US President Donald Trump’s return to tariff diplomacy is on full display in Southeast Asia as he boasts of trade deals with first Vietnam, then Indonesia. The region faces some of the world’s steepest US tariffs come August 1, and many countries have rushed into last-minute talks to avoid economic fallout.
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Trump has announced a 19 per cent tariff on all Indonesian goods entering the United States under a deal, down from 32 per cent, with Indonesia agreeing in return to buy 50 Boeing jets and spend US$19.5 billion on US energy and farm products – essentially prepaying for tariff relief. This mirrors Vietnam’s deal of a 20 per cent tariff, down from 46 per cent, by essentially agreeing to curb Chinese transshipments.
Since Trump launched his global tariff war in April, introducing a baseline 10 per cent and threatening additional tariffs unless countries negotiated US trade deals, few countries have signed up. Other than Vietnam and Indonesia, only Britain has a deal. Others, such as the European Union, are readying retaliatory measures even as they continue to negotiate a deal.
For Southeast Asia, these arrangements signal a shift in the US trade strategy – one that threatens to turn Asean members from competitive manufacturing hubs into “fee for access” economies.
Washington isn’t offering real integration or mutually beneficial trade. Instead, it’s monetising market access, demanding higher tariffs and mandatory purchases. This transactional model may score short-term wins for US negotiators, but it undermines the competitiveness and sovereignty of the Association of Southeast Asian Nations, tying the region into a rent-seeking system rather than a strategic partnership.
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For starters, US tariffs on most Asean exports have risen dramatically, with access to the American market monetised under the guise of “deals”. Even goods from Vietnam and Indonesia, which used to face most-favoured nation tariffs of 9.4 per cent and 8 per cent respectively on average, now attract more than double that.