President Donald Trump’s recently announced US tariffs are reorganising global trade and significantly impacting the tech ecosystem in Southeast Asia. According to the BBC, the president levied import tariffs on goods entering the United States from its trading partners, claiming they had “taken advantage” of his country through unfair trading practices.
Dubbed “Liberation Day”, President Trump announced he would set a baseline tariff of 10% on all imports from other countries except Mexico and Canada. The European Union (EU) and China, whom he dubbed some of the “worst offenders” in imposing high tariffs and trade barriers against the US, would get higher rates. Moreover, Southeast Asia’s tech ecosystem was hit with tariffs as high as 46% for Vietnam and others who benefited from the realignment of supply chains in 2018-19, when the US and China were engaged in the first trade war.
Why Southeast Asia is betting big on semiconductors and how chip startups are joining the race
President Trump declared economic independence, stating his goals for the tariffs were to address other countries’ policies that have fueled high trade imbalances with the US. He gave other reasons, such as helping to boost US manufacturing by bringing businesses back and protecting jobs by preventing companies from leaving the USA to set up shop in countries such as China and Mexico, which have lower production costs.
Furthermore, he wanted to encourage US consumers to buy more American-made goods and strengthen national security by reducing the country’s overreliance on other nations for vital goods and tech components.
Impact of US tariffs on Southeast Asia
The new commerce battles differ slightly from 2018’s US-China Trade War, which focussed on one nation only, whereas the latest tariffs target countries worldwide. The primary target is still China due to an import-export imbalance, tech competition, accusations of intellectual property (IP) theft, and national security fears of dependency on a rival’s manufacturing capabilities. Nevertheless, President Trump is trying to realign global trade for his country’s benefit by seeking reciprocal tariffs with all of America’s trading partners.
Here are some of the likely impacts of the tariffs on the Association of Southeast Asian Nations (ASEAN):
Shifting assembly and production to Southeast Asia
BBC News mentioned comments from analysts who pointed out that some Chinese goods enter America via neighbouring Southeast Asian nations, meaning they can avoid up to 145% tariffs. The trade war may escalate to unmanageable levels, causing more regional countries to bear the brunt of tariffs aimed at preventing them from being willingly used by China to evade charges.
In the first trade war, US companies in China started moving their manufacturing and assembly plants to Southeast Asia because they felt the tariffs’ pinch. Reuters reported that survey respondents felt pressure on their profits, reduced product demand, and significantly increased production costs. Major tech firms started shifting their assembly and production to countries like Vietnam.
Rise of investments in ASEAN
The predicted venture capital (VC) trends of 2025 did not anticipate the ensuing global tariff wars. Even so, expectations are that investments will flow into ASEAN as companies relocate from China and open subsidiaries in Southeast Asian markets to avoid the high US tariffs.
Regional countries are also coming together, with China making a move to connect with Vietnamese officials. President Xi Jinping and Vietnam’s Prime Minister Pham Minh Chinh signed agreements to strengthen cooperation in supply chains, develop the USD 8 billion railway project that connects both nations, and protect the environment.
Vietnam and the US also indicated they would negotiate a trade deal to remove as many non-tariff barriers as possible. Even though the US has paused the higher tariffs for many countries, Southeast Asian governments must come together to resolve any trade conflicts and uplift their region.
According to Chatham House, Malaysia’s Prime Minister Anwar Ibrahim, who holds ASEAN’s rotating chair, said the nations will reach out to the Trump administration to negotiate while looking to diversify trade relationships beyond the United States. President Xi Jinping visited Vietnam, Malaysia, and Cambodia from April 14th until 18th to work with the region to fight against these tariffs.
This approach will help bring investments, create jobs, and allow local startups to learn from each other and boost their innovation capabilities.
Outlook on Southeast Asia’s tech scene in the coming years
The US tariffs have increased global market volatility and interfered with supply chains, drawing nations away from China and forcing them to work with the US instead. The ASEAN tech ecosystem will benefit briefly from the shift in supply chains, but they must sustain the benefits and earn more.
Overall, the tech ecosystem in Southeast Asia can overcome the trade wars and market fluctuations to make a deal with the US. The eConomy SEA Report 2024 envisions a successful future with profitability on the horizon and investment in sustainability as many sectors and technologies like AI continue advancing.