Jonathan Head
Southeast Asia correspondent
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Trump’s tariffs are a blow to countries like Vietnam, which rely heavily on exports.
President Donald Trump’s drastic tariffs targeting much of the world are currently in effect, and outside China, other regions have not been hit hard as hard as Southeast Asia.
At the top of the list is Vietnam and Cambodia, which suffers from some of the best tariffs: 46% and 49%. Additionally, there are Thailand (36%), Indonesia (32%) and Malaysia (24%). The Philippines is subject to 17% tariffs and Singapore is subject to 10% tariffs.
This is a major blow to regions that rely heavily on exports. Economic development, which has been widely promoted over the past 30 years, has been greatly promoted by its successful sales of its products to other parts of the world, particularly to the United States.
Exports to the US contribute 23% of Vietnam’s GDP and 67% of Cambodia.
That growth story is at stake by punitive measures imposed in Washington.
The long-term impact of these tariffs differs when assuming they remain in place, but will pose a major challenge to the governments of Vietnam, Thailand and Cambodia, especially.
Vietnam’s “bamboo diplomacy” attempts to be friends with everyone and balances both China and the US, but is now being tested.
Under the guidance of Lam’s new Communist Party Secretary General, Vietnam has embarked on an ambitious plan to build a high-income knowledge and a technology-based economy by 2045. It aims to grow annually above 8%.
Exporting more to the already largest market, the US, was at the heart of that plan.
It was also the main reason why Vietnam agreed to enhance its relationship with the 2023 comprehensive strategic partnership relationship.
The Communist Party has little objection and tolerated formal political opposition, but relies on an economic pledge to its legitimacy. Already considered too ambitious by many economists, these will now be even more difficult.
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Vietnma’s leader in Lam aims to grow annually at 8% or more
Thailand relies on US exports that are less than Vietnam, which has less than 10% of GDP, but the Thai economy has been slowing down for the past decade. The Thai government has recently tried to legalize gambling, but is trying to find ways to promote economic growth.
For Cambodia, tariffs pose perhaps the biggest political threat in the region.
Hun Mane’s government has proven authoritarian, just like his successful father Hun Sen, two years ago, but it’s vulnerable.
To maintain the power of the Hun family, it was necessary to provide rival clans with Cambodian economic privileges such as monopoly and land concessions, which helped create a massive amount of complaints about property development and land expropriation that were no longer sold.
The garment sector, which employs 750,000 people, is a key social safety valve and gives Cambodia’s poorest incomes a stable income. It is likely that thousands of these jobs will be lost as a result of President Trump’s tariffs.
BBC/ Xiqing Wang
67% of Cambodia’s GDP exports to the US
Unlike China, which fought back on its own taxation, official messages from Southeast Asian governments don’t panic, retaliate, and negotiate.
Vietnam has offered to send Deputy Prime Minister Ho Duc Four to Washington to sues its own lawsuit and eliminate all tariffs on US imports. Thailand is planning to send a Finance Minister to make a similar appeal, offering to reduce fees and buy more American products, such as food and aircraft.
Malaysian Prime Minister Anwar Ibrahim is also heading to Washington, but his country is less affected than its neighbors, as exports to the US make up only 11% of Malaysia’s total.
However, the Trump administration does not seem to be in a mood to compromise.
Peter Navarro, President Trump’s senior trade and manufacturing counselor and one of the leading thinkers behind the new policy, said Vietnam’s zero tariff offer was pointless in an interview Monday as it doesn’t deal with the trade deficit in which Vietnam sells $15 worth of goods to the United States for every dollar purchase.
He accused Vietnam of maintaining multiple non-tariff barriers to US imports, saying that a third of all Vietnamese exports to the US were actually Chinese products and converted beyond Vietnam.
The proportion of Vietnamese exports that are being carried out there or transshipd there to avoid US tariffs in China is difficult to assess, but in a detailed trade study it went from 7% to 16% rather than a third.
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Asian stocks fell sharply this week as Trump’s tariffs began
Like Vietnam, the Cambodian government has appealed to the US to postpone tariffs while attempting to negotiate.
The local US Chamber of Commerce is calling for the 49% tariff to be dropped, claiming that the Cambodia garment industry, the country’s biggest employer, will be severely affected, but even with tariff levels, you can see clothing and shoe manufacturing return to the US.
Perhaps the most evil tariff rate is 44%, which applies to Myanmar, a country plagued by civil war that is not capable of purchasing more US goods.
US exports account for less than 1% of Myanmar’s GDP.
But like Cambodia, its sector, primarily clothing, is one of the few that provides a stable income to poor families in Myanmar cities.
Ironically, Trump has been a popular figure in the area up until now.
He has been widely praised in Vietnam for his tough trade approach to foreign policy, and Cambodia’s former Strongman Hun Sen is still a major power behind the scenes, proudly posting selfies at his first meeting in 2017, calling for a close personal relationship with the US president.
Only last month, Cambodia praised Trump for closing American media networks Voice of America and Radio Free Europe.
Now, Cambodia, like many of its neighbors, has found himself in a long supply pan pleading with him to ease the burden of tariffs.
