The impact of tariffs on Southeast Asia’s economy is set to be severe, with the region facing significant disruptions in global trade and potentially even a decline in economic growth. As the United States continues to implement tariffs on various countries, Southeast Asian nations must adapt and find new opportunities for growth.
The global economy is facing unprecedented uncertainty as the United States, under President Trump‘s leadership, continues to implement tariffs on various countries. While some argue that these tariffs are necessary to strengthen the U.S. economy in the long term, others warn that they could have far-reaching and devastating consequences for Southeast Asian countries.
The current approach is misguided, according to ‘the United States was once open and generous in its trade policies during the Cold War era as a strategic tool to counter the Soviet Union‘s influence’ said Bilahari Kausikan, a former diplomat from Singapore who has been vocal about the impact of tariffs on global trade. However, with the collapse of the Soviet Union, there is no clear reason for the United States to continue bearing the burden of maintaining an open market.
Bilahari Kausikan is a Singaporean diplomat and scholar who served as the Permanent Secretary of Foreign Affairs from 2000 to 2015.
He played a crucial role in shaping Singapore's foreign policy, particularly in the areas of Southeast Asia and China.
Kausikan holds a Master's degree in International Relations from Columbia University and has written extensively on international relations and security issues.
Kausikan emphasizes that the current tariffs are not just about bringing manufacturing jobs back to the United States but also have significant implications for global trade and economic growth. He believes that the shift towards bilateral agreements between countries may lead to a fragmented approach, where specific industries or sectors are protected by tariffs, rather than having a cohesive trade plan.
The impact of tariffs on Southeast Asian countries is likely to be severe. With international trade accounting for 300 times the size of Singapore‘s gross domestic product, any disruption in global trade can have significant consequences for the country’s economy. ‘the volatility caused by tariffs could tip the global economy into recession‘ said Kausikan, leading to a loss of confidence and potentially even a decline in economic growth.
Moreover, the current approach may push Southeast Asian countries towards China as an alternative economic partner. However, ‘this is a simplistic view’ said Kausikan, as it assumes that these countries are naive and do not understand their own national interests. In reality, China itself faces significant challenges in raising domestic demand, and it is unlikely to be able to absorb the increased exports from other countries.
While some may argue that tariffs could lead to a shift in manufacturing jobs back to the United States, Kausikan believes that this will take a long time and may not even happen. He emphasizes that the United States lacks the skilled workforce needed to support certain industries, such as the semiconductor sector. Instead, he advocates for a more coordinated approach to trade policy, one that prioritizes cooperation and understanding between countries.
Ultimately, the impact of tariffs on Southeast Asian countries will depend on how these countries respond to the challenges posed by global trade. While some may be forced to seek alternative economic partners, others may be able to adapt and find new opportunities for growth. ‘the future of global trade is uncertain’ said Kausikan, but it is clear that a more coordinated and cooperative approach is needed to mitigate the risks associated with tariffs.
