The recent surge in tariffs initiated by US President Donald Trump, particularly targeting China, is seen as a protective measure aimed at safeguarding American jobs and reducing trade deficits. The impact of these tariffs extends far beyond the borders of the US, affecting economies in the Global South, including countries across Asia, Latin America, and Africa. These regions, characterized by emerging markets, export dependencies, and developing infrastructures, have been significantly disrupted by the tariff turmoil resulting from the high tariffs imposed by the US on Chinese imports.
Southeast Asian economies, deeply integrated into global trade dynamics, are facing challenges from both Chinese exports and US tariffs. The redirection of Chinese goods, originally destined for the US market, towards Southeast Asia has intensified economic pressures in the region. An article co-authored by former Indonesian Minister of Trade Mari Pangestu warns of a potential influx of cheap Chinese goods, particularly in Indonesia, which could severely impact local job markets and manufacturing industries.
The solar panel manufacturing industry in Malaysia is also under strain due to US tariffs on Chinese goods. The shift in the solar module manufacturing landscape, with China gaining a competitive edge over the US, has led to closures of US manufacturing plants. The imposition of tariffs on solar panel imports from Southeast Asia by the Biden and Trump administrations has further exacerbated the situation, resulting in the closure or downsizing of Chinese manufacturing plants in Malaysia.
China’s dependence on ASEAN as its largest export market, coupled with the challenges of overcapacity and economic slowdown, is intensifying competition in Southeast Asian markets. The influx of low-cost Chinese products through e-commerce platforms is posing a threat to local manufacturers in countries like Indonesia, Malaysia, and Thailand. To counter these challenges, countries in the region are strengthening anti-dumping measures and imposing duties on Chinese imports to protect their domestic industries.
Despite being the largest export market in Southeast Asia in 2024, the US market access is facing uncertainties under the current administration. As ASEAN economies continue to grow and attract investments, the region is poised for faster growth compared to China in the coming years. The influx of Chinese goods poses a dilemma for Southeast Asia, as it navigates between the pressures from the US and China while striving to maintain economic growth and protect local industries.