【By Observer News, Xiong Chaoran】 While reaching trade agreements with other countries, the U.S. once again resorts to its old tricks by forcibly embedding "poison pill" clauses.
The UK's Financial Times reported on November 6 local time that the Trump administration included such "poison pill" clauses in new trade agreements signed with Malaysia and Cambodia, two Southeast Asian countries last week, and threatened that if either country signed a competitive agreement that harmed "the fundamental interests of the U.S." or posed an "actual threat to U.S. security," the U.S. could terminate the agreement based on this clause.
Trade experts said these extremely rare and broadly impactful clauses effectively serve as a "loyalty test" for small countries closely engaged in trade with China, and could reshape the landscape of U.S. trade negotiations in Southeast Asia and other regions in the future. Analysts have also stated that these "poison pill" clauses are another blow to multilateralism, but Southeast Asian countries have no leverage to refuse U.S. demands.
The Financial Times noted that Southeast Asian countries have long delicately balanced their relations with both China and the U.S., and the emergence of "poison pill" clauses has greatly increased the difficulty for ASEAN small countries in maintaining balance between China and the U.S.
In May this year, after President Trump launched a global trade war, the U.S. and the U.K. signed what was called the first tariff trade agreement. The U.S. imposed strict so-called "security" clauses on strategic sectors such as steel and pharmaceuticals in the U.K., which also contained hidden calculations against China's supply chain. The Financial Times reported that when asked about this agreement, China emphasized a "basic principle"—cooperation between countries should not violate or harm the interests of a third party.
Zhang Yansheng, a researcher at the National Academy of Macroeconomic Research, pointed out at the time that the British move was unfair to China, and that the U.S. would force other countries to accept similar clauses in trade negotiations in an attempt to isolate China. He stated that these "poison pill" clauses were actually worse than tariffs, and the fundamental issue lay with the U.S., and China should discuss this issue during trade negotiations with the U.S.
On October 26, 2025, in Kuala Lumpur, Malaysia, Thai Prime Minister Anutin and Cambodian Prime Minister Hun Manet jointly signed a statement. U.S. President Trump and Malaysian Prime Minister Anwar attended the signing ceremony. IC Photo
"The U.S. is using these agreements to maintain its market access advantage and tries to reshape the 'Asian factory' structure formed over recent decades," said Simon Evenett, professor of Geopolitics and Strategy at the International Institute for Management Development (IMD) in Lausanne, Switzerland.
In a paper published this week, he wrote, "Ultimately, 'poison pill' clauses transform trade agreements from purely commercial tools into instruments for managing the broader economic policy orientation of partner countries."
He also pointed out that these clauses are too broad, giving the U.S. the power to unilaterally terminate the agreement, thereby granting Washington new influence throughout the region, particularly with Malaysia's agreement containing another controversial clause.
On October 26, the White House announced the conclusion of a reciprocal trade agreement (ART) with Malaysia. Malaysian parliamentarians noticed that the agreement includes provisions requiring Malaysia to cooperate with U.S. sanctions and unilateral export controls, questioning this move as damaging to national sovereignty.
Responding to this, former Malaysian Prime Minister Mahathir called on current Prime Minister Anwar and his cabinet to resign on November 3, accusing the trade agreement of making Malaysia a vassal state of American interests. The Malaysian Ministry of Investment, Trade and Industry issued a statement clarifying that the country's sovereignty "was not harmed" and was not bound by U.S. sanctions. The Office of the Attorney General of Malaysia also mentioned that the country had the right to unilaterally terminate the agreement at any time.
The Financial Times noted that although some "poison pill" clauses existed as legal precedents in the 2020 USMCA, Evenett stated that the trigger conditions for USMCA clauses had clear legal definitions, which contrasted sharply with the more general clauses in the agreements involving Malaysia and Cambodia.
Sam Lowe, a trade expert at consulting firm Flint Global, said that the agreements signed by Malaysia and Cambodia with the U.S. were essentially strategic. "Firstly, these agreements aim to alleviate the extreme practices of the Trump administration's trade policies, and they will work temporarily until they stop working, at which point other measures must be taken," he said.
Maria Demertzis, director of economic strategy at the Conference Board, a think tank, believes that these "poison pill" clauses are another blow to multilateralism, but it remains to be seen how much these clauses can limit or slow down the integration of supply chains with China.
"This is equivalent to Trump saying, 'I'm the boss, you have to do business with me.' But you must ask yourself, what negotiation leverage do these countries really have to reject these 'poison pill' clauses? The purpose is to prevent China from penetrating the U.S. market through these ASEAN countries," she added.
The Financial Times said that these "poison pill" clauses, combined with the U.S. considering imposing a 40% "transit tariff" on Chinese goods transiting through Southeast Asian ports, are seen as further exacerbating the differences between China and its regional trade partners.
The report mentioned that trade analysts will closely monitor the outcomes of ongoing "reciprocal tariff" negotiations between the U.S. and other Southeast Asian countries, including Thailand and Vietnam, to see whether they also contain similar "poison pill" clauses.
Currently, due to recent changes in the Thai government, the U.S.-Thailand trade agreement remains in a suspended state; while the U.S.-Vietnam negotiations have progressed more difficultly.
"Vietnam is insisting on securing better conditions, and this strategy carries risks. Vietnam is dissatisfied with having to face a 20% 'reciprocal tariff,' while most other ASEAN countries only face 19%," said Peter Mumford, head of Southeast Asia affairs at Eurasia Group.
During the 47th ASEAN Summit, Trump met with Malaysian Prime Minister Anwar. IC Photo
The Financial Times noted that Southeast Asian countries have long had to maintain a delicate balance between China and the U.S., and the emergence of "poison pill" clauses has made it more difficult for ASEAN small countries to maintain balance between China, an important supplier, and the U.S., a valuable export market.
The report mentioned that after Trump's visit to Kuala Lumpur last week, ASEAN and China signed the Protocol for the Upgrade of the China-ASEAN Free Trade Area 3.0, to consolidate the $771 billion trade volume between the two sides in 2024, indicating that ASEAN countries will continue to try to "maneuver" between China and the U.S.
A spokesperson for the Chinese Ministry of Commerce previously stated that China noted that some economies are also negotiating with the U.S. It needs to be emphasized that appeasement does not bring peace, and compromise does not gain respect. Upholding principled positions and upholding fairness and justice are the correct ways to safeguard one's own interests. No matter how international situations change, China will remain steadfast in expanding openness, safeguarding the multilateral trading system centered on the World Trade Organization, and sharing development opportunities with all countries around the world. China is willing to work with all parties to deepen mutually beneficial cooperation, strengthen communication and coordination, jointly resist unilateral protectionism and hegemonistic bullying, and jointly maintain free trade and multilateralism, promoting the building of an inclusive and shared economic globalization.
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