The writer is academic director at Curtin University in Singapore

As the world accepts the reality of a second Donald Trump presidency, a focal question in the Association of Southeast Asian Nations (Asean) is how the incoming US administration’s tariffs will impact its trade and supply chains. 

During his election campaign, Mr Trump threatened 60% tariffs on Chinese imports and up to 20% on those from all other countries — including those in the Asean bloc. Since being elected, he’s promised to start his tariff hikes by adding an extra 10% import duty on all Chinese imports. 

These are intended to support the president-elect’s vision of a more resilient and prosperous US economy, better able to withstand competition from its geopolitical and economic rival, China. However, in the case of Asean, there’s reason to believe his tariffs could push the bloc closer to the Asian superpower.

US out, China in?

The US and Asean have a longstanding and close trade and investment relationship. Data from fDi Markets shows the US is the largest source of FDI projects in the ten-country bloc, with its project announcements being more than double that of any other country over the past five years, though capex-wise, China is ahead of the US. Asean is also the US’s fourth-biggest merchandise trade partner, behind Mexico, Canada and China.

The US has always viewed its relationship with Asean as one of strategic importance for its interests in the Indo-Pacific. Singapore is one of just 20 countries worldwide to have a comprehensive free trade agreement (FTA) with the US. In July, the outgoing government underscored its commitment to deepen strategic ties with Asean via their Comprehensive Strategic Partnership which was struck in 2022. 

These relations have been stable over the years, despite the US’s two dominant political camps alternating at the helm of government. The impact on Asean supply chains during Mr Trump’s first presidency were manageable, despite its escalation of a trade war between the US and nearby China. 

However, there are signs this could deviate under the protectionist policies proposed by Mr Trump for his upcoming term. The expectation in Southeast Asia regarding his second presidency is for unpredictability, due to the president-elect’s transactional and off-the-cuff style of policymaking. 

The promise of tariffs on all imports into the US — including from Asean — means we should expect the bloc to view China as a more viable and reliable alternative export market. China is already Asean’s biggest trade partner (with the US in second place). And given their geographic proximity, combined with the potential higher costs of exporting to the US, it makes sense for Asean businesses to develop stronger supply chains with China — and vice versa, given both parts of the world have tremendous and fast-growing consumer markets.

Mr Trump’s return to the White House also follows a strengthening of Asean–China ties. Since he left office, Asean has risen to become China’s biggest trading partner each year since 2020. That same year, China and Asean joined the Regional Comprehensive Economic Partnership and this past October they finalised negotiations to update the Asean–China Free Trade Area — the first FTA that China entered back in 2002. 

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Decoupling risks and opportunities

The possibility of Asean exports moving away from the US and towards China is exacerbated by the prospect of the two superpowers further decoupling under the next Trump administration. 

President Xi Jinping recently warned the US government against challenging China’s ‘four red lines’ — being the issues of Taiwan, democracy and human rights, the nation’s path, and development rights. This, combined with the prospect of Mr Trump implementing 60% tariffs on all Chinese goods, means the relationship between the two countries might worsen. 

Asean has, by and large, remained neutral over the past five years of escalating trade tensions between the US and China, its two biggest trading partners. However, the prospect of higher trade barriers into the US for Asean exporters means this could change.

Whichever direction Asean turns in response to Mr Trump’s policies, it looks set to continue benefiting from the ‘China plus one strategy’ which multinational corporations have adopted to reduce their dependence on the country by diversifying their supply chains into the region. 

Despite volatilities, Asean will be focused on finding trade and investment opportunities as it strategically navigates relations with the US and China.

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