PHNOM PENH – US President Donald Trump has announced trade tariffs on many countries, not only its allies but also non-allies. These include Mexico, Canada, and China, at 25 percent.

This kind of uncertain action has made ASEAN keep an eye on the US under the Trump administration. US goods trade with ASEAN was about $476.8 billion in 2024, and exports of goods to ASEAN were about $124.6 billion.

By 2030, Southeast Asia’s economic development is expected to grow with its young population and diversity of economies, and trade is predicted to reach $1 trillion.

However, after Trump’s recent unpredictability in the trade war, ASEAN has to pay attention because it can suffer directly and indirectly.

The direct impact could be on Vietnam, Thailand, Singapore, and Malaysia. Vietnam, through its bilateral trade with the US, can experience this impact on its steel and aluminium exports to the US.

Thailand and Malaysia could be affected by the semiconductor and auto supply chains.

According to Oxford Economics, Cambodia exports to the United States about 40 percent of total exports, the highest exposure in ASEAN. Vietnam comes in second at 27.4 percent and Thailand at 17 percent. 

From 2016 to 2024, Cambodian exports to the US increased from $3 to $13 billion, represent approximately 30 percent of its GDP.

Tariffs affect most garments, footwear and travel goods. More importantly, Cambodia is highly vulnerable to future tariffs that target its commodities because more than 60 percent of the production of some Cambodian manufacturers is sent to the US.

Moreover, the US is also a main economic partner with Cambodia and accounts for more than half of Cambodia’s exports. Cambodia’s economy is extremely susceptible to shifts in American trade policy.

Trump's 2024 campaign implied that he would impose more extensive tariffs on many countries’ goods. If he imposes the tariffs on Cambodian goods, it would significantly affect exports and other businesses.

Cambodia’s commerce with the US increased 10.2 percent year-on-year to $7.8 billion in the first nine months of 2024. As a result, Cambodia's exports to the US increased by 10.3 percent to $7.61 billion, while its imports from the US increased by 6.7 percent to $190 million.

Due to significant labor and human rights concerns, the US withdrew Cambodia’s Generalized System of Preferences (GSP) in 2020.  Notably, Trump also declared during the 2024 campaign that he would put a 10 percent tariff on all imported goods if he were re-elected.

Cambodia's international trade could be affected if the US tightened its trade regulations in the country in the future.

An indirect impact can be through China's ASEAN trade cooperation. In 2024, ASEAN and China traded for about 26 percent of the total imports.

Therefore, the recent tariff on Chinese goods can also affect ASEAN member states. The most significant impact from this tariff is in the industrial and raw materials, food and beverages, automotive, agriculture products, and electronics sectors.

Market data provided by FTSE Russell’s research arm in February highlighted that US trade policy not only affects China’s economy but also raises growth risks in economies with higher export exposures, like Singapore, Malaysia, and Thailand.

In a January report, Fitch Ratings noted “varying risk exposure” for ASEAN’s financial institutions in light of potential US tariff hikes and increased inflation hazards.

How can ASEAN deal with the uncertainty in Trump’s trade tariff policy?

Strengthen Regional Economic Cooperation

ASEAN member states can join hands to promote their regional economic cooperation with their important sectors. The ministries that work with commerce and economics can increase their cooperation to improve trade and supply chains.

Moreover, the AMS can build an economic hub to enrich the trade system. Countries with strong economic development, such as Malaysia, Singapore, Indonesia, Thailand, and Vietnam, can lead the economic hub.

ASEAN Self Trade Policies

ASEAN’s economic policy, the so-called Regional Comprehensive Economic Partnership (RCEP), plays a key role in promoting economic cooperation within AMS.

It also often organizes ministerial dialogues to discuss economic cooperation that will help enhance economic development.

The ASEAN Free Trade Area also allows tariff-free trade among member states in the trade system to improve economic development. Besides, ASEAN also has a trade cooperation with the WTO that can enhance collaboration, gain more advantages, and safeguard from tariffs from the US.

Expand Global Economic Partnership

ASEAN should pursue trade alliances to expand its global economic partnership with other countries such as China, Japan, South Korea, Australia, India and New Zealand.

 Economic cooperation with these countries in sectors such as automobiles, agriculture and food products, renewable energy, manufacturing and consumer goods, and electronics products can prevent the effects and survive the uncertainty of Trump’s trade tariff policy.