Turning crisis into opportunity for ASEAN
In recent weeks, the global economy has been thrust into uncertainty by the United States’ (US) bold pursuit of economic dominance. In a move that has reverberated across international markets, President Donald Trump unveiled a sweeping set of punitive tariffs targeting imports from virtually all trading partners – no nation is exempt.
At the heart of this strategy is a minimum 10 per cent tariff on goods from countries exporting to the US.
However, certain nations have been subjected to even steeper levies, ostensibly due to longstanding trade imbalances that US officials believe have put American companies at a disadvantage.
Among the hardest-hit is China, which, at the time of writing, faces an extraordinary 125 per cent tariff on all exports to the US – the highest imposed under the new policy. Other countries, particularly in ASEAN, have also found themselves disproportionately impacted.
At least eight of the ten ASEAN member states face tariffs exceeding 20 per cent, with Cambodia, Laos, Vietnam, Myanmar and Indonesia experiencing some of the highest: 49 per cent, 48 per cent, 46 per cent, 44 per cent and 32 per cent, respectively.
As the tariff conflict intensifies, many governments have instinctively responded with retaliatory measures, assuming that mirroring the US’ actions is the most straightforward or effective course of action.
However, Senior Research Fellow for Innovation at the Economic Research Institute for ASEAN and East Asia (ERIA) Venkatachalam Anbumozhi presented a compelling counterpoint in his op-ed, Beyond Retaliation: How ASEAN and Asia Can Turn the Tide Against US Tariffs.
In his analysis, Anbumozhi argued that, for ASEAN and many other Asian economies, retaliation may not be the most effective response.
The US, despite its position as a global economic powerhouse, represents a relatively small share of these countries’ export markets.
According to data spanning 160 countries, the US accounts for an average of just 11.4 per cent of global exports, with a median of only 4.7 per cent.
For larger Asian economies, the numbers are similarly modest: the US makes up 18 per cent of India’s exports, 16 per cent of China’s and 19 per cent of ASEAN’s.
“Ironically, average import-weighted tariffs on US exports to these countries are already lower than the ‘reciprocal’ tariffs now being proposed by the US. This suggests the ‘fair trade’ argument is more a negotiating tactic than an economic strategy.”
Given these figures, Anbumozhi suggests that retaliatory tariffs might not serve the long-term interests of the region.
“Strategic, targeted countermeasures – like those employed by China – may be necessary, but they should be limited. A better approach would be to remain calm and focus on strengthening regional integration and economic resilience.”
That being said, the intensifying tariff war still poses significant economic repercussions for ASEAN and East Asia, given the region’s deep entanglement in global supply chains – particularly in the electronics and automotive sectors.
And given the region’s central role in global production networks, the economic fallout could be substantial.
However, rather than resorting to retaliatory measures, a more calculated, forward-looking strategy could serve ASEAN’s long-term interests.
“Tariffs disproportionately affect small businesses and consumers more than they do governments or large firms. So, retaliatory trade policies are not always the optimal response,” continued Anbumozhi in his op-ed.
By diversifying trade partnerships and strengthening regional cooperation, ASEAN has the opportunity to transform a crisis into a strategic advantage, fostering a more resilient and adaptive economic framework.
This proactive approach could mitigate the risks associated with trade disputes and enhance the region’s stability in an era of heightened global uncertainty.
“Rather than entering into a tariff war, ASEAN and Asian economies should prioritise reducing internal barriers to trade, enhancing regional cooperation, and investing in building resilient supply chains.
“The COVID-19 pandemic proved that Asian firms adapt quickly to shocks – often faster than governments. Now is the time to deepen ASEAN and East Asian economic integration – not only in goods but also in services and digital trade.”
His analysis suggests that ASEAN’s path forward lies in strengthening internal economic cohesion, reinforcing supply chain resilience, and fostering collaboration beyond traditional trade dynamics.
As global trade uncertainties persist, ASEAN’s ability to navigate these challenges through strategic alliances and economic adaptability will determine the region’s long-term prosperity.
“In short, policymakers should focus less on retaliation and more on reforms that improve the business environment, logistics, and cross-border infrastructure.”
Governments must prioritise next-generation policies that enhance supply chain adaptability, green logistics, and digital public infrastructure.
At the same time, businesses must rethink their strategies – embracing low-carbon, circular production models that not only reduce costs but also unlock new market opportunities.
As the US grapples with the consequences of its own protectionist policies, ASEAN and its Asian counterparts would be best served by maintaining economic stability.
He noted that the global trade war of the 1930s serves as a cautionary tale for today’s tariff disputes, having worsened the Great Depression – a mistake that must not be repeated.
With investor confidence increasingly fragile, he stressed that steady, pragmatic reforms remain the most viable path forward.
“The good news? If Asian economies stay calm, the worst of the damage can still be avoided. The burden of these tariffs will fall most heavily on the US economy.
“For everyone else, the smartest move is to carry on with meaningful domestic reform, strengthen regional ties, and let the numbers speak for themselves.”
At the time of writing, amid a looming global market meltdown, US President Donald Trump abruptly paused tariffs on most nations for 90 days, introducing a “substantially lowered reciprocal tariff” of 10 per cent, effective immediately.
At the same time, he sharply escalated duties on Chinese imports to 125 per cent, up from 104 per cent. – Wardi Wasil
