Asian Nations Shift Trade Alliances To Avoid Trump Tariff Threats
Last week, President Donald Trump’s administration wrote letters to numerous trade partners, threatening massive tariffs unless new trade deals are applied by August 1. The letters have sent fright throughout Asia, as countries try to protect their economies and change trade strategies in response to the shift in U.S. policy.
The tariffs are part of Trump’s America First strategy, which he claims is a response to long-standing trade imbalances. According to the president, the U.S. has suffered for years from importing more than it exports, showing he wanted pity from countries like Vietnam, South Korea, and Indonesia. These demands have perplexed foreign leaders and led to a wave of diplomatic and economic activity as nations seek new partnerships to reduce their reliance on the U.S. market.
In Malaysia, Prime Minister Anwar Ibrahim urged fellow Southeast Asian countries to strengthen regional ties. “As we navigate external pressures, we need to fortify our foundations,” he said at a recent summit, calling for increased trade and investment within the region. Meanwhile, South Korea’s new president, Lee Jae Myung, has already sent requests to Australia and Germany to expand defense and trade cooperation.
Countries are also looking outside the U.S. to improve economic security. Indonesia is finishing a trade agreement with the European Union to limit most tariffs. Brazil and India announced plans to boost their trade by 70%, aiming for $20 billion. Vietnam, facing U.S. tariffs of up to 20%, is making trade deals beyond the American market.
Wendy Cutler, vice president at the Asia Society Policy Institute, noted that “as more and more countries are feeling that it’s more difficult to satisfy U.S. demands, then their interest in working with others is going to intensify.” The other countries are losing profits due to Trump’s tariffs, as they are now importing more than they export.
During Trump’s first term, when China faced tariffs from the U.S., it shifted soybean imports to Brazil, leaving American farmers struggling. South Korea, previously punished by China for hosting a U.S. missile system, responded by expanding ties with Indonesia, Malaysia, and Vietnam.
South Korea has resisted joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), although recent developments may force a reconsideration. “President Donald Trump has demonstrated a lack of commitment to traditional alliances,” said Byung-il Choi, a South Korean trade expert, saying that shared anxiety could finally bring Japan and Korea closer. South Korea is hesitant to join the CPTPP due to concerns over conflicts with its trade policies, domestic industries, such as agriculture, and the political implications of aligning more closely with certain member countries, such as Japan.
Economists like Dionisius Narjoko argue that Southeast Asia may benefit in the long term if nations invest in productivity and technology to remain competitive, especially as Chinese companies seek different manufacturing factories outside China. Still, a coordinated response has yet to be implemented. The BRICS alliance, now including Indonesia, has expressed its concern but taken no major action. Alexander Hynd of the University of Melbourne noted, “I haven’t seen indications that Southeast Asian nations are trying to join together and present a united front.”
As the August deadline comes closer, the world watches to see whether these nations will continue to negotiate separately or begin to act together.
