When US President Donald Trump unveiled significant tariffs on April 2, the shockwaves reverberated throughout Southeast Asia, a region heavily reliant on exports. The tariffs, reaching as high as 49% for some countries, threatened vital sectors such as electronics and textiles, with Thailand, Vietnam, and Malaysia among those bracing for hard hits.
Richard Han, CEO of Thailand's Hana Microelectronics, expressed disbelief upon seeing the 36% tariff aimed at his country, stating, "How could it be?" As negotiations progressed, Thailand managed to secure a reduction to 19%, but not without intense, last-minute wrangling that concluded just before Trump’s August deadline.
Vietnam, with exports to the US totaling a staggering $137 billion—30% of its GDP—was quick to respond and became the first in the region to strike a deal, bringing its 46% tariff down to 20%. However, lacking concrete details and documentation, uncertainty remains, particularly over claims made by the US administration, which Vietnam has not officially confirmed.
The complexities of negotiating in Thailand contrast sharply with Vietnam's centralized governance. Thailand's coalition government often faces internal divides, compounded by recent decisions involving Uyghur asylum-seekers that have soured relations with the US. Consequently, Thailand's negotiating position faltered, landing it at the back of the queuing process.
Amidst concerns of losing agricultural market protections due to US negotiations, Thai farmers and businesses were apprehensive. The demand for zero tariffs on US imports, particularly in agricultural sectors, raised alarms for domestic producers who struggled to compete with larger American farms. Worawut Siripun, a pig farmer, lamented that foreign pork would undercut local prices, endangering livelihoods.
As Thailand’s negotiations finally culminated in a promise of reduced tariffs, manufacturers urgently highlighted the need for favorable terms to maintain competitiveness. Electronics producers like SK Polymer and SVI articulated that while a 20% tariff could be manageable, uncertainty surrounding the rules of trans-shipment and local sourcing requirements posed a significant risk.
Moreover, the ongoing challenges highlight a broad reliance on the Chinese supply chain, complicating compliance with US expectations. The lack of comprehensive agreements and ongoing tariff negotiations left manufacturers caught in limbo, grappling not only with tariff rates but the specificities of local content requirements.
For many Southeast Asian nations, Trump's unpredictable tariff policies have forced a scramble for deals that will protect their economies from further repercussions. As the region contemplates its future in international trade, one sentiment resonates: the urgent need for clarity on these shifting regulatory standards remains paramount. "At some point this has to stop," Richard Han remarked, reflecting the anxieties facing ASEAN countries amid an evolving trade landscape.