Southeast Asia Navigates Shifting US Trade Dynamics Under Potential Trump 2.0
Despite pressure to reconsider existing trade arrangements, several Southeast Asian nations are currently defending their agreements with the United States. This stance comes amidst signals from former President Trump that he may impose stricter sanctions on countries perceived to be circumventing US tariffs, particularly following a recent Supreme Court ruling impacting trade practices.
Preserving Access to the US Market
Joanne Lin, Senior Fellow and Coordinator of the ASEAN Studies Centre at the ISEAS–Yusof Ishak Institute in Singapore, highlights a key motivation for maintaining these agreements. “The US remains a key security partner, a technology leader and one of the largest sources of foreign direct investment into Southeast Asia. Preserving broader bilateral relations will remain a priority,” she stated in a recent interview with CNA.
Countries like Indonesia and Malaysia, already holding reciprocal arrangements with the US, are likely to uphold these deals to avoid potential repercussions under a second Trump administration. This cautious approach underscores the importance of maintaining strong ties with Washington, even in the face of evolving trade policies.
The Impact of Transshipment Concerns and Recent Tariff Adjustments
The Supreme Court’s recent decision has effectively leveled the playing field for many Southeast Asian economies. Previously, concerns over transshipment – the practice of rerouting goods through intermediary countries to avoid tariffs – led to varying tariff rates across the region.
For example, Laos faced a 48% tariff, the highest in the region at one point, due to suspicions of this practice. China initially faced a 57% tariff, which was later negotiated down to 47%, ironically lower than the rate imposed on Laos.
Beneficiaries of the Shifting Landscape
Vietnam and Thailand are poised to be the biggest beneficiaries of the recent court ruling. Vietnam, a major US trading partner, exported US$142 billion worth of goods to the US in 2024, previously subject to a 20% tariff. Thailand, with US$66 billion in exports, faced a 19% tariff. In contrast, Laos’s exports to the US totaled US$849 million in the same period.
This shift suggests a potential realignment of trade flows within Southeast Asia, with Vietnam and Thailand likely to notice increased export opportunities.
Singapore’s Unique Position
Recent surveys indicate that Singapore holds a different outlook compared to other Southeast Asian nations regarding a potential return of Donald Trump to the White House. A State of Southeast Asia 2025 Survey, conducted by the ISEAS – Yusof Ishak Institute, revealed a decline in trust and optimism towards Washington’s role in the region under a second Trump administration, based on responses from 242 Singaporean participants.
Despite this, Singapore, as a long-standing partner of the US, will likely prioritize maintaining overall bilateral relations.
Did you know? The US has been a close partner to Singapore since the end of World War II.
Looking Ahead: ASEAN-US Relations in a Changing World
Experts predict that a second Trump administration will significantly reshape ASEAN-US relations across various domains, including geopolitics, trade, and technology. A roundtable discussion hosted by ISEAS – Yusof Ishak Institute explored these potential shifts, emphasizing the need for ASEAN to adapt to a potentially more unpredictable US foreign policy.
FAQ
Q: What is transshipment?
A: Transshipment is the practice of rerouting goods through another country to make it appear as though they originated there, often to avoid tariffs.
Q: Which countries are most likely to benefit from the recent Supreme Court ruling?
A: Vietnam and Thailand are expected to be the biggest beneficiaries due to their significant export volumes to the US.
Q: What is Singapore’s perspective on a potential Trump return?
A: Surveys suggest Singapore has less trust and optimism towards a US role in Southeast Asia under a second Trump administration compared to other nations in the region.
Pro Tip: Businesses operating in Southeast Asia should closely monitor US trade policies and be prepared to adapt their strategies to mitigate potential risks.
Explore more insights on ISEAS – Yusof Ishak Institute’s website to stay informed about the latest developments in regional affairs.
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