Southeast Asian countries are taking swift action. According to the latest reports, in the shadow of U.S. President-elect Trump’s plans to impose widespread tariffs on imported goods, businesses in Southeast Asia are ramping up exports to the U.S. Foreign media suggest that while the surge in exports has boosted the regional economy in the short term, challenges remain in maintaining export competitiveness to the U.S. in the long run. Currently, Southeast Asian nations are intensifying their assessments of the situation and planning ahead for the impending changes.
Countries such as Vietnam, Thailand, and Malaysia…
The Nikkei Asian Review recently reported that export-dependent Southeast Asian economies like Vietnam, Thailand, and Malaysia had already taken action well before the U.S. presidential election, aligning with American importers to stockpile goods in advance. Data shows that from January to October this year, Vietnam’s exports to the U.S. surged by 24.2%. Exports of electronic products, computers, and related components increased by 26.1% year-on-year.
In October, Thailand’s exports of electronic components to the U.S. skyrocketed by 30%, setting a record for the highest monthly growth. Overall, Thailand’s exports to the U.S. also surged by 25.3% that month. According to Preecha Arduwattana, Chief Economist at Kasikornbank Research Center, in the short term, with U.S. importers stockpiling goods and Thai exporters accelerating exports, Thailand’s GDP in the fourth quarter is expected to grow by 0.1 percentage points, and this growth effect could extend into the first and second quarters of next year.
In October this year, Malaysia’s exports to the U.S. surged by 19.2%. Meanwhile, orders in Southeast Asia’s logistics and manufacturing sectors saw significant growth. A logistics company in Singapore noted a marked increase in inquiries about early shipments.
This surge in exports reflects the “stockpiling” strategy of U.S. businesses, who are trying to stock up on goods before Trump takes office to avoid the impact of high tariffs. During his campaign, Trump proposed tariffs ranging from 10% to 20% on all U.S. imports, with the possibility of even higher tariffs on some goods.
“Facing High Uncertainty”
Nikkei Asian Review analysis suggests that Southeast Asian countries like Vietnam, Thailand, and Malaysia could become targets of U.S. tariff increases. Data shows that in 2023, Vietnam’s trade surplus with the U.S. ranked among the top five globally. Vietnam has become the largest exporter in ASEAN, with its exports to the U.S. accounting for nearly 40% of ASEAN’s total exports to the U.S. U.S. data shows that in the first ten months of this year, the U.S. had a $102 billion trade deficit with Vietnam, up nearly 20% from the same period in 2023. Thailand and Malaysia’s trade surpluses with the U.S. ranked 12th and 13th globally.
According to the Point website of the Institute of Southeast Asian Studies in Singapore, although Southeast Asian countries managed to weather the Trump 1.0 phase, Trump 2.0 is expected to be even bolder. During Trump 2.0, the globalization model that Southeast Asia’s economic growth has long relied upon will face high uncertainty. The report also noted that both China and the U.S. are key trade partners for ASEAN, and ASEAN’s exports to the U.S. heavily rely on intermediate goods from China.
Seeking Alternative Markets and Creating Special Economic Zones
For some time now, ASEAN countries have been intensifying their assessments of the situation and seeking ways to mitigate risks under Trump 2.0. Media outlets and researchers have been offering strategies for these countries.
Vietnam’s Briefing Network published an article stating that, given Vietnam’s high trade surplus with the U.S., the country should learn from China’s “quiet rise” and also showcase itself as a “reliable” trade partner to the U.S. Vietnam has already taken corresponding measures. For instance, the Ministry of Industry and Trade is drafting stricter standards for “Made in Vietnam” products. Only goods that meet the criteria of using a significant amount of local materials and undergoing substantial local processing will be labeled as “Made in Vietnam.” Products that only undergo minor processing, like labeling, will no longer be considered “Made in Vietnam.” This move is clearly aimed at curbing the re-export of foreign products to the U.S. via Vietnam.
Thailand’s Nation newspaper analyzed that during Trump 1.0, Thailand lost the “Generalized System of Preferences” benefits for developing countries, and with Trump 2.0 coming, Thailand will face even greater challenges, including the possibility of the U.S. labeling Thailand as a “currency manipulator” and forcing it to open its market to U.S. agricultural products such as pork.
Bloomberg believes that Thailand has clarified its strategy for coping with Trump’s trade war: to implement new stimulus measures to attract businesses, including those from China and the U.S., to invest in Thailand, making it a destination for risk-averse operations. Nation also suggests that as the global trade war approaches, Thailand should seek to expand its export markets, pushing domestic products into Europe, the Middle East, and other regions. At the same time, Thailand should boost domestic economic vitality to reduce reliance on exports.
Malaysia has also introduced measures in response. According to The New York Times, Malaysia recently expressed its desire to reach an agreement with Singapore to establish a special economic zone in southern Malaysia, providing multinational companies with the space and human resources needed for business development. Earlier this year, investments for the construction of the economic zone began, and the two countries’ leaders are expected to sign the final agreement on cooperation later this month. Nomura Securities’ Chief ASEAN Economist Parag Khanna analyzed that Malaysia aims to leverage Singapore’s geographical advantages and lower costs to attract multinational companies, particularly those from China and the U.S., to invest in Malaysia. Given that many U.S. companies, including Nvidia, have already made significant investments in Malaysia, the U.S. is likely to be cautious about its trade policy with Malaysia, considering its own interests.
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