US move puts South-east Asia's role in global supply chains at risk

Vietnam produces about half of sporting giant Nike's shoes, hosts an Intel chip assembly plant, and is a major hub for the production of Apple's watches and AirPods.

- Philip Wen Regional Correspondent Shannon Teoh Malaysia Bureau Chief Stania Puspawardhani Indonesia Correspondent

BANGKOK - Vietnam produces about half of sporting giant Nike's shoes, hosts an Intel chip assembly plant, and is a major hub for the production of Apple's watches and AirPods. Major apparel retailers Abercrombie & Fitch and Lululemon rely heavily on both Vietnam and Cambodia for their production. And electric carmaker Tesla signed a US$5 billion (S$6.7 billion) deal in 2022 to source nickel from Indonesia for its e-vehicle production.

South-east Asian nations have been among the hardest hit by the latest Trump tariff rout across the globe, which has dealt a heavy blow to the region's export-reliant economies, and potentially jeopardizes their growing role as a low-cost alternative to China in the supply chains of some of the world's most recognizable brands. This will in all likelihood translate to higher prices for consumers in the US and beyond.

Washington on April 2 said it will slap levies of 46 per cent on Vietnamese exports. Thailand will be hit by 36 per cent duties and Indonesia 32 per cent, as part of what the White House terms "reciprocal" tariffs that it says were determined by a calculation of levies and non-tariff barriers imposed on American exports.

The region's smaller economies were far from spared, with Cambodia at the receiving end of the highest reciprocal levy of all countries at 49 per cent, Laos at 48 per cent, and Myanmar at 44 per cent.

US consumers may also find higher price tags for Apple's ubiquitous iPhone and its range of Mac computers as well as the Microsoft Xbox gaming console, as a result of a 24 per cent tariff on Malaysian goods.

Countries across South-east Asia have in recent years sought to benefit from multinational companies seeking viable alternatives to China as a production hub for everything from electronics to garments.