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Southeast Asian countries need to hedge and expand trade and security alliances to navigate the increasing protectionism and changing geopolitics under the second term of US President Donald Trump, an online forum heard on Wednesday.
The Association of Southeast Asian Nations may not be a key priority in Trump's foreign policy, but what is significant is how individual ASEAN countries deal with the United States and other major powers, according to experts who participated in the webinar "Asia and Trump 2.0: Geopolitical Outlooks". The webinar was organized by the Asian Center, University of the Philippines.
Experts have noted how Trump's policy of raising tariffs against its major trading partners like China is also affecting ASEAN as the region is also part of the China supply chain. They also said Trump's directives such as the US withdrawal from the Paris climate pact and the World Health Organization will have repercussions worldwide.
While ASEAN countries are not major powers, these countries "still have agency" when it comes to international relations, according to Melissa Hubahib Loja, a postdoctoral fellow at the Center for European, Comparative, and Constitutional Legal Studies, University of Copenhagen.
Rational options
"The best way for (non-major powers) to exercise their agency is to adopt a rational approach to real politics," Loja said, noting that balancing, bandwagoning and hedging are the "rational strategic options "for small states.
Collin Koh Swee Lean, senior fellow at the Institute of Defense and Strategic Studies at Nanyang Technological University, Singapore, cited Singapore as a case study in strategic hedging. Koh said the city-state, a small and trade-dependent economy, maintains a consistent and principled foreign policy when dealing with major powers.
Koh said that regional governments like ASEAN are not likely to choose sides and would instead choose to band together to assert their interests on the global stage.
"We are likely going to see greater intra-ASEAN cooperation," he said, adding he expects ASEAN member states to agree on more vital issues, especially on trade as US tariff hikes threaten their respective economies. Koh also sees "growing participation in regional security" by other non-US regional powers such as those in either the Pacific or Europe.
Maria Thaemar Tana, Japan Foundation-Global Japan Studies fellow at the Institute for Advanced Studies on Asia, University of Tokyo, said that while hedging remains ASEAN's best strategy", its effectiveness is limited by internal divisions, weak enforcement mechanisms and growing external pressures.
Aaron Jed Rabena, assistant professor at the Asian Center at the University of the Philippines, said ASEAN countries should reduce dependence on the US in light of Trump's "unpredictable and volatile" trade and foreign policy. But Rabena said the strategy of each ASEAN nation also varies from time to time based on their perceived and actual threats and opportunities.
For Noel Christian Moratilla, dean of the Asian Center, "neutrality is what is imperative and applicable at this point". He said this has already happened in the past, with the establishment of the Non-Aligned Movement in 1961 at the height of the Cold War.
Moratilla said there's no point for the Philippines to antagonize either the US or China and learn from other ASEAN countries "as to how they do it, and also as not to appear very adversarial and very hostile to either one of them".
Irine Hiraswari Gayatri, senior researcher at the Research Center for Politics, National Research and Innovation Agency in Jakarta, said Indonesia is diversifying economic partnerships to reduce reliance on the US market. For example, Gayatri said Indonesia has joined BRICS, demonstrating how it's widening alliances.
ASEAN urged to renegotiate trade with US
Analysts call for region's economies to diversify markets to mitigate risks
Southeast Asian economies will need to renegotiate their trade deals with the United States to mitigate any long-term repercussions from the US plan to impose reciprocal tariffs on trading partners, analysts said.
US President Donald Trump on Thursday signed a memorandum directing his administration to determine "the equivalent of a reciprocal tariff with respect to each foreign trading partner".
Most of the members of the Association of Southeast Asian Nations have export-dependent economies and count the US, the world's biggest importer, among their key export markets. But Nomura analysts said in their research note that while Thailand, with higher relative tariff rates on US exports, faces the risk of higher reciprocal tariffs, it is not the case for Indonesia, the Philippines and Singapore.
Nomura said Thailand has a "large exposure" to the two sectors most vulnerable to reciprocal tariffs: agriculture and transport. Thailand's agricultural exports to the US comprise 0.8 percent of its GDP while transport products comprise another 0.5 percent. In contrast, Indonesia's export of transport products to the US accounts for 0.02 percent of its GDP.
"We expect Asian economies to step up their negotiations with Trump," Nomura analysts said. But they noted that while reciprocal tariffs are "less of a risk" to developed economies like Singapore, these economies "could still be caught in Trump's tariff net, if it is expanded to include pharmaceuticals, semiconductors, or if the (free trade agreements) are renegotiated".
Pongsarun Assawachaisophon, deputy secretary-general to Thai Prime Minister Paetongtarn Shinawatra, told Bloomberg News on Feb 4 that the government has asked Thai petrochemical companies to increase the purchase of US ethane by at least 1 million tons. He said Thailand is "being proactive and hopes that we can leverage this in our talks with the US".
Wichai Kinchong Choi, a business development expert at the Bangkok-based Kasikornbank, said Thai exporters will need to be ready for the negative impact caused by the tariff increase. He said the Thai government "must try harder" to diversify the country's export markets and explore new business opportunities in other regions like the Middle East and Africa.
"Fortunately, in the past few years, China has become the major market for many Thai export goods. As China has become the biggest trading partner of Thailand, Sino-Thai trades are expected to grow further in the near future thanks to the vast, open and resilient China market," Choi said.
In Vietnam, the country's Trade Minister Nguyen Hong Dien said on Friday the country is ready to open its market and import more agricultural products from the US.
Adam McCarty, chief economist of consultancy Mekong Economics in Hanoi, said it is important for Vietnam to understand the peculiar economics of Trump and his team — in terms of their concerns on trade balance.
Quick response needed
He said it is necessary for the Vietnamese government to respond quickly to Trump's tariff plan and even consider removing all tariffs, which are already at a low level on US products and import more from the US to convince Trump to take Vietnam off his list.
"Bilateral trade balances are not important (if you ask economists), but it gets into the heads of politicians and it is in Donald Trump's, so you have to treat it importantly," McCarty told China Daily.
Vietnam is among the top countries with a trade surplus with the US. The two-way trade exceeded $132 billion in 2024, with Vietnam exporting goods worth roughly $119 billion to the US, according to data from Vietnam Customs.
"You need to understand the economic logic or illogic behind these ideas (of Trump)," said McCarty. "It is really simple … he just thinks he hates Americans being taxed so he is going to make everyone not tax American goods."
McCarty said the US is "becoming more insulated and cutting itself off from the world".
Trump's Thursday memorandum is the latest in his series of moves to raise levies in line with his campaign promise to boost US industries and protect jobs. Early this month, Trump imposed an additional 10 percent levy on Chinese goods and a 25 percent tariff on steel and aluminum imports from all countries.
While ASEAN economies were not directly targeted by the tariff hikes, governments in the region are implementing policies to reduce the risk of increased trade protectionism.
China Daily
[Photo/VCG]
