Trump is reshaping Southeast Asia’s future

US Secretary of State Marco Rubio was handed an unenviable task on his visit to Malaysia for ASEAN meetings last week. He needed to signal US commitment to the region at the same time President Trump was releasing tariff decisions on social media. 

Despite claiming that many ASEAN countries would receive better tariffs than other parts of the world, he was given a diplomatic rebuke by ASEAN foreign ministers who declared that unilateral tariffs are counterproductive and “pose complex challenges to ASEAN’s economic stability and growth”. 

The awkward timing of Rubio’s visit perhaps reflects a deeper problem: President Donald Trump and his team appear to have paid little attention to the region.

When it comes to global affairs, the Middle East, Ukraine and trade with China have occupied much of their focus so far.

Likewise, Trump’s cabinet have had only limited engagement with the region to date. In addition to Rubio’s visit, Defence Secretary Pete Hegseth has visited Singapore and the Philippines. They’ve rolled out talking points about US commitment to the Indo-Pacific that have done little to reassure regional countries struggling to deal with US unpredictability.

Despite the apparent disinterest in Southeast Asia, whether by design or accident the Trump administration is making decisions that are fundamentally altering the region’s future. 

The question for ASEAN member states is whether they will take steps individually and collectively to shape their own future.   

Trump is exacerbating divisions within ASEAN. Unity in the bloc has always been paper thin. It has struggled to deal with difficult issues like the South China Sea or the conflict in Myanmar.

As current ASEAN Chair, Malaysian Prime Minister Anwar Ibrahim has called on member states to take a coordinated approach to negotiating US tariffs. The opposite has happened as each country has tried to strike its own deal. Vietnam was first out of the blocks in seeking a deal. 

The US has widened existing differences within the bloc on how to engage China by doubling down support for its close partners and alienating others. The delicate dance that ASEAN member states do as they hedge between the US and China is becoming trickier. 

Hegseth was vocal in his support for the Philippines, talking about an “ironclad” alliance in the face of China’s aggression in the South China Sea. 

Meanwhile, higher US tariffs appear to be targeted at countries that are seen as leaning towards China. Laos (40%), Cambodia (36%) and Thailand (36%) have been hardest hit. If the main game for the US is to compete with China, it’s unclear why the US is imposing hefty tariffs that will push regional countries closer to it. 

The Trump administration isn’t just exacerbating regional divisions; it is altering the economic outlook. Tariff decisions will amplify and accelerate long-term economic trends, creating winners and losers that in turn shift domestic political fortunes. 

Indonesia, Vietnam and the Philippines stand out as the likely winners. 

Indonesian President Prabowo Subianto just received a boost to his political fortunes after Trump announced a 19% tariff, down from an earlier 32%. Details are scant but Trump claimed the US would get tariff-free access to the Indonesian market. 

Cracks have been starting to show in the Indonesian economy. Prabowo’s 8% growth target is as distant as ever and even 5% seems challenging. The rupiah has weakened, the stock market has backed away from the highs of last year and the middle class is under pressure. While growth may still take a hit, this deal might be the boost that Prabowo needs. 

The strong economic outlook for Vietnam and the Philippines will be bolstered by their tariffs of 20%. The tariff on Vietnam is likely to put a dint in its 6% plus forecast growth for 2025. Likewise, forecast growth of 6% plus in the Philippines is likely to dip, though the impact is likely to be temporary. 

So far, Indonesia, Vietnam and the Philippines stand out as retaining their attractiveness for foreign investors. Unless Thailand and Malaysia can secure similar deals, they risk falling behind. The timing is particularly challenging for Thailand, as it yet again enters a period of political leadership uncertainty.

Nothing is ever set in stone with Trump. He’s flagged yet another deadline of August 1 before the tariffs come into effect, so countries still have a chance to negotiate better deals.

Of course, Southeast Asian countries have agency and are not completely beholden to Trump’s whims. Individually they can choose to undertake structural reforms, adjust their growth model and diversify trading partners. Collectively, there’s room to rethink ASEAN’s norms and procedures. But all these changes take time and political will. 

There will be plenty of twists and turns to come as we are not even a year into Trump’s presidency. But if existing trends continue, the long-term impact will be a region that is more divided, politically and economically.

Robert Law is Director of Advisory & Insights at Asialink, based at the University of Melbourne.

A version of this article was previously published on The Diplomat. 

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