Once a Beneficiary of the China-Plus-One Strategy, ASEAN Now Grapples with New Trade Barriers
Southeast Asia’s role as a supply-chain hub is under threat as US President Donald Trump’s latest tariffs impose steep levies on the region’s exports. Once a prime beneficiary of companies shifting operations away from China, ASEAN nations now find themselves at a disadvantage in the evolving trade landscape.
Heavy Tariffs Reshape Regional Trade
Announced on April 2, the new US trade policy imposes a blanket 10% tariff on all imports, with additional reciprocal duties raising levies to as much as 49% for certain Southeast Asian nations. By comparison, the European Union faces a 20% tax, placing ASEAN in a relatively weaker position.
“Unlike during Trump’s first term, Southeast Asia is now directly in the line of fire,” an analyst observed, noting that previously, the region had benefited from companies relocating supply chains from China under the China-plus-one strategy.
Economic Uncertainty for ASEAN Nations
While Vietnam, Malaysia, Indonesia, and Thailand once thrived as alternative manufacturing hubs, the new tariffs undermine their cost advantages. Investors may now hesitate to expand operations in the region, given the increased costs of exporting to the US market.
Singapore, which faces only the baseline 10% tariff, remains in a relatively stronger position. However, as a key financial and trade hub for the region, its economy is still exposed to the broader impact of declining trade flows.
Future Trade Strategy
With supply chains disrupted, ASEAN nations may seek to strengthen regional trade agreements or pivot towards other export markets to mitigate the impact. Some analysts suggest that this could accelerate intra-Asia trade growth, while others warn that companies may now look beyond ASEAN for new production bases.
The coming months will be critical in determining whether Southeast Asia can adapt to the shifting trade landscape or if businesses will seek alternatives in other parts of the world.
