WASHINGTON DC: Southeast Asia is already bracing for a wave of tariffs. Donald Trump's return to the White House brings a significant shift in US trade policy, with his proposed sweeping tariffs threatening to trigger retaliation and raising the prospect of a global trade war.
For a region whose exports to the US surged to US$143 billion in the first half of 2024 – overtaking shipments to China – Southeast Asia will likely come under increased scrutiny.
At the heart of Trump's agenda is rebalancing trade through robust tariff increases, which he views as both a powerful negotiating tool and a means to rejuvenate American manufacturing. On Tuesday (Nov 19), Trump announced China hawk Howard Lutnick as his pick for commerce secretary, tasking him with leading the administration's trade and tariff strategy.
On the campaign trail, Trump said he would impose tariffs of up to 20 per cent on all imports and a staggering 60 per cent or more on Chinese goods – which would effectively shut many Chinese exports out of the US market.
Southeast Asian economies such as Vietnam, Thailand and Malaysia export more to the US than they import, creating significant trade surpluses. Tariffs would raise the cost of their exports making them less attractive to American buyers. To maintain access to the critical US market, they may need to increase imports of American goods and curtail exports.
ASEAN economies could face short-term disruptions, with economists projecting that Trump's tariffs could cut regional growth by up to 0.5 percentage points in 2025.
ASEAN governments are already taking steps to curb the influx. Vietnam and Indonesia have imposed a range of anti-dumping tariffs on Chinese goods, and Thailand recently announced measures to monitor cheap imports.
But countries will also need to strengthen enforcement mechanisms, improve quality standards, and expand the use of anti-dumping and countervailing duty measures to ensure fair trade.
TRUSTED ALTERNATIVES, NOT JUST “SOUTHEAST ASIA-WASHING”
But it’s important to look beyond just Trump’s tariffs and see the trajectory of reducing US reliance on Chinese manufacturing and technology.
Before the election, the Biden administration had finalised its ban on US investment in sensitive Chinese tech that will take effect on Jan 2, 2025 - before Trump is even inaugurated. It was also considering a broad ban on software which would effectively prevent Chinese cars from being sold in the US market.
While Trump will likely exit Biden-era economic initiatives such as the Indo-Pacific Economic Framework – half of the 14 member states are ASEAN countries – the weak trade pillar has been on ice since November 2023.
A Trump administration will likely build on the Biden agenda of stricter controls on strategic exports and investments, while increasing monitoring of Chinese content in goods routed through third countries to the US. Unlike during Trump's first term, when many firms sidestepped US tariffs by routing final assembly through Southeast Asia, stricter monitoring of Chinese content and ownership in products like solar panels makes this strategy increasingly difficult.
https://www.channelnewsasia.com/commentary/trump-tariffs-southeast-asia-cheap-china-goods-trade-4759326
Post time 27-11-2024 06:57 AM
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