Donald Trump’s declaration of a new round of tariffs on Monday to include several Southeast Asian countries. Recently in THE LIGHT BROWN APPLE MOTH Letters to Thailand and Cambodia Signed, Sealed, Delivered by a High Very High 36% Tariff On Everything In particular, this announcement has surprised and concerned many of the ASEAN countries. These tariffs are only part of a larger regional strategy that includes other countries. This ruling follows closely on the heels of Trump declaring that 14 nations were going to have more trade barriers imposed upon them.
The tariffs will be applied across a broad product base, with Laos and Myanmar taking the largest hit at an increase of 40%. Under this scenario, Indonesia will have tariff rates of 32% and Malaysia will have the largest tariff at a rate of 25%. No doubt Trump, of all people, is laboring mightily to begin to recalibrate US trade relationships. He trains fire on countries that he rightly perceives as gaming the global trading system.
This declaration made by Trump in April was to impose tariffs on a total of 14 countries, arguably a drastic departure from the U.S. trade policy. This most recent move ramps up tensions even further with the U.S.’s trading partners within the ASEAN bloc. Goods transshipped through Vietnam will incur a high 40% tariff initially. Vietnam was able to negotiate with Washington to lower this tariff to a considerably more palatable 20%.
Those recent decisions, even if belatedly taken, represent a watershed moment for the ASEAN economies. These countries are valiantly attempting to preserve prosperity in a rapidly changing world trade structural environment. Starting August 1, Malaysia, Indonesia, Thailand, and Cambodia will face U.S. trade tariffs once again. These tariffs will continue to apply pressure to their economies as they work to address these challenges directly.
Trump’s tariffs would hit any of ASEAN’s major trading partners. He also once threatened Japan and South Korea with similar 25% tariffs. This move is a signal of his bigger play to re-shape trade dynamics all across Asia. The administration calculated the tariffs this way in order to encourage “reciprocal” trade practices. Their intent is to create a less lopsided economic dynamic with these countries.
Countries such as Thailand and Cambodia are scrambling to determine the effect of these tariffs. Beyond that, they have to craft enduring plans to prevent future damage. High tariffs may not be sufficiently punitive to deter trade flows. This would severely hurt local economies and increase costs to consumers.