[Salon] US tariffs nudge Asean closer to China as UN says billions in exports on the line



US tariffs nudge Asean closer to China as UN says billions in exports on the line

A new UN report forecasts a punishing 9.7 per cent drop in Southeast Asian exports to the US, potentially costing the region billions

SCMP
Asean economic ministers meet in Kuala Lumpur, Malaysia, on September 23. Photo: EPA
30 Sep 2025
Southeast Asia is set to be the region hardest hit by American tariffs, according to a new UN report, with observers saying the fallout could push Asean deeper into China’s orbit as the US raises the price of entry to its vast consumer market.
The report from the United Nations Development Programme (UNDP) forecasts a 6.4 per cent slump in exports to the United States from the wider Asia-Pacific, driven by price increases from tariffs.

But for Southeast Asia – a linchpin in global supply chains and a major supplier of American-bound electronics, garments and footwear – the expected drop is a punishing 9.7 per cent.

“Southeast Asia will definitely be hard hit by Trump’s tariffs as much of the region’s growth is tied to exports, especially in sectors like electronics, semiconductors, garments and footwear,” Joanne Lin, a senior fellow at the ISEAS-Yusof Ishak Institute’s Asean Studies Centre, told This Week in Asia.

Shipping containers are seen at a port in Sihanoukville, Cambodia, earlier this year. Photo: AFP
Shipping containers are seen at a port in Sihanoukville, Cambodia, earlier this year. Photo: AFP
Some countries are more exposed than others, however. Vietnam and Cambodia look the most likely to face headwinds “if US demand for their exports deviates from existing trends”, according to Ahmed Albayrak, a research associate at the Lowy Institute think tank’s Indo-Pacific Development Centre.

Both nations were “very dependent on the US” as a market for their exports, he said.

The UNDP report, released on September 18, predicts a 23 per cent plunge in Cambodia’s US-bound exports and a contraction of its entire export sector by a third, given that 58 per cent of Cambodian exports currently head for America.

“Such a shock is deeply consequential for an economy so dependent on trade,” it said.

Vietnam also faces steep losses. With US tariffs on key exports such as apparel, footwear and electronics reaching 20 per cent, the country’s shipments to the US are projected to fall by 19.2 per cent – potentially wiping out US$25 billion in trade, according to the UNDP’s chief economist for the Asia-Pacific, Philip Schellekens.

An employee works at a factory making shoes for export in Hanoi, Vietnam. Photo: Reuters
An employee works at a factory making shoes for export in Hanoi, Vietnam. Photo: Reuters

Last year alone, Vietnam exported US$136.5 billion worth of goods to America, making it the sixth biggest supplier to the world’s largest economy.

Other members of the Association of Southeast Asian Nations are also bracing for sharp declines: Thailand’s exports to the US are forecast to shrink by 12.7 per cent, Malaysia’s by 10.4 per cent and Indonesia’s by 6.4 per cent.
The region’s role as a semiconductor hub may soon become a liability too, amid US President Donald Trump’s threats to impose duties as high as 300 per cent on chips.

“There are reports that Trump is considering a formula that would account for the number of chips in foreign electronic devices,” said Kevin Chen, an associate research fellow with the US programme at the S. Rajaratnam School of International Studies’ Institute of Defence and Strategic Studies in Singapore.

A silicon wafer is displayed during a semiconductor conference in Taiwan on September 11. Photo: EPA
A silicon wafer is displayed during a semiconductor conference in Taiwan on September 11. Photo: EPA

“This would have a serious impact on the semiconductor sector across the region, not only hurting their competitiveness in the US market but also spurring a reallocation of investments towards the US.”

Chen also raised concerns about US action against transshipped goods – those routed through third countries to skirt tariffs – threatening compliance headaches across Southeast Asia, though he noted that it was “yet unclear how Washington will define such goods”.

Small businesses, such as those in the regional furniture sector in Malaysia and Singapore, would be among the hardest hit, he added.

‘A China-shaped basket’

With exports under strain, observers foresee a broader contraction in trade and investment, the erosion of factory jobs and mounting economic pressures nudging Asean closer to China.

“It is also quite likely that Washington won’t compromise on strategic sectors like chips, which will affect countries like Malaysia, Vietnam and Singapore which are very integrated into global supply chains,” Lin said.

“That pressure could push Asean closer to China as both a market and a partner in trade and investment.”

But the story is not so simple, according to Albayrak. Despite the trade disruption, he said Southeast Asia remained “relatively competitive” compared to regional competitors such as China itself as well as India and Bangladesh, which now face tariffs of 20 per cent and 25 per cent respectively.

Pressure [from Washington] could push Asean closer to China as both a market and a partner in trade and investment
Joanne Lin, Asean researcher

He added that a dramatic pivot towards China was unlikely, as most Southeast Asian economies still see Beijing primarily “as an investor and a provider of intermediate inputs”, rather than a major consumer of their exports.

“The region does not depend heavily on China for their manufacturing exports, and it is hard to see that changing given China’s current manufacturing prowess,” Albayrak said.

Chen, however, called China one of the “obvious alternative markets” for Asean, highlighting the pending upgrade to the Asean-China Free Trade Area as a potential game changer for regional supply chains.

But he also tempered expectations, cautioning that not all sectors “will find a suitable market” in China, with semiconductor firms in particular facing fierce local competition.

“In fact, the redirection of China’s exports could easily become a broader issue,” Chen said. “As such, Southeast Asian governments are not putting all their eggs in a China-shaped basket.”

Albayrak argued that Asean should seize the opportunity to broaden trade relationships. “Some in the region, like Singapore and Vietnam, have standing free trade agreements with major alternative markets like the EU. Others could follow suit.”

Observers also see “substantial” scope for deepening intra-Asean trade. “The challenge is that Asean economies often compete in similar products, making integration tricky,” Lin said.

“But if the region can strengthen its internal market and upgrade into higher value-added production, the tariffs could serve as a painful but important push to accelerate diversification and resilience within the grouping.”

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Sam Beltran
Sam Beltran is a journalist based in Manila who has written for publications in the Philippines and around Asia. Her stories explore food, lifestyle scenes, popular trends, and sub-cultures as



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