Vietnam’s booming exports at risk
Vietnamese entrepreneur Hao Le saw a chance when Donald Trump first imposed tariffs on China in 2016. His company, SHDC Electronics, quickly filled the gap left by Chinese exporters, shipping $2 million worth of phone and computer accessories to the US each month.
But now, with Trump threatening 46% tariffs on Vietnamese goods, Le fears it could all collapse. “It would be catastrophic for our business,” he says. “We cannot compete with Chinese products—not even in our own market.”
Vietnam is just one of several fast-growing economies that benefitted from the earlier wave of tariffs. But if Trump returns to office and reinstates these taxes, those same countries could become collateral damage.
A fragile balance between China and the US
Trump’s initial tariffs redirected a flood of cheap Chinese goods into South East Asia, undercutting local industries. At the same time, they created new openings for regional players eager to join global supply chains.
That balance is now under threat. Nations like Vietnam, Malaysia and Indonesia find themselves wedged between their top trading partner—China—and their key export market—the US. Both giants want loyalty, but most in the region are refusing to pick sides.
“We can’t choose, and we will never choose,” Malaysia’s trade minister Tengku Zafrul Aziz said ahead of Chinese President Xi Jinping’s visit this week. Xi’s trip to Vietnam, Malaysia and Cambodia came at a moment of mounting pressure, while the US is reportedly seeking commitments from smaller nations to limit trade with Beijing.
Southeast Asia scrambles for a response
After Trump’s latest tariff announcement, regional leaders scrambled to protect access to the US market. Vietnam offered to scrap tariffs on American imports. Thailand’s prime minister planned a visit to Washington, promising more US investment. ASEAN, meanwhile, ruled out retaliation and stressed its partnership with the US.
These efforts reflect the stakes: Vietnam hosts factories for global giants like Samsung, Intel and Foxconn. Thailand relies on the US as its largest export destination. Malaysia supplies vital chips for American-bound electronics.
Yet Trump’s proposed tariffs are steep—24% for Malaysia, 32% for Indonesia, and 49% for Cambodia. Economists warn this could reshape global investment flows.
“If this continues, companies will rethink their commitments,” said Malaysia’s Zafrul. “It won’t just hurt us—it will affect the global economy.”
China’s surge swamps local markets
At the same time, cheap Chinese goods displaced by tariffs on the US are flooding local markets. In Indonesia, sleepwear seller Isma Savitri says she’s losing business to Chinese competitors selling near-identical designs for half the price.
More than 100 factories have closed monthly in Thailand over the past two years, and in Indonesia, over 250,000 textile workers have lost their jobs. Vietnam, Thailand and Indonesia have all introduced anti-dumping measures or tighter import rules in response.
“This is a wake-up call for the region,” said Malaysian economist Doris Liew. “It’s not just about reducing reliance on the US—but about not over-relying on any one trade partner.”
Can China maintain favour?
President Xi’s Belt and Road Initiative has built bridges, ports and power plants across the region, securing China’s role as a critical partner. But it hasn’t been smooth. Disputes in the South China Sea have soured ties with several neighbours.
China’s leaders now worry that offloading goods blocked from the US into nearby countries could worsen diplomatic tensions. “If Chinese exports swamp these markets and cost jobs, that’s a geopolitical headache for Beijing,” said analyst David Rennie.
While Laos and Cambodia remain staunch allies, others—like Vietnam, the Philippines and Malaysia—are more cautious, balancing economic benefits with sovereignty concerns.
Winners in the shake-up?
Still, there may be short-term gains. Malaysia, for example, dominates global rubber glove production and could profit as buyers avoid 145% tariffs on Chinese-made goods in favour of Malaysia’s 24%.
“Customers will pay more for Malaysian gloves, but not that much more,” said Oon Kim Hung, head of Malaysia’s rubber glove manufacturers. “We’re not celebrating, but this could help our industries—and those in Vietnam, Cambodia and Thailand.”
In Vietnam, Hao Le says US buyers are already reaching out, eager to shift their supply chains. “What used to take months now happens in days,” he says.
For now, South East Asia is trying to walk a tightrope—trading with both sides, while preparing for fallout from a tariff war that may not be over yet.
