Vietnam had tried to appease Donald Trump: tariffs on US goods were reduced; regulations were passed to allow Elon Musk’s SpaceX to launch its Starlink in the country. The prime minister, Pham Minh Chinh, even joked in January that he would happily “play golf all day long” at Trump’s Mar-a-Lago home in Florida if it could “bring benefits to my country and my people”.
The strategies do not appear to have worked. Trump has inflicted an extraordinary 46% tariff on Vietnam that threatens to devastate its economic growth plans and undermine relations between the two countries. The tariff has sent shock waves through Vietnam, a manufacturing powerhouse where Trump has always been fairly popular, and across south-east Asia.
Across the region, which is highly dependent on exports, Trump is introducing similarly punishing tariffs, including in Cambodia (49%), Laos (48%), Thailand (36%), Indonesia (32%), Malaysia (24%), Brunei (24%), the Philippines (17%), and Singapore (10%).
The announcement has damaged the US’s reputation as a reliable partner in the region, said Kevin Chen an associate research fellow with the US programme at the S. Rajaratnam School of International Studies, in Singapore. The Trump administration’s approach was “unilateral, coercive, and undermines the trading system that countries in this region prospered under”, Chen said.
South-east Asia is a strategically important region for the US, especially in light of Washington’s competition with China and tensions in the South China Sea.
Vietnam and the US had grown closer under Trump’s predecessor, Joe Biden, with the two countries upgrading their partnership. Trump is known to be well liked in Vietnam, where his books are translated into Vietnamese, and he has gained respect as a businessman and as a politician tough on China.
Yet relations between the US and south-east Asia have been undermined in recent months. The tariff announcement comes on top of the gutting of USAID and other foreign assistance programmes, which halted life-saving projects across the region.
America’s image has also been damaged in recent years in countries including the Muslim-majority Malaysia and Indonesia, owing to Washington’s support for Israel during its war on Gaza. US companies have been targeted with prolonged boycotts in both countries.
China is expected to try to capitalise on the chaos. Xi Jinping, the Chinese president, is due to visit Vietnam, Malaysia and Cambodia this month and “will likely use the opportunity to portray China as a steadfast and reliable partner in contrast to the US”, Chen said. A slew of economic agreements are expected to be signed between China and those countries by the end of his visit.
In the longer term, whether China can leverage frustration in south-east Asia is less straightforward, say analysts, especially as Beijing risks becoming embroiled in a worsening trade war with its superpower rival.
Trump has threatened China with an extra 50% tariff, which will exacerbate the economic difficulties already affecting dynamics between China and its south-east Asian neighbours.
Peter Mumford, the head of practice for south-east Asia at Eurasia Group, said the region was “grappling with a flood of low-cost Chinese goods, and that’s going to get even more complicated”. The oversupply of cheap goods, from clothing to steel, had damaged small businesses and contributed to hundreds of factories closing in Thailand.
South-east Asian leaders will seek to diversify by looking to Europe or Japan, say analysts, while also scrambling to negotiate with Trump.
It is unclear what countries such as Vietnam can offer to placate Washington. Vietnam’s trade surplus with the US has surpassed $123bn, a figure that has grown rapidly over recent years as companies moved there from China to skirt tariffs imposed by the previous Trump administration.
“Trump would likely push Vietnam to commit to purchasing significantly more American goods and services. As Vietnam has been seen as a conduit for China to bypass US tariffs, the Trump administration may also demand that Vietnam restrict transshipment of Chinese goods,” said Phan Xuan Dung, research officer of the Vietnam Studies Programme at the ISEAS – Yusof Ishak Institute, in Singapore.
Vietnam was doing its best to negotiate to persuade the US to reduce the tariffs, said Khang Vu, a visiting scholar in the political science department at Boston College. But, he added, the US tariffs would “damage the Vietnamese government’s goodwill toward the Trump administration”.
He said Trump’s tariffs on Vietnamese goods showed Hanoi that, despite everything Washington had said of Vietnam’s regional importance, their partnership was “dispensable”.
Countries in the region would be cautious about leaning too closely to China, already south-east Asia’s largest trading partner. In the past the US had served as a counterbalance in the region. “The major difference this time,” said Chen, “is that they will need to account for a potentially unfriendly, if not hostile United States as well as an assertive China.”
