U.S. Trade tactics risk alienating Southeast Asia, benefiting Beijing

President Donald Trump’s trade program, characterized by broad-based import taxes, has created significant challenges for manufacturers across the Association of Southeast Asian Nations (ASEAN), including American companies. Instead of curbing China’s influence, these policies are fostering resentment and hindering supply chain diversification, ultimately diminishing U.S. influence in the region. Evan Feigenbaum, a former Republican diplomat, describes this as a “reverse pivot,” where the U.S. exhibits hesitation and retreat in Asia.

Following President Trump’s announcement of “Liberation Day” tariffs in April 2025, some ASEAN countries lowered non-tariff barriers and pursued agreements like Boeing sales and potential LNG contracts. While initially appearing successful, the Supreme Court struck down much of the tariff regime in February. The administration then implemented workarounds, including emergency measures and investigations into forced labor and intellectual property violations.

The concerns regarding labor practices, intellectual property, and excess capacity primarily relate to China, not Southeast Asia. This has resulted in a shift from a comprehensive Southeast Asia policy to one that treats regional partners as collateral damage in the effort to appear tough on China, weakening crucial alliances.

Multinational corporations have been redirecting manufacturing from China to countries like Vietnam, Malaysia, India, and the Philippines for nearly a decade, aiming to mitigate geopolitical risk. However, U.S. tariffs are disrupting this strategy, causing Southeast Asian export hubs to suffer from illicit transshipment and subsidized Chinese overcapacity.

Deborah Elms, head of trade policy at the Hinrich Foundation, notes that the U.S. created the incentives for alternative supply routes and is now penalizing those partners for utilizing them.

These tariffs are failing to achieve Trump’s stated goals. Domestic production lines are not shifting to the U.S. due to higher costs and a lack of skilled labor, and bilateral trade deficits with Southeast Asian economies remain largely unchanged.

ASEAN nations have historically employed “bamboo diplomacy,” balancing China and the United States. They prefer not to be dominated by Beijing, making the U.S. a natural partner. However, increasingly erratic and punitive U.S. policies are prompting them to seek alternative partnerships.

Canadian Prime Minister Mark Carney warned at the World Economic Forum in Davos in January that economic weaponization forces middle powers to organize. U.S. Ambassador to Singapore Anjani Sinha recently instructed local businesses to increase U.S. investments, a request that was poorly received, with capital instead flowing further into Asia.

This approach contradicts decades of bipartisan policy. Since the 1985 Plaza Accord, U.S. leaders have recognized that regional partners thrive under predictable, rules-based frameworks. The current transactional posture risks creating a lasting trust deficit.

With the U.S. withdrawal from the Trans-Pacific Partnership, ASEAN is building institutional networks that bypass Washington, including the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

U.S. companies are actively collaborating with ASEAN negotiators on the ASEAN Digital Economy Framework Agreement (DEFA), a framework spanning 11 nations and a $2 trillion digital marketplace. While Washington focuses on tariffs and disputes, Southeast Asia, with U.S. company input, is shaping the regulatory landscape of the digital economy.

Despite this, Southeast Asia does not seek to decouple from the United States. Four ASEAN nations—Vietnam, Thailand, Malaysia, and Singapore—are among America’s top 20 bilateral trading partners. Strong private enterprise, investment, and educational ties remain.

Ultimately, trust is vital in statecraft. U.S. influence in the Indo-Pacific has relied on a vision of mutual benefit and reliable rules. Continuing to treat Asian partners as transactional pawns risks economic isolation and strategic diminishment for the United States.