The nations of Southeast Asia rush to respond to the radical prices announced by the American president Donald Trump, expressing hopes of bilateral negotiations, but also a desire reduces their dependence on the American market.
Asia yesterday woke up with Trump’s show, sitting in the Roseraie de la Maison Blanche in a context of American flags, announcing a range of punitive rates on a long list of nations. These involve a 10% reference rate on each American trading partner and a range of reciprocal prices on nations enjoying a trade surplus with the United States.
Among the savings in Southeast Asia, Cambodia was affected by the highest rate – 49% – followed by Laos (47%) and Vietnam (46%). This was followed by Thailand (36%), Indonesia (32%), Malaysia (24%) and the Philippines (17). Singapore and Timor-Leste, the only two nations of Southeast Asia which run a trade deficit with the United States, were spared the reciprocal prices and struck with only the reference rate of 10%.
Overall, while Southeast Asia has survived the commercial wars of the first relatively unscathed Trump administration – nations like Vietnam have benefited considerably from the relocation of Western enterprises in China – it is firmly in the reticle under Trump 2.0. As Roland Rajah wrote yesterday for the interpreter, “instead of obtaining a boost, the entire development model focused on the region’s exports is now serious.”
Indeed, if they were implemented in their current form, the prices could have serious impacts on the region. The United States is the largest export market for Vietnam, Cambodia, Thailand and the Philippines, the second largest for Indonesia and the third largest for Malaysia.
The exact objective of the prices is not clear. The countries of Southeast Asia are actually punished for managing trade deficits with the United States (indeed, far from being “reciprocal”, the prices have been calculated simply by the trade balance of countries with the United States)
At the same time, nations like Cambodia have been accused of having acted as strolls for Chinese exports to the United States, as a White House official told journalists: “China has transformed Cambodia into the most important transhipment hub that Communist China uses our prices.” Vietnam has also been accused of being a major source of indirect Chinese exports to the United States, either by pricing or by the inclusion of Chinese components in Vietnam exports to the United States, although some support that this is overestimated.
Answers from Hanoi and Bangkok
Nevertheless, the two most difficult major economies in the region – Vietnam and Thailand – have responded in a way that reflects both the importance of trade relations in Southeast Asia with the United States and the frustration that many in the region feel about the virus and coercive turn in American trade policy.
In Vietnam, the general reaction to the prices was “a mixture of shock, frustration, anger – and the fear of the economy if a reprieve cannot be negotiated by the 9th”, as Mike Tatarski noted in his weekly bulletin of Vietnam.
After the price announcement, Prime Minister Pham Minh Chinese called an emergency firm meeting during which he declared that the 46% tariff did not reflect the strong bilateral relations between the two nations, “said Reuters, citing the state media. He nevertheless declared that the ambitious target of GDP growth of 8% of Vietnam remained unchanged.
The spokesman for the Ministry of Foreign Affairs, Pham Thu Hang, said that the tariff decision was “not in accordance with the reality of mutually beneficial economic and commercial cooperation between the two countries” and “does not reflect the spirit” of the complete strategic partnership that the two nations were established in 2023. Meanwhile, the Trump Ministry of Administration set up the United States. Hanoi has already announced that Deputy Prime Minister Ho Duc Phoc, a former finance minister, will go to the United States on April 6 to try to negotiate an agreement.
At the same time, in a statement from the government which followed by Reuters, Chinese has undertaken to diversify the export markets of Vietnam. He described the pricing announcement as “an opportunity to restructure the economy towards rapid but sustainable development … to extend the markets, to diversify the product markets and the supply chains and to stimulate location”.
Vietnam has many reasons to be injured. Since the election of Trump in November, Vietnamese officials have done a lot to engage with the United States government in order to respond to its concerns concerning its unbalanced trade balance, in the hope that any American price would be moderate. It unilaterally lowered prices to a range of American imports, including ethanol, liquefied natural cars and gas, with other reductions reported on a range of other imports. He also gave Elon Musk the authorization of Elonlink to start operating in Vietnam and, for good measure, in Green, a golf project affiliated with Trump and a vacation project outside Hanoi. As Tatarski wrote, Vietnam “adopted a resolutely non -conflictual approach and was nevertheless much more difficult than the countries against which Trump regularly contradicts.”
Likewise, in Thailand, a long -standing ally of American security, Prime Minister Paetongtarn Shinawatra, said in a statement that his government had “expressed its desire to discuss with the US government in the first opportunity to adjust the trade balance fairly for both parties, minimizing the impact on the relevant sectors”. Thailand also explores the possibility of increasing imports of American agricultural products, with the aim of reducing the trade deficit by $ 45.6 billion with the United States in February, it announced its intention to import 1 million tonnes of American ethane in the second quarter of this year.
Paetongtarn added that Thai exporters “have been encouraged to seek new potential markets to reduce dependence on a single market” and that the Thai government had “prepared attenuation measures to support Thai exports affected which mainly count on the United States market”.
Cambodia officials, on the other hand, seemed relatively jaded about the 49% mammoth price announced by Trump, who, if implemented in its entirety, could wreak havoc on the clothing industry and the manufacture of dependent shoes of the country.
Pan Sovicheat, spokesperson for the Ministry of Commerce, said the prices were “not reasonable” but also told Phnom Penh Post that “the government and the Ministry of Commerce were not alarmed by this issue”. He added: “We will strive to protect the interests of the export industry, as well as the interests of workers in Cambodia.” Ly Kunthai, president of Cambodia Footwear Association, told the newspaper that he thought that the question would be resolved by negotiations between Phnom Penh and Washington.
In the future
The question of whether the governments of Southeast Asia will succeed in negotiating lower rates largely on the ultimate objectives of the Trump administration, which remain difficult to identify. As Roland Rajah has argued in the interpreter, if the Trump administration is really focused on reducing trade deficits, “there may also be a limited place for these countries to negotiate their exit”, given the small size of their savings. However, if the Trump team has in mind a more holistic vision of regional geopolitics – in particular, its animated attempts to soften the increasing power and ambition of China – it can be more willing to be more flexible, at least for the nations which it considers as potential partners in this project.
In the longer term, the shock of prices, to say nothing in the capricious and almost insulting way of the way in which they were determined, will perhaps tarnish, the reputation of Washington as a firm and reliable economic partner. As the reactions of Thai and Vietnamese governments suggest, the great economies of Southeast Asia are now a strong incentive to reduce their high dependence on the American market. Although this is easier to say than to do – replacement of the American market may well take years, even decades – the blind nature of Trump prices could create new economic convergences between Southeast Asia and many other economies, including European Union, Japan, South Korea, India, Australia, the United Kingdom and Russia. It is also very likely to tighten the already considerable economic ties of China with the region, because Beijing presents itself as a supporter of the mutually beneficial economic exchange.
If this happens, the logical result will be an American economic presence reduced in the region. There is still a lot of water to go under the bridge, but as Nikkei Asia concluded yesterday in an article, “even if Trump’s prices help reduce the American trade deficit with Southeast Asia, the advantages will be more difficult to see for American companies as links with the vast market of Southeast Asia.”