Trump tariffs hit Southeast Asia hard

Punishing levies threaten region's position as substitute for manufacturing in China

- ALEXANDRA STEVENSON

For years, countries such as Vietnam, Cambodia and Thailand have worked to turn themselves into alternatives to China for factories making the bags, electronics, shoes and auto parts that eventually end up in the United States.

That is now poised to change after President Donald Trump on Wednesday aimed his most punishing tariffs at countries in Southeast Asia.

The new tariffs examine how to American companies that have come to depend on factories in the region amid growing US-China trade tensions. Some were asking: Where to now?

"This will hurt worse than what most of us had anticipated," said Sonal Varma, chief economist for Asia excluding Japan at Nomura, the Japanese bank.

There were no illusions that any one country in Southeast Asia would be spared, but the size of the tariffs was a shock, as many of these countries are trade partners and allies with the United States.

Singapore, a close partner of the United States, said it was disappointed by the imposition of 10% tariffs despite a free-trade agreement with the United States and said that it would engage with the United States to understand how it calculated the tariffs.

Vietnam and Cambodia were singled out with new tariffs of 46% and 49% — among the steepest meted out to any country in the world, and accounting for other tariffs in specific sector and countries such as China and Mexico, the tariffs were high too, at 36% and 32%.