Southeast Asia grapples with US tariffs as Vietnam, Thailand bear brunt

Southeast Asian countries are reeling from US President Donald Trump's hefty tariffs, with Vietnam and Thailand particularly exposed, as the US imposed tariffs between 32 per cent and 49 per cent on six of the nine Southeast Asian nations listed by Trump.

This move follows a shift in production from China to Southeast Asia by manufacturers seeking to avoid tariffs on Chinese goods during Trump's first term, Caliber.Az reports citing foreign media.

Vietnam, a major exporter to the US with companies like Apple, Nike, and Samsung Electronics operating large manufacturing plants, has been hit with a 46 per cent tariff. This levy poses a significant challenge to Vietnam’s export-driven growth model, which accounts for nearly 30 per cent of the country’s GDP. Vietnamese Prime Minister Pham Minh Chinh has responded by ordering the establishment of a task force to address the situation. Despite the heavy tariff, Chinh maintained the country's 8 per cent growth target for the year.

"Vietnam's export-driven growth model has been highly successful, attracting multinational companies ... However, a 46 per cent US tariff would directly challenge this model," said Leif Schneider, head of international law firm Luther in Vietnam. In response, Vietnam is likely to offer more concessions to Washington in hopes of reducing the impact of these tariffs. "I expect negotiations to continue on ways to reduce or mitigate the impact of any new tariffs," said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi.

Thailand, which faced a 37 per cent tariff — much higher than the expected 11 per cent — also plans to seek negotiations with the US "We have to negotiate and get into details," said Thai Prime Minister Paetongtarn Shinawatra. Thailand’s growth has been lagging, with a 2.5 per cent increase in GDP last year, and it is aiming for 3 per cent growth this year.

Meanwhile, Malaysia, facing a 24 per cent tariff, announced it would not seek retaliatory tariffs but would actively engage with US authorities to maintain "free and fair trade." Cambodia, facing the highest tariff of 49 per cent, is struggling to cope, with its garment and footwear industries taking a major hit. A Cambodia-based investment consultant noted the situation was "very, very serious for the economy," with Cambodia having few options for negotiation.

By Vafa Guliyeva