By Deborah Kay Elms, Head of Trade Policy, Hinrich Foundation

US President Donald Trump arrived back in office in January determined to remake the global trading system.  For most of his life, he has believed that the world has taken advantage of the United States, citing as proof a persistently large US deficit in trade in goods.

This situation is particularly perilous for Southeast Asia, as the region has achieved impressive economic growth and development largely through deeper integration into global supply chains.  Export-led economies do not thrive in a protectionist world.

Initial Tariff Announcements and Their Calculation

The extent of the risk for the region was revealed on 2 April, when Trump made his now-famous pronouncements of tariff rates in a Rose Garden session outside the White House, with Southeast Asian economies featured prominently in the list.  Many received the highest “reciprocal” tariff rates, with Cambodia set to 49%, Vietnam at 46%, or Myanmar at 44%.  Even Singapore, which has a free trade agreement in place with the US, received 10% tariffs. 

The reason ASEAN members were punished with high rates had to do with the method of calculation.  The tariff assessment was based on the 2024 value of exports to the US divided by the value of goods imports from the United States.  There was nothing particularly “reciprocal” about the formula at all.  Given the high levels of exposure to the US economy and relatively limited imports, the region was badly affected.

Ongoing Challenges and Legal Battles

While the highest levels of “reciprocal” tariffs have not yet been applied, the risks are clear. 

Unfavourable reactions from markets led Trump to temporarily suspend the full amount, but since 5 April, every export to the US including all goods from ASEAN, have been assessed an additional 10% tariff at the border.  Trade partners have been given until 9 July to work out satisfactory bilateral deals to avoid receiving tariffs above 10%.  So far, no deals with partners in the region have been announced and timelines are getting short to do so.

The uncertainty surrounding Trump’s tariff agenda also increased with legal rulings in late May.  Trump had used a domestic law called the International Economic Emergency Powers Act (IEEPA) to justify his “reciprocal” tariffs. 

Two separate US courts ruled that the President had overstepped his authority in issuing tariffs under IEEPA and asked for the immediate withdrawal of all tariffs under the statute.  A rapid appeal filed by the Administration stayed the lower court decision, but the cases are likely to be sent to the Supreme Court.  In the meantime, tariffs are still being collected and the Trump team is insisting they have the authority to escalate tariffs as intended in July.  The internal legal battles could continue for months.

This situation has left Southeast Asia in a bind.  Failure to get relief from the highest levels of “reciprocal” tariffs could be devastating for companies in the region.  Yet getting agreements in place has proven difficult, with onerous demands from the US to trade partners, including changes to existing and future supply chain configurations.

Broader Tariff Threats: Section 232 and Beyond

Managing the “reciprocal” tariffs under IEEPA is difficult enough, but this is not the only tariff challenge faced by the region.  Trump has also moved to quickly capture a growing share of trade under Section 232 cases which use national security justifications as a reason to apply higher tariffs on imports.  So far, Section 232 affects steel, aluminium, and products made with these metals as well as autos and auto parts.  Metals tariffs were escalated from 25% to 50% on 4 June while autos and auto parts are currently assessed at 25%. 

There are seven other Section 232 cases pending in the US, including for pharmaceuticals, semiconductors and electronics, critical minerals, copper, heavy vehicles, lumber, and space.  As with existing Section 232 cases, the total coverage of goods under each of these sectors could be extremely broad, capturing a wide range of products exported from the region to the US.

Tariffs could be set at almost any level under Section 232.  Unlike IEEPA, it will be hard for the courts or Congress to challenge the administration’s ability to impose tariffs under this statute, as it covers national security.  Once in place, these tariffs are likely to remain in place for an extended period of time. 

Many of the products produced in ASEAN fall within the expanding list of covered sectors including auto parts, a wide array of electronic goods using semiconductors, and pharmaceuticals and medical devices.  Not all goods, however, are obvious candidates for a rule claiming the existence of a US national security threat.  Many items manufactured in the region and sent to the US in large quantities are items like textiles, garments, footwear, and food products.

Other US Trade Tools and Future Outlook

There are other tools the US administration might use against trade partners.  One, especially, may be worth noting.  Under Section 301, the US can claim unfair trade practices against a country.  This allows a sweeping set of potential retaliatory responses.  There is an existing Section 301 in place for China from the first Trump administration, and more could be filed against other trade partners.  Tariffs of roughly 20% against China under Section 301 starting in 2018 remain in place today.

The bilateral trade talks with Washington have focused primarily on the “reciprocal” tariff levels.  It appears to be increasingly urgent for ASEAN members to also address the application of current and future Section 232 and other trade regulations.

So far, the US has not really focused much attention on trade in services or digital trade.  Trump’s favourite tool, tariffs, cannot be easily applied to either.  But if his remaking trade policy agenda continues, it is possible to imagine a greater focus on services, investment, and digital trade in the future.

Conclusion

The return of a protectionist United States under President Trump has placed Southeast Asia in a sensitive position, given that the region’s economic success is deeply tied to global supply chains and export-led growth. There is an urgent need for Southeast Asia to diversify its trade partnerships, invest in regional economic integration, and build more resilient trade architectures that are less exposed to the policy swings of any single market. ASEAN cannot afford to wait—the region must act swiftly and collectively to safeguard its hard-earned economic gains in a world where the rules of trade are being rewritten in real time.

About the Writer

Dr. Deborah ELMS is Head of Trade Policy at the Hinrich Foundation in Singapore. Previously, she served as Executive Director and Founder of the Asian Trade Centre. Results-oriented and highly accomplished professional with extensive experience in international economics. Globally recognized as a thought leader and advocate for economic development and trade, skilled in working with both companies and governments to promote better economic policies, negotiate improved trade arrangements, and more effectively utilize trade agreements. Adept at understanding and navigating complex global economic regulations and building strong relationships with key stakeholders including governments, companies, international organizations, and trade associations. Previously, she was head of the Temasek Foundation Centre for Trade & Negotiations (TFCTN) and senior fellow of international political economy at the S. Rajaratnam School of International Studies at Nanyang Technological University, Singapore. Dr. Elms received a PhD in political science from the University of Washington, a MA in international relations from the University of Southern California, and bachelor’s degrees from Boston University.

The views and recommendations expressed in this article published on June 2025 are solely of the author/s and do not necessarily reflect the views and position of the Tech for Good Institute.