As Southeast Asia welcomes Trump, it battles headwinds unleashed by him

Southeast Asia was 1 of the biggest winners from United States President Donald Trump’s commercialized warfare with China successful 2018, luring manufacturers to the portion to debar caller tariffs connected Chinese goods.

It benefitted from investment, taxation revenues and exertion transfers that came with the expanding “China Plus One” proviso concatenation concept.

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Seven years later, Southeast Asia finds itself successful a precise antithetic concern arsenic Trump’s 2nd commercialized warfare drags on, and it gets squeezed by the world’s apical 2 economical powers. New tariffs from the US endanger its export-driven economy, portion it’s besides facing a abstracted surge successful Chinese goods looking for an alternate to the US market.

It’s present trying to find its mode guardant contempt the economical pressure, said Jayant Menon, a elder chap astatine the ISEAS-Yusof Ishak Institute successful Singapore.

“Southeast Asia has been trying to locomotion the tightrope and bash a balancing enactment of not picking sides betwixt the US and China. Both are important economical partners,” helium told Al Jazeera.

China is the largest trading spouse of the Association of Southeast Asian Nations (ASEAN) – a determination bloc of 10 countries positive caller member, East Timor. The US is its fourth-largest commercialized partner, but it holds an outsized value successful different areas similar determination security.

The region’s narration with the US has been nether important accent since Trump returned to the White House earlier this twelvemonth connected the committedness of slashing the US commercialized shortage by imposing tariffs connected astir commercialized partners.

Southeast Asia was deed hard successful April by Trump’s “liberation day” tariffs, erstwhile helium added duties of 49 percent connected Cambodia, 48 percent connected Laos, and 46 percent connected Vietnam. Even Thailand and the Philippines, some US subject allies, were initially deed with tariffs of 36 percent and 17 percent.

Regional tariffs person since fallen to 10 to 20 percent for astir ASEAN countries aft idiosyncratic countries negotiated with Trump, but they stay astatine a precocious 40 percent for Myanmar and Laos. Further tariffs stay connected circumstantial exports similar steel, aluminium and car parts. In precocious July, the White House announced an further 40 percent tariff connected alleged “transshipments”.

The word refers to goods that are shipped done the portion to debar tariffs – successful this case, pre-existing tariffs connected Chinese goods – arsenic Beijing and Washington proceed to negociate a abstracted tariff deal.

The transshipment tariff has enactment the China Plus One accumulation exemplary successful the “crosshairs” of Washington, said Nick Marro, pb expert for planetary commercialized astatine the Economist Intelligence Unit.

“[It’s] a risk, particularly present due to the fact that you person a threatened tariff of 40 percent connected transshipments which seems beauteous squarely aimed astatine emerging markets,” helium said.

Against this backdrop, the Asian Development Bank revised its 2025 maturation forecast for Southeast Asia from 4.7 percent to 4.3 percent, citing the emergence of a “new planetary commercialized environment, shaped by tariffs and updated commercialized agreements”. ADB’s maturation forecast for 2026 is besides 4.3 percent.

Complicating the picture, though, is that Chinese exports to Southeast Asia are connected the rise. The inclination began earlier Trump returned to the White House, but it’s accelerated implicit the past year.

Chinese customs information shows that exports to ASEAN roseate 12 percent to $586bn twelvemonth connected twelvemonth successful 2024. The inclination is acceptable to proceed successful 2025 arsenic Chinese exports to the portion are up 14.7 percent, hitting $487.5bn successful the archetypal 9 months of the year. The full measurement of commercialized successful 2025 is besides up 8.6 percent and deed $776.7bn successful September.

Conversely, Chinese exports to the US person been falling. They deed $317bn betwixt January and September 2025, a driblet of 16.9 percent implicit the aforesaid period, according to Chinese customs data. China’s full measurement of commercialized has besides fallen 15.6 percent twelvemonth connected twelvemonth to $425.8bn, according to the aforesaid data.

Customs information unsocial doesn’t explicate the reasons for these parallel trends, according to experts, but they accidental that 2 factors could beryllium driving this shift.

Experts told Al Jazeera that Chinese manufacturers mightiness beryllium shipping much goods done Southeast Asia.

“Exports from Southeast Asia to the US person grown successful tandem with exports from China to Southeast Asia. This tells you that this commercialized is being diverted done these countries to immoderate extent,” said ISEAS’s Menon.

ASEAN exported $352.1bn worthy of goods and services to the US successful 2024, up 13.3 percent from a twelvemonth earlier, according to information from the US Trade Representative.

The fig is besides astir treble the worth of ASEAN’s US exports successful 2017, conscionable earlier Trump started his archetypal commercialized war. That year, ASEAN exported $192bn successful goods and services to the US, according to the USTR.

But Chinese companies are besides shipping finished goods to Southeast Asia arsenic the last destination, arsenic they question retired caller customers to regenerate the US.

“There’s nary precise information connected however overmuch is exported and however overmuch is past re-exported. Survey [data] seems to suggest that the bulk is portion of the proviso chain, but there’s a increasing stock of exports that are destined to beryllium yet consumed successful the Southeast Asian countries,” Menon said.

A survey of much than 300 companies successful the Asia Pacific exporting to the US and 30 US importers by New York-based consultancy GLG successful July recovered that 66 percent of Chinese exporters said they were looking for markets beyond the US, arsenic it had go a “challenging and little predictable commercialized partner”.

Eighty-three percent said they were looking astatine the European Union arsenic an alternative, followed by different 71 percent who cited ASEAN arsenic a imaginable market, according to the report, which was written by Menon.

While consumers successful Southeast Asia whitethorn invited much products connected e-commerce sites similar Shein, Temu, Alibaba, Lazada and Shoppee, the uptick successful Chinese goods is besides making immoderate section industries nervous, said the EIU’s Marro.

Chinese exports are other competitory this twelvemonth acknowledgment to a depreciation successful the dollar, and with it the Chinese renminbi, but China besides has a longstanding occupation of making much than it needs. The contented has been exacerbated with its post-pandemic economical slowdown and a autumn successful home demand, which means it needs determination to nonstop this “overcapacity”.

While exporters person looked for caller markets overseas, immoderate person been accused of “dumping,” oregon deliberately undercutting section markets with artificially debased prices successful countries similar Vietnam, Thailand and Indonesia.

“We person started to spot a batch much anxiousness among assorted governments successful the past mates of months astir a imaginable flood of Chinese goods into definite markets. This doesn’t needfully restrict itself to things similar phones oregon electrical vehicles. It tin besides see commodities similar alloy oregon different types of things similar textiles oregon apparel,” Marro said.

“There is simply a precise large hazard that Southeast Asia is besides going to get deed by the distortions successful China’s economy,” helium added.

Much similar transshipments, whether exports are “dumping” is successful the oculus of the beholder, said Chris Beddor, lawman manager of China Research astatine the Beijing-based Gavekal Dragonomics.

Investigating different state for dumping tin beryllium a politically and economically costly determination that tin extremity successful tariffs oregon commercialized disruptions connected some sides. It’s a hazard galore countries are not consenting to instrumentality with China, helium said.

“A batch of the ASEAN countries, frankly, don’t person a batch of inducement to beryllium pointing fingers astatine China for dumping due to the fact that of the proviso chains being rerouted. They privation a portion of the action,” helium told Al Jazeera.

It’s overmuch similar the attack that Southeast Asia has taken with the US. Rather than propulsion backmost against Trump’s tariffs, determination leaders lined up to negociate with the White House one-on-one alternatively than arsenic a bloc – overmuch the mode that Trump prefers.

Ian Chong, a governmental idiosyncratic astatine the National University of Singapore, told Al Jazeera this strategy could, however, outgo Southeast Asia successful the agelong run.

“This is simply a effect of ASEAN’s passive ‘not choosing sides’. They thought they could person immoderate broadside assistance them oregon that Washington and Beijing could ever tribunal them,” helium said. That optimism ignored the anticipation that they could beryllium squeezed by some sides. They whitethorn extremity up not having to marque choices, since these person been made for them elsewhere.”

ISEAS’s Menon said helium was besides disquieted that much occupation could inactive beryllium connected the horizon. The US and China person yet to scope a woody connected tariffs, and adjacent if they succeed, the famously mercurial Trump could inactive alteration his mind.

“My large fearfulness is that this is not the end, but the opening of a continuing process of tariff increases,” said ISEAS’s Menon. “Trump has been precise wide astir 2 things. One is that helium loves tariffs. The 2nd happening is that helium wants to usage them to trim bilateral deficits. The bottommost enactment is, I don’t deliberation helium tin beryllium stopped.”