Until early April 2025, Southeast Asian capitals seemed almost relaxed about Donald Trump’s return to the White House. Unlike European leaders bracing for another transatlantic breakdown, or East Asian allies fretting about security commitments, governments in ASEAN were relatively sanguine.
The annual State of Southeast Asia survey by Singapore’s ISEAS–Yusof Ishak Institute captured that mood. In its February 2025 release, more respondents than in 2024 said they would prefer the United States over China if forced to choose. Trump, in their eyes, represented continuity: a tough line on Beijing, yes, but also an America still engaged in Asia.
That complacency shattered on April 2 — “Liberation Day” in Trump’s own branding — when the president announced sweeping reciprocal tariffs on all trade partners, sparing no country except a few who quickly signed bilateral deals. For a region whose economic growth has been turbocharged by exports of manufactured goods to the U.S. market, the shock was immediate and profound.
Vietnam, with its economy deeply tied to U.S.-bound exports of electronics, textiles, and furniture, moved faster than any other Southeast Asian nation. Within weeks, Hanoi dispatched envoys to Washington, offering sweeteners: purchases of American aircraft, liquefied natural gas, and even the expedited approval of a Trump-family golf course project long stalled in Vietnam’s bureaucracy.
The overtures earned Vietnam a temporary reprieve — tariffs reduced but not eliminated. Yet even this deal looks shaky. Reports out of Hanoi in July suggested disagreements over the size of Vietnam’s LNG purchases and wrangling over the golf course’s tax status. The uncertainty illustrates a larger problem: Trump’s willingness to renegotiate, retract, or raise tariffs at any time.
For investors who had poured money into Vietnam precisely because it seemed a safer, tariff-free alternative to China, the risks are suddenly clear. “The whole logic of diversification — moving factories from China to Vietnam or Malaysia — is being undercut,” a Singapore-based fund manager told me. “If Washington slams tariffs on Vietnam too, then where is the safe haven?”
The timing could hardly be worse. Southeast Asia had been a major beneficiary of the “China+1” strategy after the pandemic, attracting foreign direct investment into electronics, automobiles, and renewable energy. New supply chains were being stitched together with Vietnam, Malaysia, and Thailand at their heart.
All of that investment rested on an assumption: that the United States, while protectionist toward China, would leave the rest of Asia relatively unscathed. Trump’s tariffs blow apart that premise.
The implications ripple far beyond trade balances. Tariff shocks inject uncertainty into financial markets, chill investment decisions, and risk recessionary effects across a region where exports still drive GDP growth. Even bilateral exemptions — Vietnam’s partial deal, Indonesia’s prospective negotiations, or the “Liberation Day” discounts extended to Thailand — cannot restore the predictability businesses crave.
Faced with the crisis, Malaysian Prime Minister Anwar Ibrahim, chairing ASEAN in 2025, sought to rally a collective response. At the May summit in Kuala Lumpur, leaders issued one of the group’s more forceful economic statements in years, vowing to avoid unilateral retaliation and instead deepen ASEAN’s own internal integration.
It was an ambitious attempt to show unity. Yet almost immediately, the limits were exposed. Trump rejected Anwar’s request for a special U.S.–ASEAN summit, preferring his trademark “divide and deal” approach with bilateral negotiations.
Still, Anwar salvaged something. When border skirmishes erupted between Thailand and Cambodia in July, Trump himself called both governments, leaning on them to step back. That personal intervention helped convince him to confirm his attendance at ASEAN’s October summit in Kuala Lumpur — a symbolic win for Anwar, if not a strategic breakthrough.
If bilateral deals with Trump are the region’s “Plan A,” diversification is emerging as “Plan B.” In June, Malaysian Deputy Minister for Trade and Investment Liew Chin-Tong put it bluntly: “The Trump administration will set goalposts and change them at the last minute. We should think about the long term and rewire the way we think about trade.”
That thinking drove Malaysia to convene a special trilateral summit with ASEAN, the Gulf Cooperation Council, and China. Energy, logistics, and technology cooperation topped the agenda, with leaders explicitly framing it as a hedge against U.S. volatility.
For ASEAN policymakers, diversification is not an abstract slogan. It means accelerating long-stalled regional free trade agreements, nurturing domestic consumption, and exploring new markets in the Middle East, Africa, and Latin America. But skeptics note that building such alternatives will take years, while Trump’s tariffs are biting now.
To understand why this moment matters, recall Southeast Asia’s recent history of shocks:
-
1997 Asian Financial Crisis: China earned goodwill by pledging not to devalue its currency and offering limited assistance.
-
2008 Global Financial Crisis: With U.S. credibility shaken, China positioned itself as the emerging stabiliser.
-
COVID-19 pandemic: China was quicker than the United States in dispatching vaccines and medical equipment.
Each episode nudged the region closer toward Beijing, even if temporarily. Trump’s tariffs risk becoming another milestone in that trajectory.
Beijing wasted no time. On his April 2025 tour of Vietnam, Malaysia, and Cambodia, President Xi Jinping pitched China as the reliable champion of open trade. He spoke of an “Asian family” that must stand together against protectionism.
The rhetoric landed well in parts of the region, particularly where elites already see the United States as erratic. “When America closes, China opens — that’s the message,” said a Cambodian official after Xi’s visit.
Yet China’s ability to profit materially from the U.S. tariffs is limited. Domestic demand remains sluggish; Chinese consumers cannot replace the American market for Southeast Asian exports. What Beijing can do, and is already doing, is redirect its own excess exports into ASEAN. In 2023, the bloc was already China’s largest export market, a trend now accelerating.
For Southeast Asia, Chinese exports are both a lifeline and a threat. Many of the imports are intermediate goods — machinery, electronics components — that fuel ASEAN’s own manufacturing industries. But increasingly, China is exporting finished consumer products, competing head-to-head with local manufacturers.
The danger is clear: just as Southeast Asian firms struggle with U.S. tariffs, they may face a flood of cheaper Chinese goods at home. That would squeeze margins, weaken industries, and complicate the political gains Beijing hopes to secure.
So far, ASEAN has been slower than Europe or North America to erect trade barriers against Chinese products. But under current pressures, that reluctance may fade. Already, whispers in Jakarta and Manila point to potential safeguard duties on Chinese steel and consumer electronics.
Even before Trump, Washington’s economic engagement with Southeast Asia was underdeveloped compared to its security presence. The U.S. never joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), leaving the region to question America’s long-term trade strategy.
Now, with tariffs wielded like hammers, the United States looks less like a dependable partner and more like a volatile giant. For Southeast Asia’s younger generation of policymakers, the image of America as a chaotic and unpredictable actor is hardening.
A Singaporean diplomat put it bluntly: “The problem is not just Trump. It is that America’s politics allow such sharp swings. We cannot base our economic future on that.”
Do Trump’s tariffs mean Southeast Asia is inevitably drifting into China’s orbit? Not necessarily. Beijing cannot fully replace the U.S. market, and many ASEAN leaders remain wary of China’s strategic ambitions in the South China Sea and beyond.
But the tariffs reinforce a longer-term pattern: each crisis that undermines U.S. reliability leaves the region a little more attuned to China’s gravitational pull. The outcome is not an overnight realignment but a gradual, cumulative shift.
The crucial variables ahead are twofold: how skillfully Southeast Asian governments diversify their economies, and how sustainably China manages its own. If ASEAN can accelerate intra-regional trade, deepen ties with the Gulf and India, and resist being flooded by Chinese exports, it can maintain strategic balance. If not, the tilt toward Beijing will only grow.
Trump’s April 2 tariffs were meant to showcase American strength, but in Southeast Asia they have sown uncertainty and resentment. Vietnam’s scramble, Anwar’s calls for unity, and Malaysia’s diversification efforts all underscore the same reality: the region must adapt to a world where U.S. policy is unpredictable and transactional.
China, while constrained economically, is eager to fill the vacuum — at least politically. For ASEAN, the challenge is to avoid overdependence on either power while protecting its hard-won economic dynamism.
