The future of ASEAN, US and China trade

(Part 1)

- EDUARDO ARARAL, JR.

At the end of the month, ASEAN leaders will convene in Kuala Lumpur, where on top of the agenda will be the future of trade between ASEAN and the US, between ASEAN and China and among ASEAN members. Collectively, ASEAN-US trade in 2024 amounted to about $555 billion compared with $968 billion for ASEAN-China trade.

The first part of this series will look at the status of bilateral trade negotiations among individual ASEAN countries and the US. Part 2 will look at the implications for ASEAN-China trade and Part 3 will look at implications for intra-ASEAN trade.

Vietnam: With the fourth-largest trade surplus with the US ($123.5 billion in 2024), Vietnam faces the steepest threatened duty of 46%. Hanoi has moved decisively. It held high-level talks in May and has already cut tariffs on many US goods. Vietnam is also cracking down on Chinese products routed through its ports to dodge US tariffs — a key American gripe. In return, it seeks to preserve critical export sectors (electronics, apparel) that have boomed thanks to US markets. The negotiations are accelerating: a second round of talks in Washington went through late May. Vietnam is dangling big-ticket deals to please Washington — from state oil firm PetroVietnam agreeing to buy more ExxonMobil crude, to Vietnamese companies planning new factories in the US. Officials hint a deal is within reach, as both sides aim to avoid a 46% tariff that would “disrupt Vietnam’s growth” and upend supply chains for US firms manufacturing there.