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EAF editors
Some months have passed since US ‘Liberation Day’ tariffs were announced and the 90-day pause has now lapsed, yet the volatility in US trade policy shows little sign of easing. Recent developments include a second tranche of duties on India, an expansion of steel and aluminium tariffs and, more curiously, an investigation into furniture imports as a national security threat. The pace has not receded, but there has now been enough time to reflect on how the region is dealing with the chaos of Trump’s trade policies and their consequences.
One striking aspect of the Trump 2.0 saga has been the apparent ease with which the United States has secured bilateral concessions. The critical variable to watch is the extent to which these concessions translate from handshakes and press releases into binding commitments. Side deals have been announced with countries in the region including Indonesia, Japan, the Philippines, South Korea, Thailand and Vietnam, often with scant and sometimes conflicting information on the content.
For ASEAN, the politics and economics of dealing with the tariffs were particularly challenging. About 30 per cent of Cambodia’s and 25 per cent of Vietnam’s GDP come from exports to the United States, while even in less US-dependent economies like Australia or Indonesia, threats to sensitive sectors mean no country can be idle.
A united ASEAN or ASEAN-plus response to the United States will be more effective than a fragmented one. The ASEAN economic ministers’ immediate response was a powerful statement pledging no retaliation, welcoming dialogue and reaffirming support for the multilateral trading system.
Of course, the sheer heft of the economic threat from tariffs has so far pushed the ideal of a fully unified response out of reach — though the details and impacts of the negotiations between the United States and ASEAN countries are yet to be seen. Side deals became seen as necessities.
The hard diplomatic work ahead is to prevent emergency bargains from hard-wiring fragmentation. Quiet, coordinated pressure is the better defence against the United States’ costliest demands, like pressure on Vietnam and others to slash Chinese-origin content, which would be a step towards 1930s-style trade blocs. Preventing the weaponisation of rules of origin will go a long way to averting a worst-case economic outcome.
Asia has better options than Trump’s transactional economic order. ASEAN-centred platforms, such as RCEP with its cooperation agenda, and other regional agreements, like the CPTPP with its forward-looking rulebook, offer a range of practical avenues. Deepening these arrangements can offset the costs of US tariffs on the region and keep markets open for a large majority of global trade.
The economic case for integration as insurance is strong. Modelling by the East Asian Bureau of Economic Research and the Center for Strategic and International Studies suggests that tariffs like those threatened in April 2025 would reduce ASEAN real GDP by 2.3 per cent. Yet if others retaliate while ASEAN holds the line by fully implementing RCEP, that loss flips to a 1.9 per cent GDP gain as intra-regional trade rises and substitution occurs. The alternative path, towards tariff and protectionist contagion that matched US tariffs, would lead to a collapse of more than 11 percent in Southeast Asia’s GDP.
Deepening these agreements and making them easy to join for any economy that meets the rules is thus a priority. In RCEP, early gains can include aligning tariff schedules, simplifying rules of origin and energising its ongoing cooperation agenda.
The latest edition of East Asia Forum Quarterly, ‘Asia’s new trade politics’ , maps the terrain on which these choices will be made. It examines how governments across the region are juggling the shocks from Washington alongside domestic political and economic pressures. It explores the rapidly changing trade policy landscape: responses to Chinese subsidies, the ongoing race on green industrial policy, and how automation and artificial intelligence are reshaping the path to industrialisation. It investigates how and why governments are stepping up cooperation on economic security.
In this week’s lead article, Sam Hardwick writes that while the consequences of a second Trump administration will unfold over decades, it is the responses from governments today that will be decisive. Cooperation frameworks that function without a great-power sponsor are essential.
Progress at the WTO remains indispensable, but hurdles that prevent consensus mean faster gains will come through open, issue-specific plurilaterals that any economy that commits can join, as well as through RCEP and the CPTPP.
The more profound task ahead is building a system that functions with or without hegemonic sponsorship. With the United States now only accounting for a bit over one-tenth of global goods trade, other economies can decide how far rules, rather than power, will govern the rest.
Asian and Pacific economies cannot wait for order to be restored from outside. The best defence against a zero-sum world is to choose rules over deals, and integration over fragmentation. If the region uses its own institutions to keep markets open, it can go a long way towards preserving the multilateral system through this rough passage and help take the lead in rebuilding it.
The EAF Editorial Board is located in the Crawford School of Public Policy, College of Law, Policy and Governance, The Australian National University.
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