ASEAN–USA: The End of the Trade Truce Is Near

Trump-era tariffs have also targeted Southeast Asia, pushing the region’s countries to seek agreements with Washington

By Anna Affranio

With the expiration of the trade truce symbolically set for July 8, the United States and ASEAN find themselves at a critical juncture. The announcement made on April 2—referred to as “Liberation Day” by the Trump administration’s rhetoric—has reignited tensions: Washington has announced its intention to impose tariffs on a wide range of products from, among others, Southeast Asian countries. 

Specifically, the tariffs would affect Cambodia the most (with duties up to 49%), followed by Laos (48%), Vietnam (46%), Myanmar (44%), Thailand (36%), and Indonesia (32%). Malaysia, Brunei, the Philippines, and Singapore would instead be subject to lower tariffs, ranging from 10% to 24% (according to an official source). According to Washington, these measures are meant to correct trade imbalances and protect domestic industries, particularly in the electronics, agri-food, and automotive sectors.

For many ASEAN countries, however, tariffs of this magnitude pose a serious risk to their economic model, which heavily relies on exports. For many of them, the United States is the primary export market. Moreover, in recent years, due to trade tensions between Beijing and Washington, the region has attracted massive investments from multinational companies seeking to reduce their dependency on China—a strategic position now threatened by the newly introduced tariffs. 

In an attempt to mitigate the damage ahead of the deadline, both multilateral and bilateral negotiations are underway. A multilateral summit between the United States and the entire ASEAN bloc is being arranged, with Singapore, Indonesia, and Vietnam pushing for an extension of the tariff truce—at least for the most sensitive tech sectors. At the same time, Malaysia, which holds the rotating ASEAN chair, has proposed an extraordinary summit with Donald Trump, aiming for a high-level political agreement.

On the bilateral front, individual ASEAN countries like Cambodia, Vietnam, and Thailand are conducting separate negotiations with the U.S. to handle tariffs in a more targeted and flexible manner. As for Vietnam, multiple negotiation rounds have already taken place, focusing on textile and electronics exports. Hanoi has pledged stricter controls against illegal transshipments of Chinese goods and has shown openness to increasing imports of U.S. products. The leader of the Vietnamese Communist Party, To Lam, was among the first foreign leaders to speak with the White House after “Liberation Day” and is directly involved in the negotiations. Thailand has also taken action. Its government was among the first to set up a technical team to negotiate a reduction of the current 36% tariff. Bangkok has submitted a proposal that includes expanding market access for American products and Thai investments in the U.S., potentially creating American jobs in return. According to the optimistic view of Thailand’s Minister of Commerce, negotiations could bring the tariff down to 10%. However, no official agreements have been signed yet. Cambodia, the hardest-hit by the tariffs and with exports to the U.S. accounting for about 38% of its total exports—mainly clothing and footwear—has responded similarly. Fearing severe economic and social consequences, its government has already held two rounds of virtual talks with Washington and aims to launch direct negotiations soon. As a goodwill gesture, Phnom Penh has cut import duties on 19 categories of U.S. products, reducing them from as high as 35% to around 5%, and has strengthened internal controls to prevent potential fraudulent export practices.

Meanwhile, China is watching and acting. Beijing has recently updated its free trade agreement with the entire ASEAN bloc and continues to strengthen cooperation with the region in infrastructure, logistics, and energy. The goal is clear: to present itself as a stable and predictable partner, in contrast to the more volatile and aggressive American trade approach.

Three scenarios are most likely: a technical extension of the truce for a few months, an immediate return to full tariffs, or an intermediate solution involving sectoral exemptions and quarterly monitoring. In any case, the risk is that ASEAN may emerge from this period more fragmented, as each country might pursue separate and independent negotiations with the U.S. This could have far-reaching consequences for supply chains, foreign investment, and the region’s overall geopolitical positioning.

The decisions made in the coming weeks will have long-term effects not only on ASEAN’s economy but also on the entire commercial architecture of the Asia-Pacific region.