During his campaign for the American presidential election, Donald Trump announced that he would be ready to toughen taxes on Chinese imports. While his first term resulted in good trade relations with the countries of South-East Asia, what will happen in the second if the 47th president carries out this threat?
6 mins
At the time when Donald Trump refines his government team before settling into the White House, the countries of Southeast Asia, the hub of the global supply chain, are preparing for an intensification of American protectionist measures. For this second term, the Republican promised an increase in customs taxes of 10% to 20% on imports and up to 60% on products from China. Measures which will inevitably shake up the established order of international trade.
During his first term, in 2018, Donald Trump had already put in place severe customs barriers on nearly $250 billion annually in Chinese imports, thus triggering a trade war with the Middle Kingdom. This time, he promises to go further. “ It probably won’t be 60% as announced, at first, but it will hit very hardanalyzes Ruben Nizard, economist specializing in North America at Coface. Donald Trump must be taken seriously. He followed through on his ideas during his first mandate on protectionism. »
Southeast Asia reaps the fruits of conflict
On the front lines of the trade war between Beijing and Washington is Southeast Asia. At the crossroads of the two economic giants, this region emerged victorious from the first political-economic conflict between the two powers, in particular Vietnam and Malaysia which saw their exports to the USA double between 2017 and 2022. There are transfer mechanics effects that were put in place during the first term, explains Marc Lautier, lecturer, specialist in emerging economies in Asia in Rennes 2 and Paris 13. Chinese companies or those that produced in China had a strong incentive to relocate to avoid the final product being labeled made in China. “.
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In the short term, “ there is a potential gain for Southeast Asian countries », predicts Marc Lautier. Under the second Trump term, initially, Southeast Asia is expected to maintain a steady flow of companies choosing to locate in the region in order to avoid trade barriers. Relocations will even be “ this time, more intense » said Jareeporn Jarukornsakul, CEO of WHA Group, a heavyweight in the field of logistics, the promotion of energy industrial zones and digital services in the region.
At the start of the year, as Trump prepared his campaign to retake the presidency, requests from Chinese clients to WHA Group increased, said the CEO. So much so that the company had to expand its sales force and add Chinese speakers to its teams.
A real opportunity for the region
In the long term, this investment flow should be an opportunity for Southeast Asia. It represents an opportunity to improve technological development, infrastructure and workforce training. This is the case for countries like Thailand or Indonesia and especially Vietnam, “ a big beneficiary of these production process substitutions », underlines Marc Lautier.
Thanks to its geographical proximity to China, its cheap labor and its quality infrastructure, Vietnam has become the new El Dorado for companies seeking to relocate their production. Technology giants such as Samsung, Apple and Dell have set up shop there and contributed to its rise in the production of smartphones and semiconductors.
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According to Anda Djoehana Wiradikarta, teacher and researcher in intercultural management, specialist in Indonesia, the benefits will be even wider: “ If the United States imposes taxes, the countries concerned will avoid the American market. This will encourage them to diversify their export markets. This is already seen through Beijing’s New Silk Roads initiative. China is a big investor in Indonesia, Thailand, and Laos. »
Southeast Asia also in Trump’s sights?
However, certain South-East Asian countries are not sheltered from Trumpist trade policy, due to their trade surplus vis-à-vis the UNITED STATES. Robert Lightizer, former foreign trade representative during the billionaire’s first mandate, judged in the columns of Financial Times that ” Our trading partners, especially those with large trade surpluses, should not blame us for a policy change. We would only be reacting to the harm they caused “.
The countries that could be targeted by customs barriers would therefore be Malaysia, the Philippines, Thailand and Vietnam. The latter described by Trump as “ worst attacker » in trade, records one of the largest trade surpluses with the United States, after China and Mexico. In 2022, Uncle Sam’s country had a trade deficit of $114 billion with Vietnam.
Southeast Asian countries could also attract Trump’s attention with the abuses of transshipment, which amounts to transporting goods to a third country, then to the final destination in a second step. “ It would seem that part of these flows [qui proviennent d’Asie du Sud-Est] represent goods that are still manufactured in China, but which would pass through Vietnam and Mexico in an attempt to avoid customs barriers », recalls Ruben Nizard.
Negotiations and new measures have already been put in place with Mexico to regulate the flow of Chinese steel and aluminum. Even if these transhipment stage countries do not “ will probably be in Trump’s sights, they do not appear to be the first targets. In priority, there is China, Europe, then Canada-Mexico », Tempers the Coface specialist.
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