In January 2025, President Donald Trump reinstated the “America First” trade policy, aiming to prioritize U.S. economic interests by reducing trade deficits and reshoring manufacturing jobs. This policy shift has significant implications for the economic relationship between the United States and the Association of Southeast Asian Nations (ASEAN).
Background of the ‘America First’ Trade Policy
The “America First” doctrine emphasizes protecting U.S. industries through measures such as imposing tariffs on imported goods and renegotiating trade agreements to favor American interests. In his previous term, President Trump utilized tariffs extensively to address trade imbalances, notably with China. His return to office signals a renewed focus on these protectionist strategies.
The policy aims to reduce the U.S. trade deficit, encourage domestic manufacturing, and create jobs within the country. However, these goals often come with consequences for international trade partners, including ASEAN countries that have become significant players in global supply chains.
Impact on ASEAN Economies
ASEAN countries, including Vietnam, Thailand, and Malaysia, have developed strong trade ties with the U.S., exporting a wide range of products from electronics to textiles. However, the renewed emphasis on reducing trade deficits has led to increased scrutiny of these relationships.
Vietnam, for instance, saw its trade surplus with the U.S. reach a record high of over $123 billion in 2024, marking a nearly 20% annual increase. This significant imbalance places Vietnam among the top countries with substantial trade surpluses with the U.S., alongside China, the European Union, and Mexico. The new administration’s focus on reducing trade deficits may pose a risk of tariffs on Vietnamese exports.
Thailand is also expressing concern over its trade surplus with the U.S., which stood at $35.4 billion last year. Prime Minister Paetongtarn Shinawatra has ordered a study to assess the potential impact of U.S. trade policies on Thai exports, particularly in sectors like agriculture and electronics. A task force has been established to plan trade and investment strategies with the U.S., aiming to mitigate potential adverse effects.
Malaysia, Indonesia, and the Philippines are closely monitoring the situation as well. While their trade surpluses with the U.S. are smaller, they remain vulnerable to broader protectionist measures targeting specific industries like electronics and automotive components.
Challenges for ASEAN
The imposition of tariffs and the emphasis on reshoring manufacturing pose significant challenges for ASEAN economies. Many companies had previously shifted production to countries like Vietnam to avoid tariffs on Chinese goods. However, with the U.S. now considering broader tariffs on nations with substantial trade surpluses, these strategies may no longer be effective.
Companies are exploring alternatives such as securing exemptions, diversifying suppliers, or relocating production to the U.S., though the latter may not be economically viable. The increased uncertainty surrounding U.S. trade policy may also deter foreign investment in ASEAN’s manufacturing sectors.
Furthermore, ASEAN countries are increasingly intertwined with China’s economy. The U.S.-China trade tensions could have collateral effects on ASEAN nations due to their deepening economic ties with both superpowers. Economies like South Korea, Taiwan, Thailand, and Vietnam are particularly exposed, with significant surpluses and growing trade relationships with both the U.S. and China. This situation suggests a ‘lose-lose’ scenario for these nations, caught between two economic giants.
ASEAN’s Response and Future Outlook
In response to these challenges, ASEAN countries are taking proactive measures. Vietnam has pledged to import more U.S. goods and implement other measures to mitigate the risk of tariffs. Thai officials are preparing for potential global trade conflict impacts and may consider increasing imports of U.S. liquefied natural gas and reducing import duties on American agricultural products to appease Washington.
Indonesia, Southeast Asia’s largest economy, has initiated dialogues with U.S. trade representatives to secure long-term agreements that provide greater stability for exporters. The Philippines is similarly focusing on strengthening diplomatic and trade relations with Washington to maintain favorable market access for its agricultural and electronics sectors.
ASEAN is also focusing on strengthening intra-regional trade to counter global uncertainties. By enhancing trade among member countries, ASEAN aims to mitigate the impact of external economic challenges and reduce reliance on external markets. Initiatives like the Regional Comprehensive Economic Partnership (RCEP) are expected to play a crucial role in this strategy.
U.S. Strategy and ASEAN’s Importance
While the “America First” policy underscores the need to reduce trade deficits, the U.S. remains aware of ASEAN’s strategic importance. The region serves as a vital manufacturing hub and a significant consumer market, with a combined GDP exceeding $3.6 trillion. Additionally, ASEAN’s geographic location makes it a crucial partner in the Indo-Pacific strategy, particularly as the U.S. seeks to counterbalance China’s growing influence.
U.S. companies have expressed concerns about the potential repercussions of protectionist measures on their supply chains. Multinational corporations like Intel and Apple, which have heavily invested in Vietnam and Malaysia, are lobbying for exemptions and clearer guidelines to minimize disruptions.
Moreover, U.S. officials have reiterated their commitment to ASEAN’s economic development. Initiatives like the Indo-Pacific Economic Framework for Prosperity (IPEF) are designed to foster collaboration in areas such as digital trade, clean energy, and supply chain resilience. Balancing these initiatives with the “America First” policy, however, remains a delicate task.
The Road Ahead
The evolving U.S.-ASEAN economic relationship under the “America First” policy presents both challenges and opportunities. Protectionist measures may pose immediate hurdles, yet they also encourage ASEAN nations to diversify their trade partnerships and strengthen regional cooperation.
ASEAN countries must remain agile, adapting to shifts in U.S. trade policy while pursuing strategies that enhance regional economic resilience. Simultaneously, the U.S. must carefully navigate its trade objectives to avoid alienating key partners in a region that plays a pivotal role in global trade dynamics.
As the world watches how these policies unfold, the coming years will be crucial in determining the future trajectory of U.S.-ASEAN economic relations in an increasingly interconnected global economy.
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