods.

Observer Net: Which industries in Vietnam's domestic market may be affected by the US zero tariff?

Zhao Weihua: Overall, Vietnam's agriculture and US agriculture have different structures. Vietnam's agriculture is basically tropical agriculture, and US soybeans and other products basically will not impact Vietnam's domestic agricultural market. However, in terms of industrial manufactured goods, such as the automotive industry or other electronic industries, there may be some impact. This may benefit some elite groups in Vietnam, as they can use affordable American products. However, after implementing a special consumption tax on high-consumption items like automobiles, the impact on some industries in Vietnam is relatively light, because the special consumption tax itself is a way to circumvent risks under the premise that Vietnam is unable to directly resist the US.

The image of ASEAN unity is facing multiple challenges

Observer Net: Vietnam was the first to go and negotiate with Trump, and was also the first ASEAN country to reach a trade agreement with Trump. ASEAN has always hoped to send a unified message externally. Do you know how other ASEAN countries view Vietnam's behavior?

Zhao Weihua: The attitude of scholars in ASEAN countries is relatively consistent, believing that as small countries, ASEAN countries cannot compare with China. China can counteract the US, but ASEAN countries cannot, because they cannot match the US, and can only choose self-protection measures.

In fact, from the statements of Indonesian President Prabowo in interviews and the attitude of Cambodian Prime Minister Hun Manet in resolving trade with the US, it can also be seen that the main countries in ASEAN do not have the will to oppose or counter the US's unilateral trade bullying. For example, Prabowo said that Indonesia does not intend to retaliate against the US, but wants to solve the problem through negotiations. Indonesia is the largest economy in ASEAN, and even it has made such a statement, let alone other countries. I think that the ASEAN countries, whether Indonesia, Vietnam, Thailand, or the Philippines, currently want to minimize the damage, rather than retaliate against the US, because retaliation may invite more extreme retaliation from Trump.

Photo of Trump

Observer Net: Then, from the perspective of ASEAN, how should it deal with the US strategy of "dividing and ruling" individual countries? The 47th ASEAN Summit will be held from October 26 to 28. Malaysia, as the rotating chair of ASEAN in 2025, is about to complete its term. How do you summarize and evaluate ASEAN's performance over the past year?

Zhao Weihua: The past year has been challenging for ASEAN. Previously, ASEAN was united and spoke with one voice, which was effective. However, in 2024, facing Trump, an unpredictable and extreme unilateralist, none of the ASEAN countries resisted the unilateral trade bullying, but instead competed to compromise with the US, which greatly damaged the image of ASEAN's unity in responding to external challenges.

Additionally, the military conflict between Cambodia and Thailand has raised doubts about the level of unity within ASEAN and whether it can resolve disputes peacefully.

Observer Net: Regarding the conflict between Thailand and Cambodia, I remember there was a photo showing the scene, with representatives from China and the US sitting behind, on the left side was Cambodian Prime Minister Hun Manet, on the right side was acting Thai Prime Minister Prawit Wongsuwon, and in the middle sat Malaysian Prime Minister Anwar Ibrahim. At that time, many people said that this proved the coordination ability of ASEAN.

Zhao Weihua: As the current rotating chair of ASEAN, Malaysia successfully resolved the internal conflict. From this perspective, it can be said to be successful. However, as an integrated organization, ASEAN should build a community. When conflicts arise, it failed to stop them, which challenges the unity of ASEAN. If it is an effective community or alliance, it should be able to calm down disputes at the budding stage, rather than letting them escalate into military conflicts.

Photo of the ceasefire negotiation between Cambodia and Thailand, AFP

Observer Net: I see. US President Trump will also attend this ASEAN Summit. Previously, there was news that he participated on the condition of "excluding the participation of China in the signing ceremony of the Thai-Cambodian peace agreement". This somewhat reflects a microcosm of how ASEAN deals with Sino-US relations. Sometimes the US's "capricious" demands put them in a difficult position. How can ASEAN uphold its independence and autonomy between China and the US?

Zhao Weihua: When the original five ASEAN countries were established, they hoped to voice their own opinions between the two superpowers, the US and the Soviet Union. Now, it is impossible to completely remain independent in an increasingly interdependent international society, as it is always involved in the interests of various parties. ASEAN's strategy is to make China, the US, Japan, Russia, India, and other major powers its dialogue partners, maintaining a special status through mutual constraints among the major powers. In this case, it inevitably has to consider the interests and ideas of the major powers and balance between them. Especially when the US promotes "reciprocal tariffs" and unilaterally, it is inevitably affected by the US.

But it is also impossible for ASEAN to fully follow the US's intentions, and China is stronger than ever, and will not tolerate the US influencing ASEAN. ASEAN itself also understands that if it becomes a tool of the US, it will find it difficult to coexist with other major powers like China.

Observer Net: Finally, the last question, the Philippines will serve as the ASEAN chair in 2026. Considering the performance of the Duterte government in recent years towards China, what substantial impact will this have on China-ASEAN relations?

Zhao Weihua: China and the Philippines have had frequent conflicts in the South China Sea in recent years, especially a series of friction incidents around Huangyan Island and Ren'ai Reef. Therefore, the Philippines serving as the rotating chair will definitely have some impact on China-ASEAN relations, such as making some actions or expressing unfavorable voices in agenda setting or direction guidance.

However, ASEAN adopts the principle of consensus. A single country like the Philippines cannot dictate the overall direction of China-ASEAN development. It may make some noise, but the other ASEAN countries will not let the Philippines' intentions succeed, even though it is the chair.

This article is an exclusive article by Observer Net. The content of the article is solely the personal opinion of the author and does not represent the views of the platform. Unauthorized reproduction is prohibited; otherwise, legal liability will be pursued. Follow Observer Net WeChat account guanchacn to read interesting articles every day.

Original: https://www.toutiao.com/article/7565348203819516454/

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