[Source/Author: Luo Yifufu of Observer Network Column]
On April 2, Trump officially announced the specific plan for "reciprocal tariffs" on all trading partners, with the scope and amount of the additional tariffs exceeding the expectations of many trading partners. Southeast Asian countries that once benefited from Trump's tariff war with China also found themselves unable to escape this time, ranking high on the list of "reciprocal tariff" target countries.
The economic and trade activities and industries of Southeast Asian countries, as well as their status in the international economic landscape, have rapidly risen with the wind of the last round of global industrial chain restructuring, but now face the risk of falling under the hammer of the "reciprocal tariffs". This dramatic rise and fall is a comprehensive test of the economic resilience and diplomatic capabilities of Southeast Asian countries.
Trump's "heavy punch" hits Southeast Asia
Southeast Asia is a key area where Trump imposes "reciprocal tariffs". Among the 10 countries with the highest rates of additional tariffs, four are from Southeast Asia, in descending order: Cambodia (49%), Laos (48%), Vietnam (46%), and Myanmar (45%). Thailand and Indonesia are subject to higher rates, at 37% and 32%, respectively. Brunei (24%), Malaysia (24%), and the Philippines (18%) are relatively better off, while Singapore is the only survivor in Southeast Asia, being subjected to only a "minimum base tariff" of 10%.
According to Trump's logic for calculating the tariff rate, which aims to achieve trade balance or equivalence between imports and exports, Southeast Asian countries have become the main targets of the additional tariffs primarily because they have a higher degree of trade imbalance with the U.S.
Take Vietnam as an example. Since its trade surplus with the U.S. turned positive in 2018, the annual surplus has rapidly expanded, reaching $123.5 billion in 2024. For the U.S., Vietnam is the third largest source of trade deficits after China and Mexico, making it an inevitable target for Trump.
Workers assembling products on a production line in a Vietnamese factory. Photo by VNA.
Although Cambodia, Laos, and Myanmar have much smaller trade volumes with the U.S. compared to Vietnam, their trade imbalances are particularly pronounced. In 2024, Cambodia's exports to the U.S. amounted to $9.9 billion, while imports were less than $300 million. Thailand and Indonesia also had trade surpluses of $55 billion and $10.1 billion, respectively.
In contrast, Singapore was spared from being hit with high "reciprocal tariffs" by Trump largely because it has maintained a trade deficit with the U.S. over the long term. The root cause is that Singapore's limited domestic manufacturing scale does not significantly divert production from the U.S.'s domestic manufacturing sector.
With the exception of a few countries like Singapore, the trade surplus pattern of most Southeast Asian countries with the U.S. is largely the result of the reshaping of the global industrial chain in recent years.
In 2018, Trump launched a trade war against China, forcing the processing and manufacturing sectors of the global industrial chain to migrate from China to Southeast Asia. Transnational enterprises in representative sectors such as textiles and electronics manufacturing flocked to Southeast Asia to invest and set up factories. They imported intermediate products or components from China (including Japan, South Korea, etc.), processed and assembled them in Southeast Asia, and then exported them to the U.S., becoming the most typical industrial division model in recent years. As a result, Southeast Asian countries became new centers for global manufacturing processing and bridges for Sino-U.S. economic exchanges, achieving industrial rise or upgrading through large-scale manufacturing investment and increasingly playing a crucial role in the international economic landscape.
Of course, Southeast Asia could rely on this round of global industrial chain restructuring to significantly increase its exports to the U.S. or promote trade prosperity fundamentally because of the complementary conditions between the U.S. as a global consumption center and Southeast Asia's comparative advantages in processing and manufacturing.
High Tariffs Could Devastate Southeast Asia's Industrial Chain
If Trump's high-rate "reciprocal tariffs" on Southeast Asian countries are implemented as scheduled, it will trigger a major upheaval in the Southeast Asian industrial chain. Here, "Southeast Asian industrial chain" refers not only to the regional industrial pattern jointly formed by Southeast Asian countries based on their own industrial development processes but also includes Southeast Asian countries' participation in the global industrial chain.
Referencing the industrial ties and trade structure between Southeast Asian countries and the U.S., the high "reciprocal tariff" rates would primarily disrupt the Southeast Asian industrial chain in the following two aspects:
First, breaking the long-standing export-oriented and foreign-investment-dependent industrial development model and pattern of Southeast Asian countries.
For example, Vietnam achieved rapid industrial growth by integrating into the global industrial chain but also bears significant risks—its high dependence on exports and the U.S. market. In 2024, Vietnam's exports accounted for approximately 90% of its GDP. Its top five goods export destinations were the U.S., China, the EU, South Korea, and Japan. Among these, exports to the U.S. accounted for more than 29% of total exports, while exports to China accounted for about 15%, just half the size of exports to the U.S. Vietnam mainly exports electronic products (such as computer parts, mobile phone components), textiles, furniture, footwear, etc., which are also its pillar industries in recent years.
The smooth export channels to the U.S. have become a critical prerequisite for transnational companies to invest in Vietnam and drive the construction of the local industrial ecosystem. If the U.S. implements the 46% "reciprocal tariff" measures on Vietnam, it may significantly weaken the competitiveness of Vietnam's products in the U.S. market, leading to a "halving" reduction in Vietnam's exports to the U.S., and also reduce the enthusiasm of transnational companies to invest in Vietnam.
After Trump announced the new tariff policy, Nike's stock price, which owns 130 factories in Vietnam and accounts for 50% of the shoe product capacity there, plummeted 14% overnight, followed by the announcement of a price hike strategy, among other phenomena, indicating possible changes in Vietnam's related industrial chains. These changes will clearly obstruct Vietnam's existing industrial development process but may also force it to explore intrinsic drivers of industrial development, accelerating the transformation and upgrading of domestic production factors and placing greater emphasis on opening up domestic markets.
Nike's recent stock performance
Second, reconfiguring the deeply embedded global industrial chain of Southeast Asian countries.
The new round of industrial chain reconfiguration may include two directions: one is to maintain Southeast Asian countries' role as processors and manufacturers in the industrial chain, shifting the downstream consumer end from the U.S. to Europe and East Asia; the other is to remove Southeast Asian countries from the existing global industrial chain, with vacancies filled by the U.S. and Mexico, among others.
For the former, trade agreements signed by Southeast Asian countries with the EU, such as the EU-Vietnam Free Trade Agreement (EVFTA), and regional free trade arrangements like the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and ASEAN Free Trade Area provide important institutional support for final consumer goods entering the European and East Asian markets from Southeast Asia.
For the latter, Trump's tariff policy's key goal is "manufacturing return," and given that Mexico, which has some competitive relationship with Vietnam and other Southeast Asian countries, has been exempted from the "reciprocal tariff"新政, it may trigger a wave of withdrawal and transfer of transnational enterprises in Southeast Asia, weakening Southeast Asia's participation in the global industrial chain.
In general, due to Southeast Asia's position in the middle link of the global industrial chain, compared to other countries or regions, Trump's imposition of "reciprocal tariffs" on Southeast Asia may interfere with the global industrial chain more directly and significantly.
Compromise with the U.S. Can Only Be a Temporary Solution
After Trump announced the implementation plan for "reciprocal tariffs," Southeast Asian countries responded differently but generally showed a tendency to compromise. To date, Southeastern countries that have made official responses to "reciprocal tariffs" can roughly be divided into three scenarios:
First, the all-encompassing acceptance type, with Singapore as the typical representative.
Countries of this type are subject to lower "reciprocal tariff" rates, experiencing minimal impact, and may even benefit from the overall "reciprocal tariff" plan. Singapore's Prime Minister Heng Swee Keat directly and straightforwardly announced that "Singapore will not impose retaliatory tariffs on the U.S." after Trump announced the tariff policy.
It is worth noting that although the Philippines, which is similarly affected to a lesser extent, has not yet made an official response to Trump's "reciprocal tariffs," statements from various sectors in the country reflect an optimistic attitude. The Philippine Trade and Industry Secretary pointed out that the Philippines' imposed rate is significantly lower than that of other countries, providing an opportunity window for the country to fill positions in the global trade chain; the Finance Minister also emphasized that in the adjustment of global production layouts, the Philippines might become a new landing point for manufacturing and exports.
FORTUNE reported: The Philippines expressed "cautious optimism" toward U.S. President Trump's comprehensive tariff measures, suggesting that higher tariffs on neighboring countries might bring opportunities.
Second, the accommodating negotiation type, represented by Vietnam and Cambodia.
These countries have a high dependency on the U.S. market and are most severely impacted by "reciprocal tariffs."
Before Trump announced the tariff policy, the Vietnamese government attempted to lower import taxes on various U.S. goods, actively purchasing U.S. liquefied natural gas, power generation equipment, and other large items, signing cooperation agreements totaling $90 billion, and approving the "Starlink" project落地 in Vietnam, among other measures, to show goodwill to the U.S.
Later, the formal introduction of the "reciprocal tariff" plan proved that these gestures did not change Trump's stance on imposing tariffs on Vietnam. Vietnam further accommodated by having General Secretary Nguyen Phu Trong of the Communist Party of Vietnam speak with Trump over the phone, expressing willingness to implement zero tariffs on goods imported from the U.S., followed by sending a delegation led by Deputy Prime Minister Vu De Phuc to the U.S., planning to purchase more Boeing aircraft and engage in communication and negotiations with the U.S.
Cambodia's response was similar to Vietnam's. Prime Minister Hun Manet announced an immediate reduction of import duties on 19 categories of U.S. goods from 35% to 5% and arranged for the Commerce Minister to consult with the U.S. Trade Representative.
Third, the alternative path type, represented by Indonesia, Malaysia, and Thailand.
Although these countries also emphasized negotiating tariff issues with the Trump administration, they placed greater emphasis on self-strengthening and mutual assistance as other solutions.
For example, Indonesian President Prabowo announced strategic measures, structural reforms, deregulation policies, continued improvement of the investment environment, and sought joint strategies with Malaysia and other ASEAN nations. As the ASEAN Chair, Malaysia also stated that it would organize a special meeting of ASEAN Economic Ministers to discuss collectively the impact of "reciprocal tariffs" on regional trade, investment, and economic stability and seek countermeasures to safeguard Southeast Asia's economic interests and an open, fair, and rule-based trade system.
Thailand focused on exploring potential new markets to reduce reliance on a single market and planned to take measures to adjust its industrial structure and enhance industrial competitiveness.
The Fundamental Cure Lies in Unity
No matter what kind of response, it reflects the passive and powerless situation of Southeast Asian countries in countering Trump's tariffs. Relevant countries have tried their best to seek exemptions from the U.S. before the "reciprocal tariff" policy takes effect on April 9, but regardless of the outcome, the threat of Trump's tariff weapon will hang over Southeast Asian countries for a period of time.
Even if relevant countries compromise with the U.S. and temporarily reduce or cancel "reciprocal tariffs" under Trump's temporary easing, as long as their comparative advantages in processing and manufacturing relative to the U.S. objectively exist, there will be an expansion of trade surpluses with the U.S. and the possibility of Trump wielding the tariff weapon again, ultimately further eroding Southeast Asian countries' autonomy in their economic and trade relations with the U.S.
Therefore, compromising with the U.S. can alleviate Southeast Asian countries' urgent problems but is ultimately not a fundamental cure.
The most fundamental approach should lie in firmly maintaining the hard-won global free trade order, resisting the U.S.'s disregard and destruction of free trade rules, uniting countries suffering from Trump's tariff新政, and effectively countering the U.S. through collective voice, coordinated actions, and rule constraints, urging the U.S. to return to the track of free trade.
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