U.S. President Trump's ongoing tariffs could impact ASEAN economies. (Photo: White House)
Since President Trump took office, he has imposed additional tariffs on many imported products, raising concerns in some Southeast Asian countries about the potential impact and prompting them to devise countermeasures.
The Malaysian government has called on the solar industry to explore the ASEAN market and reduce reliance on the United States. Meanwhile, Vietnam has strengthened its infrastructure in renewable energy, which is seen as a way to ease the pressure from slowing export growth to the U.S.
As U.S.-China competition intensifies, ASEAN countries closely linked with China face challenges in avoiding the impact of increased tariffs. Vietnam, Thailand, and Malaysia are particularly vulnerable, with some even singled out as suffering significant economic blows. Trump's cancellation of electric vehicle-related subsidies and incentives could also hinder U.S. investment in Indonesia's nickel mines and battery factories, possibly triggering a supply chain crisis for electric vehicles in the region.
Malaysia's call for ASEAN unity for solar industry
According to the Malaysian Parliament’s official website, the Ministry of International Trade and Industry (MITI) responded in writing to a query from Member of Parliament Wee Ka Siong on March 3. The response highlighted that Malaysia’s investment incentive program for the solar industry complies with World Trade Organization (WTO) rules. Moving forward, the government will encourage local businesses to explore new markets, particularly targeting ASEAN countries, to reduce dependence on the U.S.
MITI emphasized that this initiative aims to foster greater cooperation among solar manufacturers within the ASEAN supply chain, enabling them to collectively tackle external challenges. It will also contribute to Malaysia's goal of becoming a regional hub for green technology.
Previously, Malaysia’s Minister of Transport, Anthony Loke Siew Fook, expressed that Malaysia should not rely solely on one market but should expand trade within ASEAN. However, he also noted that some large U.S. companies with operations in Malaysia continue to re-export solar panel components, such as chips, semiconductors, and electronic parts, to the U.S.
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MITI stated that in response to the impact of Trump's tariff war, it will promote collaboration among ASEAN solar manufacturers within the supply chain to jointly address external challenges. (Photo: iStock)
Vietnam likely to bear the brunt of U.S. tariff effects
With 30% of Vietnam's GDP coming from exports to the U.S., the tariffs have placed more pressure on Vietnam than on other ASEAN countries. Currently, the Vietnamese government is discussing potential solutions, including large-scale transactions such as importing substantial amounts of liquefied natural gas from the U.S., using American nuclear suppliers, or purchasing military transport aircraft to reduce the U.S. trade surplus and ease tensions in trade relations.
On the other hand, Vietnam’s policies to enhance low-carbon power infrastructure are expected to help mitigate the economic impact of U.S. tariffs. VinaCapital, a Vietnamese asset management firm, analyzes that the country’s National Power Development Plan (PDP8) is making significant investments in low-carbon energy development. Combined with infrastructure improvements in transportation, these initiatives are expected to drive domestic demand and compensate for the reduced exports to the U.S.
VinaCapital projects that the Vietnamese government will increase infrastructure spending by nearly 40% this year to $36 billion. Over 80% of this will be allocated to improving power generation and distribution capacity and upgrading Vietnam’s transportation network. If these projects are successfully implemented, they could contribute two percentage points to Vietnam's GDP growth this year.
Source: Bernama, Reuters, ING, Selangor Journal, The Investor
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