Trump’s Tariff Reversal: An Opportunity for Trade Realignment in Southeast Asia

For most ASEAN countries, tariffs have reverted to pre-Liberation Day levels but with an added 10 per cent burden likely to be passed on to US consumers | Photo by SEAN GALLUP / GETTY IMAGES EUROPE / Getty Images via AFP

In an article by Fulcrum, Deasy Pane and Siwage Dharma Negara argue that as trade policy takes a volatile turn under the US leader, ASEAN can seize the moment to diversify global partnerships and assert a stronger voice in the international trade order.

The tariffs were purportedly based on the rates other countries impose on the US, including considerations of “currency manipulation and trade barriers”. Despite claims of reciprocity, the tariff calculations lacked transparency. Some countries with large trade surpluses faced higher US tariffs, while others received a flat 10 per cent hike.

President Trump’s claim that long-standing US trade deficits stem from unfair trade is fundamentally flawed. While such practices may play a role, trade deficits are shaped by broader factors like domestic savings, investment levels, and consumer demand. Imposing universal tariffs as a fix is misguided and risks triggering far-reaching economic costs at home and abroad.

The response has been swift and mixed. The European Union (EU) reportedly prepared counter-measures, criticising the tariffs as violating World Trade Organization rules. Vietnam opted for diplomacy, proposing to eliminate tariffs on US goods, though Washington deemed the move insufficient. Indonesia announced its willingness to reformits non-tariff barriers and import more US goods. China is the only country that has responded in kind, initially imposing 34 per cent tariffs on all US imports, then raising them to 84 per cent, and now to 125 per cent.

But in a dramatic about-face just one week later, on 9 April, Trump announced a 90-day suspension on “reciprocal” tariffs (except for China) following pressure from American business leaders and investors worried about the US heading into recession.