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Southeast Asia is breathing a collective sigh of relief after the United States finalized new, lower tariff rates for the region. On Thursday, July 31, the White House published a sweeping executive order that set reciprocal tariffs for a number of nations, with the new duties set to take effect on August 7.
Most Southeast Asian countries received a percentage ranging from 19% to 20%, a massive cut in comparison to the initial rates threatened by the Trump administration on April 2, a day the president had dubbed “Liberation Day.”
When President Trump returned to power, the Trump 2.0 administration adopted a far more aggressive trade stance. Its new policy, branded as “reciprocal tariffs,” caught global markets off guard with both its scale and severity. While several countries were affected, Southeast Asian nations, many of which have maintained large trade surpluses with the US, were particularly exposed to the initial high-rate proposals.
This was a sharp reversal for a region that had previously benefited from the first Trump administration's trade war with China.
In 2018, when Trump imposed massive tariffs on China, Beijing responded with its "China Plus One" strategy. This tactic involved shifting some manufacturing to Southeast Asian countries, a practice
often called "transshipping", to avoid the high tariffs. As a result, nations like Viet Nam, Thailand, Malaysia, and Cambodia saw an influx of manufacturing and investment.
However, with Trump’s second term, these countries became targets themselves. The initial tariffs threatened by the administration were as high as 46% for some nations, with the goal of both pressuring China and stamping out transshipping.
After a series of intense negotiations, most Southeast Asian countries secured a much lower number than the initial threat.
But what concessions did these countries have to make to strike a deal?
This summary highlights the new tariff arrangements for Viet Nam, Philippines, Indonesia, Malaysia, Thailand, Cambodia, Singapore, Laos, Myanmar, and Brunei.
Beofre diving in, here are a few key trade terms used throughout the article:
Trade - the buying and selling of goods and services between countries.
Trade deficit - when a country buys more from other countries that it sells.
Trade surplus - when a country sells more to other countries than it buys.
Reciprocal tariffs - when countries charge equal or matching fees on each other’s goods to keep things fair.
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-Asia Media Centre
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