Use 90-day tariff pause to plan long-term shift away from US, Asean told

Asean faces new trade challenges as US tariff uncertainty looms, with experts urging the bloc to use the 90-day pause to reconsider trade dependencies and focus on regional cooperation.

PETALING JAYA: 

Economists say Southeast Asian nations can leverage the 90-day tariff pause to plan a reduction in trade dependence on the US for greater long-term economic resilience.

Jayant Menon.

Jayant Menon, a senior fellow at the ISEAS-Yusof Ishak Institute, said the current uncertainty in US trade policy makes it critical for Asean countries to diversify their trade patterns.

“This is unlikely to be the end of uncertainty in US trade policy,” he told FMT.

“Southeast Asian countries should negotiate as a group with the US to secure a reduction or elimination of recent tariff hikes, but this should go hand-in-hand with reducing reliance on the US market.”

Universiti Malaya economist Goh Lim Thye shared a similar view, saying Asean can no longer rely heavily on one major market.

“Asean countries must negotiate diplomatically while pivoting decisively,” he said, adding that countries that reform quickly will have the upper hand.

On Thursday, US President Donald Trump announced the temporary pause on the imposition of import tariffs, excluding those imposed on China.

He had on April 2 slapped steep “reciprocal” tariffs on a host of countries, including many of Washington’s Southeast Asian trading partners, with Cambodia facing 49%, Laos (48%), Vietnam (46%), Malaysia (24%), and Singapore (10%).

Jayant and Goh pointed to the Asean Economic Community (AEC) as a potential platform to help Southeast Asia reduce its reliance on US trade.

Launched in 2015 to create a single market and production base, the AEC has seen slow progress in removing trade barriers, with analysts noting that nearly 20% of planned measures missed their initial deadline.

Jayant attributed the framework’s slow progress to protectionist interests within member states, but the possibility of losing a key trade partner like the US may finally push everyone to fast-track inter-Asean trade via the AEC.

Goh Lim Thye.

“When you are forced to replace an important trading partner, then new things are now on the table. And dealing with various non-tariff barriers could be part of that new response,” he said.

Goh described the AEC as “the only credible path” to make a “minus-US” trade strategy work.

“If tariffs and external shocks are now structural features of the global economy, then regional economic self-strengthening is no longer optional—it’s imperative,” he said.

Still, Jayant said that the Regional Comprehensive Economic Partnership (RCEP), a 15-nation trade pact which includes China, Japan and South Korea, may be more relevant than any Asean trade framework.

“In Asean, there are a lot of similar countries and not enough complementarities. There’s more substitutability,” he said, adding that most are linked through global supply chains and not trading much with each other.

Countries like Malaysia, Singapore, Thailand and Vietnam focus heavily on electronics, while Indonesia and the Philippines lean toward commodities—creating overlap rather than synergy. - FMT