ESL RIVINGTON et Antidox sont heureux d’avoir convenu un partenariat avec The Ambassador Partnership, cabinet de conseil britannique réputé, et composé d’anciens ambassadeurs spécialistes de la résolution de conflits et experts en risques politiques (www.ambassadorllp.com).
US President Trump’s “Liberation Day” on 2nd April sent shock waves through the global economy, upsetting the international order with global ramifications. His severe “reciprocal” tariffs were levied not only on US adversaries such as China (145%) but also on US allies. However, the “substantial progress”’ in trade talks between the US and China earlier this week in Geneva was a breath of fresh air, surpassing expectations. The US will lower extra tariffs it imposed on Chinese imports in April to 30% from 145%, whilst Chinese duties on US imports will fall to 10% from 125%. The new measures will be effective for 90 days. There is also a mechanism for further talks between these countries which brings cause for optimism for more agreements, resolving differences and avoiding a general decoupling between their two economies.
The lowering of US tariffs on Chinese imports may logically be expected to be extended to export dependent economies, especially the Association of Southeast Asian Nations (ASEAN) including Cambodia 49%; Laos 48%; Viet Nam 46%; Thailand 36%; Indonesia 32%; and Malaysia 24%. Even with the 90-day pause in tariff escalation announced on 9th April, a new minimum rate of 10% remains in effect for goods imported from all countries.
The US market is the largest export market for most ASEAN nations and many of them, especially Viet Nam and Thailand, amongst the top 10 countries recording a trade surplus with the US, are lining up for bilateral negotiations with the US on the heels of US negotiations with Japan and India.
Although these ASEAN members are awaiting such negotiations with the US on increasing imports to reduce the trade surplus as a leverage for tariff reductions, the US could well be more focused on the technical trade barriers such as dairy items and beef. Uncertainty remains regarding the tactics employed by President Trump. Here, ASEAN members would need to work collectively and avoid competing with each other to avoid the weaponization of tariffs.
Indeed, 60 years on, ASEAN is an open and outward-looking regional grouping. It has established comprehensive strategic partnerships with both the US and China as well as with the EU. ASEAN has its geographical proximity with and close affinity to China, as well as being China’s largest market. China looks to ASEAN as an integral part of its supply chain. ASEAN is a core region for China’s Belt and Road Initiative (BRI) and it has development strategies in place for infrastructure construction and the digital and green economies.
The recent visit of Chinese President Xi to three ASEAN countries, Viet Nam, Malaysia, and Cambodia, included the signing of over 100 cooperative documents to increase trade and investment as well as security related projects in ASEAN. The outcome can be seen as a clear message that China is a dependable and reliable partner in contrast to the US. China is asserting its role as a defender of the multilateral trading system, rejecting unilateralism and protectionism. However, the visit could create the impression that the three ASEAN countries are siding with China while negotiating a tariff reduction with the US.
Both the US and China continue to propel ASEAN’s robust economic growth anchored in trade and investment. ASEAN is forecast to become the world’s fourth largest economy by 2030. However, such aspiration is being dampened by global tariff escalation. ASEAN is now caught between US tariffs aimed at Chinese re-exports through Southeast Asia, and the risk of Chinese products diverted from the US market flooding Southeast Asia. The challenge for ASEAN is to balance its position between the US and China during this period of uncertainty and volatility. Moreover, the underlying macroeconomic imbalance of excessive Chinese exports to the world market remains unaddressed and could well be a source of tariff escalation and economic fragmentation.
A cohesive ASEAN would help minimize the impact of Trump’s tariffs and global tariff escalation. Investors are adopting a wait-and-see posture in their business planning given the cavalier policy changes of the US. A coordinated ASEAN position would carry more leverage in negotiating with the US instead of members competing for better bilateral tariff concessions. Indeed, ASEAN should seize this crisis as an opportunity to deepen economic integration and build regional resilience to sail through stormy uncertainties arising from global fragmentation. In doing so, there are several practical pathways for trade-enhancing and sustainable solutions in which ASEAN has core competency.
First, re-assess its development strategy, industrial restructuring, reconfigure its supply chain, and strengthen domestic enterprises. Enhancing ASEAN productivity and competitiveness would advance the ASEAN Economic Community (AEC) as a single market and production base. ASEAN is rich in resources and has a population of over 600 million with increasing middle-class purchasing power. Though the ASEAN region as a whole is a much smaller economy than the US, China or Japan, it is growing much faster.
Secondly, deepen its regional connectivity in trade, services, digital transformation, and green transition. Intra-ASEAN trade, which accounts for 22% of total ASEAN trade, could expand by building its supply chain of customers and suppliers within the ASEAN region. Connectivity can be enhanced through digital transformation to bridge the digital divide between and within member countries to become a global digital economy. The ASEAN power grid system needs to be concretized to ensure energy security and supply of affordable electricity.
Thirdly, diversify markets with economic partners and utilize next generation Free Trade Agreements (FTAs) such as the Regional Comprehensive Economic Partnership (RCEP) which is the largest FTA amongst the 15-member Asia-Pacific countries accounting for 30% of global GDP ($29.7 trillion). Individual ASEAN members have concluded their own FTAs such as Viet Nam with 17 FTAs whilst Thailand has 15. Since the EU intends to expand its supply chain in the Indo-Pacific region, ASEAN countries should utilize the ASEAN-EU Strategic Partnership to incentivize EU business partnership in the region through expediting the negotiating process of bilateral FTAs with EU members. ASEAN should also deepen economic partnership at the region-to-region level with the Gulf Countries, South Asia, Latin America, Central Asia, Africa and the BRICS (Brazil, Russia, China, India and South Africa).
Fourthly, invest in research and development. Singapore is host to regional headquarters of many multinationals and is regarded as the region’s incubator of ideas in driving science, technology and innovation. Singapore can provide a platform for ASEAN to mobilize talent from among its member states’ ingenuity and know-how to become a producer and not just a consumer of innovation. ASEAN can foster and scale-up innovation in key S-curve sectors such as bio-technology for agro-industry; bio-circular and renewable energy related technology; health care, medical devices and pharmaceuticals.
As the trade war drums are beating, the International Monetary Fund (IMF) has recently downgraded its 2025 Global GDP growth forecast to 2.8% down from 3.3% and warned that rising protectionist measures could reduce global trade volume growth to just 1.7% which is a level even lower than during the European sovereign debt crisis between 2010 and 2015 which had its roots in the 2008 global financial crisis. Additionally, global economic vulnerabilities are compounded by the economic slowdown of the US and China.
According to Thai corporate leaders, if the high tariffs are enforced against the ASEAN member nations in the second half of the year, GDP growth is expected to fall drastically. For instance, the 36% tariff on Thailand would mean a projected further fall to 0.7 – 1.4%, and annual export growth may contract as much as 2%. Another concern is the rapid appreciation of the Thai Bhat against the US dollar.
The way forward for ASEAN is to align the bilateral tariff negotiations with those of the region’s development strategy to avoid competition between ASEAN members. In building regional resilience and a sustainable supply chain, collaborative platforms are necessary for all ASEAN stakeholders to define development strategies and long-term commitments with shared responsibility. ASEAN’s cohesiveness, relevance and proactive role in the global economy are being tested as it rises to the challenge of navigating through the geopolitical tension between the US and China, as well as the risks of global tariff escalation and global recession.
Publié le 15 mai 2025 par The Ambassador Partnership
