ASEAN-US trade under Trump: lessons from 2017-21

Donald Trump's return as president is expected to complicate global trade. What are the implications for Asia, and what lessons can we draw from his previous term?

When Trump first took office in 2017, many multinational companies – anticipating rising US-China tensions – started “de-risking” by shifting supply chains toward ASEAN nations. These countries offered competitive costs, expanding infrastructure, and favorable policies.

As our first chart shows, this led to a marked divergence between China and the ASEAN countries' trade balances with the US, starting in about 2019. While the US deficit with China remained near 2017 levels, its ASEAN trade deficit soared. This trend continued under President Biden.

To be sure, much of this dynamic reflects the ongoing integration of Chinese inputs into Southeast Asian manufacturing; increased ASEAN exports are only possible with rising Chinese imports by those countries.

Will the ASEAN "connector economies" trade model be more directly affected by Trump's tariffs this time? The president-elect has proposed tariffs of up to 20% on all foreign goods, which would include friendly ASEAN states. However, Trump has proposed even higher levies on imports from China.

The president-elect's hawkish tone might moderate, but the potential for a Republican majority in both the House and Senate could mean Trump's administration would be relatively unrestrained in pursuing its policy agenda.

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