10/04/2025

THURSDAY | APR 10, 2025

/thesuntelegram FOLLOW / Malaysian Paper

ON TELEGRAM m RAM

10

How will Asean respond to tariffs? T RUE to his election promises, President Donald Trump has unleashed his tariff Shell-shocked analysts and investors in the share market bloodbath looking for some relief from the havoc and meltdown in markets 8 6 7DULIIV RQ $6($1 LQ &DPERGLD A N O T H E R T A K E

bazooka on the world to make America great again. Using the International Emergency Economic Powers Act, a rarely used presidential provision, the US president has imposed what the official announcement declares as a “national emergency to increase our competitive edge, protect our sovereignty, and strengthen our national and economic security” on April 2. Breakdown of targets The reciprocal tariffs unleashed apply to 183 countries and territories. Countries affected include key players in global trade such as China, Japan, India, South Korea, Taiwan, European Union (EU) countries, the United Kingdom, Switzerland and Australia. They also include small nations from the global south, especially Asia, that have benefited from export-oriented development, with virtually all of them facing a much higher imposition of the baseline 10% tariff on their US exports. In Africa, home to some of the world’s poorest countries, the African Growth and Opportunity Act, which has allowed African nations to export duty-free to the US since 2000, is now as good as dead. A small number of countries have been excluded due to earlier sanctions. They include Russia, Belarus, Cuba and North Korea. Canada and Mexico, though missing from the April 2 list, have had new higher tariffs imposed under prior orders. Stock market boom The impact of what Trump now refers to as his economic revolution has been staggering, with US stock market losses reaching into the trillions of dollars since his inauguration. The Dow Jones Industrial Average closed at 37,965 on Monday afternoon, down from an all-time high of more than 45,000 in December 2024. B Y L I M

/DRV

around the world will not be comforted by the down playing of stock market falls by White House senior counsellor for trade and manufacturing Peter Navarro. “The market will find a bottom. It will be soon and from there we’re going to have a bullish boom.” Navarro went on to predict that “the Dow is going to hit 50,000 during Trump’s term” and the S&P 500 is going to have a very broad-based recovery”. Unfortunately, the senior adviser was not asked when his predicted Dow boom was going to be realised. Trump’s term of office ends in November 2028 or much later should Trump decide on a third term that he has not ruled out. The next few months and years could well see the global economy enter into a prolonged recession led by the US. Impact on Asean countries Besides the downturn in share markets, the Association of Southeast Asian nations (Asean) is having to deal with the fact that among trading blocs and regions in the world, its member countries are the hardest hit by Trump’s tariff war. Within Asean, the worst affected are Cambodia, Laos, Vietnam and Myanmar. All are being hit with over 40% tariffs, which are amongst the highest in the world. Only the Philippines and Singapore, the most pro-American countries in the region, have gotten off lightly, with less than 20% tariff imposition. In a response on April 4, Indonesia’s Foreign Affairs Ministry in an official statement said: “Indonesia has communicated with Malaysia as the Asean chair to take joint measures, considering that all 10 Asean countries are affected by the imposition of US tariffs.” On its part, the Malaysian prime minister has responded that he “will continue to coordinate efforts G H E E

9LHWQDP 0\DQPDU 7KDLODQG ,QGRQHVLD 0DOD\VLD

T

K

E

C

%UXQHL

3KLOLSSLQHV 6LQJDSRUH

Asean countries are the hardest hit by Trump’s tariff war.

secretary of the country’s Communist Party, was able to get an early phone call to Trump to discuss the matter, ahead of Japanese Prime Minister Shigeru Ishiba, who is anxiously awaiting for his turn to get his call through. Lam’s call, described by Trump as “very productive”, has raised expectations that Trump’s transactional approach may permit a lowering of the announced Vietnam tariffs through negotiations and further concessions to the US. Other Asean member states will have reservations with a supplicatory approach, which may not bring much positive outcome given Trump’s proclivity to engage in public relations statements and unfulfilled promises. The more strategic approach would be to await the outcome of the EU’s retaliatory united front response to Trump’s tariffs and to work with the EU on the targeted countermeasures. Asean should also work with the Indo-Pacific and global south countries to tackle US protectionism and push for World Trade Organisation reforms and for a return to the rules-based economic and trade order which Trump’s economic revolution is seeking to destroy. Lim Teck Ghee’s Another Take is aimed at demystifying social orthodoxy. Comments: letters@thesundaily.com

to present a united regional front, maintain open and resilient supply chains and ensure that Asean’s collective voice is heard clearly and firmly on the international stage”. Any joint steps or united front will take considerable time and effort to organise even if there is consensus, which appears unlikely. The Philippines under Ferdinand Marcos Jr has put all its eggs into the US basket whilst Singapore may be reluctant to join a united front fearing it could endanger its current relationship with the US. Will Asean countries fight back? Vietnam, possibly the most badly affected Asean country, appears to have bent its knee in the hope of securing a substantial reduction in the tariff rate. In fact, even before the actual announcement of the new tariff rates, Vietnam had cut several duties as its concession to the US while pledging to buy more American goods, including planes and agricultural products. Describing the new tariff as “shockingly high”, Vietnamese and American businesses have requested the Trump administration to delay the 46% tariff on Vietnamese goods, saying the levy will hurt them and bilateral commercial relations. An indication that Vietnam may be able to get a discounted rate is the news that Vietnam’s leader, To Lam, general

“The more strategic approach would be to await the outcome of the EU’s retaliatory united front response to Trump’s tariffs and to work with the EU on the targeted countermeasures.