Trump Tariffs Leave Asean Searching for Silver Linings and Solutions

As countries scramble and markets plunge, it's a race to remain competitive and stay together.

- Deborah Elms

US President Donald Trump grandly labelled his economic policy of reciprocal tariffs as "Liberation Day." It was in honor, he said, of the liberation of the US market from the tyrannies of foreign economies.

Under Mr. Trump's sweeping economic plan which he unveiled on April 2 at the White House Rose Garden, every country was assessed a 10 percent tariff on products imported to the US starting on April 5. About 60 locations are due to receive much higher further tariffs on April 9.

Global markets quickly rendered a verdict on the announcements, with stock market indexes crashing. US stocks plunged with losses exceeding US$6.6 trillion (S$8.9 trillion) in two days. By the morning of April 7, Japan's Nikkei had to briefly halt trading as market turmoil continued unabated.

The fallout reflects growing concerns about the impact of Mr. Trump's tariff and economic policies on global growth. With market watchers increasing the odds of a recession in the US, Mr. Trump and his team have continued to insist that this sort of "short-term turbulence" is worth the immediate economic pain.

"I don't want anything to go down. But sometimes you have to take medicine to fix something," he told reporters.

The tariffs have severely punished places that are strong exporters, including most of Asean. Vietnam was charged 46 percent, Thailand at 36 percent, Cambodia at 49 percent, Indonesia at 32 percent, and the Philippines at 17 percent. These new tariffs threaten to undercut competitiveness, unsettle supply chains, and introduce fresh volatility.

At these tariff rates, it may be uncompetitive for US firms and consumers to continue to import from the region. This was probably why Vietnam's leader To Lam was quick to propose negotiations to eliminate tariffs.