Trump tariffs send region topsy-turvy

Hello friends!

How’d your country go this “Liberation Day”? Australia got a 10% (what, no submarine discount!), but Norfolk Island got 29%. It’s miles away, sure, but that’s part of my electorate. I know it’s a lot to ask for sense, but a little bit would be nice. 

I’ve been stunned by what’s happened across the region. Southeast Asian countries make up five of the top 12 hardest hit. Usually, I’m a vocal hater of framing the region as a battleground for US-China power wars but I think this is an exception. The US tanked itself. 

Much more to come, but here’s where we stand 24 hours later, give or take. Some in the region want an Asean-combined approach, some are eyeing what can be picked up and Vietnam, I think, wants revenge. 

Haven’t heard a peep from Laos, Brunei or Timor and it’s barely the top 5 most important things in Myanmar this week, so we’ll check back in there later. 

Erin Cook

🇰🇭 Cambodia, World #1!

It’s rare to feel bad for the Cambodian government, but even the Huns deserve a bit of sympathy for waking up to the news that not only was Cambodia targeted with tariffs — it got the highest in the world! Clocking in at an ungodly 49%! “[Cambodia] made a fortune out of the United States,” Trump said during his announcement. 

Much has been written about the odd maths used by the White House to get to their numbers. Cambodia's exports to the US are worth $9.9 billion a year, while it imports $264 million in American-made goods. Ponnary, a trader at the famous Russian Market in Phnom Penh, broke it down for the Times: “It’s very simple. We are a poor country. Almost nobody here can afford anything the Americans make.” 

What can be done, asks Khmer Times. Not much says Casey Barnett, president of the American Chamber of Commerce in Cambodia. “There is very little Cambodia can do to counteract potential losses other than to offer duty-free access for US goods and fast-track licensing for US businesses such as Starlink,” he told the paper. Maybe a visit to Ream, he suggests. 

Former prime minister Hun Sen repeatedly chest-beated his way through threats and the implementation of sanctions and trade threats, largely due to his undemocratic garbage. Cambodia can survive, he’d say, vowing not to be bullied by Western forces. Time for the son to test if that’s true! 

🇻🇳 Clear-eyed Vietnam left in the cold

Vietnam has known this was coming. Vietnam has factored Trump in for months! But, by all reports, even Vietnam has been left dazed by the staggering 46% it’s been struck with. 

It’s “unfair” and “lacking scientific basis” — which could be said of most of Trump’s policies — the Ministry of Industry and Trade said yesterday. This VN Express piece has the maths, so click through if that’s your bag. 

What has really struck me here is the Vietnamese government’s reluctance to play the polite diplomacy game others in the region (and the world) have opted for: ‘The US administration stated the tariff aims to tackle global trade unfairness and reduce America's trade deficits. It would remain effective until the perceived trade issues are resolved. Vietnam’s trade ministry said that such a statement showed that there is no longer room for negotiation to achieve a good result for both Vietnam and the US,’ reports VNE. 

Measures had already taken place. Tax rates were slashed on Monday for American cars, wood products, ethanol and six agricultural products, the South China Morning Post reports. And the government was talking big about narrowing the trade surplus and buying more US goods. All for naught, I suppose. 

“If these tariffs remain in place, we could see gross domestic product growth forecasts for Vietnam being downgraded. Broad market sentiment will be negative given the importance of exports to the Vietnamese economy,” Ruchir Desai, a fund manager at Asia Frontier Capital in Hong Kong, told Bloomberg (via a free Straits Times link). 

🇹🇭 Thailand, wake up!

I almost said this a couple of newsletters ago, but I really mean it now. Thai Prime Minister Paetongtarn Shinawatra’s empty words are really driving me bonkers. Usually, it’s just about how her dad isn’t pulling puppet strings or whatever, but telling everyone that a 35% tariff slap isn’t worth worrying about is bananas. 

She’s vowed to enter into talks and all that, but I think what might be crucial here is that it is very well known that Thailand (along with a few others in the region) are hubs for Chinese products to be exported from to the US, dodging the existing tariffs there. Tricky, tricky!

Lowkey, she’s “justified” now in her full-attention shift to China. 

🇸🇬 Barely hit, but still wounded in Singapore

Singapore has been hit with the 10% minimum, in sharp contrast with the rest of the region. But that sigh of relief should only be brief, analysts warned the Straits Times. “Singapore will, however, be impacted by the massive deflationary shock to demand and trade. Manufacturing and exports will likely turn lower and contract in the coming quarters,” Dr Chua Hak Bin, co-head of macro research at Maybank, said. 

How’s this for a line heading into election season: “Our households and our businesses will have to be prepared for rough waters ahead of us,” Deputy Prime Minister and Minister for Trade Gan Kim Yong said separately yesterday. Yeesh! “It is still early days, because some of the information is still not fully available, so we will need to take time to reassess, adjust, to see whether we need to recalibrate our economic forecast,” he added.

🇮🇩 Is it planning or paralysis in Jakarta?

You better get this sorted out, business groups are demanding of the Indonesian government. The region’s largest economy copped a 32%, particularly damaging for the country’s manufacturing sector, after booking a $16.8 billion surplus in trade. 

Indonesian Employers Association (Apindo) chairwoman Shinta Kamdani wants to see a ‘coordinated’ approach in responding, with the government collaborating with business groups. Some coordination within the government is needed first. Airlangga Hartarto, the Coordinating Minister for the Economy, was expected to speak yesterday before a last-minute cancellation citing the need to speak with other ministries first, the Jakarta Post reports.

A statement issued later said the government was still making an assessment: “The Indonesian government will continue to communicate with the US government at various levels, including sending a high-level delegation to Washington, DC, to conduct direct negotiations.” Perhaps not overly reassuring to the business sector or those employed in the industries affected, but honest! 

Indonesia also said it’s reached out to this year’s Asean Chair, Malaysia, which is interesting, as we’ll get into right now! 

🇲🇾 Middle of the pack Malaysia looks to its Asean chair

Over in Malaysia it’s 24%. Could be better, could be way, way worse. Malaysia sends off palm oil, electronics and machinery in a trade surplus, the Edge reports, and ‘was removed from US’ monitoring list for currency manipulation of its major trading partners’ last year. 

The government is walking gingerly. “While respecting such sovereign decisions, Malaysia strongly believes in constructive engagement for mutually beneficial economic relations,” the Investment, Trade and Industry Ministry said in a statement as per Malaysiakini. “And we are committed to safeguarding Malaysia's economic interests and maintaining strong trade relations with the US.” 

The Malay Businessmen and Industrialists Association of Malaysia (Perdasama) has a similar idea to Indonesia: use the weight of Asean to push back. “With Asean solidarity, along with support from both the private sector and the government, more effective measures can be taken to safeguard Malaysia’s and Asean’s economic competitiveness,” Perdasama president Mohd Azamanizam Baharon said in a statement yesterday to the Star.

🇵🇭 It’s all about mindsets in Manila

Seventeen percent? What we worry, says Malacanang. “The impact of this won’t be too big. It will be very minimal,” Palace Press Officer Claire Castro said yesterday, as reported by the Inquirer. 

A very conspicuous lack of Asean solidarity is at play in Manila, where the loss of others in the region has been seen as potentially a gain for the Philippines. “The 17 percent tariff that will be imposed is good news because many countries are getting imposed with even higher ones. Among those countries, our tariff is at the second lowest just behind Singapore.” 

Indonesia and Malaysia will leave you out of the new group chat, then?