Southeast Asia’s trade battle plan for the post-Trump world
In Brief
ASEAN countries face rising trade uncertainty due to escalating US tariffs, deepening ties with China and US–China tensions. While some member states have struck bilateral deals with the United States and the rates have been announced for all, technical details are still being discussed. Uncoordinated efforts risk undermining regional integration and compliance with global trade rules. ASEAN should adopt a more unified and strategic approach, enhance coordination on economic and security issues and push for fairer global trade frameworks.
Southeast Asia was a clear winner in the era of hyper-globalisation, becoming an economic powerhouse because of its relative stability, young demography, proximity to Northeast Asia’s production and innovation hubs and adoption of open trade and regionalism.
The region’s embeddedness in global supply chains and deepening economic relations with China now make it vulnerable to repercussions from the trade disruption by Trump’s trade war.
Trump’s threat of so-called reciprocal tariffs — from their announcement on 2 April 2025 to the series of tariff letters and deals in July, culminating in the Executive Order on Modifying the Reciprocal Tariffs — add to the uncertainty.
The impact of US tariffs on ASEAN will vary, depending on eventual tariff levels and coverage and each country’s exposure to the US market. It will also depend on how other players, such as China, retaliate.
ASEAN member states are not only concerned about reciprocal tariffs. Under Section 232 of the Trade Expansion Act, the US president has the authority to impose or raise tariffs on national security grounds.
Those sectoral tariffs such as the ones on automotives and auto parts, semiconductors or pharmaceuticals will affect some ASEAN countries significantly. ASEAN domestic markets are also at risk from the general weakening of global demand and may face pressure from diversion of Chinese goods from the United States looking for alternative markets.
Politically, ASEAN responded to Trump’s tariffs by releasing statements at the Special Meeting of the ASEAN Economic Ministers in April and the 46th ASEAN Summit in May. While these statements were a strong assertion of regional unity, there is little detail yet of the joint steps that ASEAN will take beyond initiatives that are already underway or planned, like the upgrading of the ASEAN Trade in Goods Agreement and negotiations on the ASEAN Digital Economy Framework Agreement.
Bilateral discussions between the United States and some ASEAN member states have been conducted in parallel. Vietnam, Indonesia and the Philippines secured bilateral trade deals days before the reciprocal tariffs were due to apply on 1 August 2025, involving commitments to open their markets to the United States, purchase certain US goods, address non-tariff measures and the trans-shipment issue and cooperate on economic security.
Even with the tariff rates now announced in the 31 July Executive Order for all ASEAN member states, negotiations on the technical and implementation details are still underway.
Uncoordinated bilateral negotiations risk weakening the region’s economic integration and its compliance with international trade rules. Whether tariff reductions or the streamlining of non-tariff barriers are undertaken in a WTO-consistent manner is key, while the additional purchases of US products — if not in line with the axiom of efficiency — will impact member states competitiveness and fiscal space. These deals may also trigger responses from other trade partners.
Negotiations to date have all been conducted bilaterally. Following the ASEAN Chair’s request for a US–ASEAN dialogue, Trump has announced he will attend the ASEAN–US Summit planned for October 2025. Despite the barriers to negotiation with Washington, the region would benefit from better coordination among ASEAN member states through information exchange and sharing experience at the highest level as well as developing a possible approach or common framework to deal with the situation.
ASEAN member states need to discuss the principles guiding negotiations and future trade relations, cooperate on common issues such as non-preferential rules of origin, tackle illegal trans-shipments together and enhance supply chain traceability. They should also gather feedback from regional businesses, strengthen economic linkages with other partners and ensure that any deal will not be at the expense of another member state, existing ASEAN commitments or multilateral rules.
ASEAN needs to ramp up its regional response. Its newly established Geoeconomics Task Force should be empowered through access to expert input, as well as its mandate to coordinate between relevant sectoral bodies and to report and provide recommendations to relevant ASEAN processes, including leaders, to underpin regional coordination. The taskforce needs to be empowered and tasked with monitoring the transmission of risks from geoeconomic disruptions.
A more coordinated approach to addressing the intersection between economics and security is also needed, along with mechanisms to consolidate ASEAN member states’ shared priorities and interests across platforms. Assessments of the utilisation and effectiveness of ASEAN trade facilitation initiatives to date and the ASEAN free trade agreements are a necessary complement to this coordination.
Myanmar and Laos — the two ASEAN member states that hold least-developed country status — have been threatened with among the highest of Trump’s reciprocal tariffs. Capacity building activities or greater concessions alone are not sufficient: a fundamental rethinking of the rules for more sustainable, inclusive and fairer trade is now required. ASEAN is poised to be a champion.
Global trade reform needs to explore ways to improve trade and supply chain resilience in the face of great power rivalry, introduce rules around invoking security-related exemptions, uphold transparency and clarity of rules around subsidies and seek effective redress for unfair trade practices. ASEAN also should be more proactive in shaping new global trade rules.
Individual ASEAN member states will continue to expand and diversify their partnerships, including by joining plurilateral frameworks and negotiating or upgrading bilateral trade and economic partnerships. Some are pushing domestic reform, from Indonesia’s deregulation agenda to Vietnam’s bureaucratic and governance reforms. Certainty in policy direction and implementation is crucial and member states can leverage this momentum.
ASEAN must fully leverage the available frameworks at hand, including the Regional Comprehensive Economic Partnership (RCEP). The call by Malaysia, the 2025 ASEAN Chair, to convene the 5th RCEP Leaders’ Meeting in October 2025 is well timed.
Julia Tijaja is Associate Senior Fellow at the ASEAN Studies Centre, ISEAS–Yusof Ishak Institute, Singapore.
This article appears in the most recent edition of East Asia Forum Quarterly, ‘Asia’s new trade politics’, Vol 17, No 3.