Vietnamese entrepreneur Hao Le’s company, SHDC Electronics, thrives by exporting $2 million worth of phone and computer accessories monthly to the US. However, potential 46% tariffs proposed by former US President Donald Trump on Vietnamese goods could severely impact his business. This situation reflects broader challenges faced by Southeast Asian nations as they navigate the complex dynamics of US-China trade tensions.
Since Trump’s initial tariffs on China in 2016, many Southeast Asian countries have capitalized on opportunities to replace Chinese exports in Western markets. However, these nations now face the risk of punitive tariffs themselves, threatening their economic growth. For instance, Vietnam and Indonesia, which have been positioning themselves as key players in industries such as chips and electric vehicles, find themselves caught between two major economies: China, their largest trading partner, and the US, a critical export market.
Chinese President Xi Jinping recently visited Vietnam, Malaysia, and Cambodia to promote regional unity against US tariffs. While Southeast Asian nations are reluctant to choose sides, they are increasingly aware of the need to diversify their trade relationships. Malaysia’s trade minister emphasized that his country cannot afford to alienate either superpower.
In response to Trump’s tariffs, Southeast Asian governments have adopted various strategies, including offering to reduce tariffs on US goods and increasing imports from the US. Despite these efforts, the threat of tariffs remains a significant concern for industries ranging from electronics in Vietnam to rubber gloves in Malaysia.
Experts warn that the region must reduce its reliance on any single trade partner, whether the US or China. While consumers benefit from competitively priced Chinese products, local businesses struggle to compete with ultra-low prices. This has led to a wave of protectionism, with measures such as higher tariffs on Chinese goods and stricter import inspections.
Despite the challenges, some Southeast Asian companies see opportunities. For example, Malaysia’s rubber glove industry, which already holds nearly half the global market share, is poised to gain further from reduced demand for Chinese-made gloves due to high tariffs.
— new from BBC