Ever since Donald Trump became the 47th President of the United States (U.S.), the markets have grown increasingly concerned about the health of the world economy. Specifically, the outlook for the international trade order became uncertain as Trump’s 2024 election platform included expansive claims about new tariffs. Indeed, on 2 April, 2025, Trump unveiled his long-promised ‘reciprocal’ tariffs strategy, essentially imposing hefty import duties on more than a hundred of countries. However, less than a week after revealing his reciprocal tariffs, Trump adjusted his policy, declaring that countries that had not retaliated would receive a reprieve until July and would only face a blanket US tariff of 10%. At the same time, the tariffs on China were increased even further.
The principal idea behind Trump’s aggressive trade policy is that higher import costs would encourage global manufacturers to re-locate production into the U.S., while also pressuring other nations to buy more U.S. goods, thereby correcting the U.S.’s massive trade deficit. Thus, counties that run large trade surpluses with the U.S. have most to fear and most to lose from these tariffs. Many of these countries are located in South and Southeast Asia (see the table below). For these countries, Trump’s decision to pause the reciprocal tariffs for 90 days has offered a critical window for negotiation.
| Trade balance with the U.S. (million USD) | Share of U.S. imports | After reciprocal tariffs imposed | Total until July | |
| Cambodia | 9,652 | <1% | 49% | 10% |
| China | 359,850 | 13.4% | 34% | negotiations still ongoing |
| India | 42,931 | 2.7% | 26% | 10% |
| Indonesia | 12,638 | <1% | 32% | 10% |
| Laos | -109 | <1% | 48% | 10% |
| Malaysia | 15,744 | 1.6% | 24% | 10% |
| Myanmar | 361 | <1% | 44% | 10% |
| Philippines | 3,276 | <1% | 17% | 10% |
| Singapore | -11,850 | 1.3% | 10% | 10% |
| Thailand | 35,045 | 1.9% | 36% | 10% |
| Vietnam | 103,392 | 4.2% | 46% | 10% |
Source: International Monetary Fund, White House
The negotiations between the U.S. with China commenced and have already yielded some positive results. There is hope among other Asian states that similar productive discussions and agreements to mitigate the impact of the proposed tariffs can follow. The coming weeks are crucial as countries navigate the negotiation period before the 90-day pause expires, seeking to secure more favorable trade conditions with the U.S.
China is a central focus of the U.S. trade policy. In 2024, the total value of goods traded between two countries was approximately $582.4 billion. The U.S. relies heavily on Chinese imports of electronic equipment and machinery, while China primarily imports U.S. mineral fuels, oil seeds, electrical machinery and mechanical appliances. However, the trade balance significantly favors China, which recorded a $360 billion surplus with the U.S. in 2024, according to IMF data.
Last Monday, Donald Trump announced a broad trade deal with Beijing that lowered import taxes on all Chinese goods from 145% to 30%. China, in turn, lowered its tariffs on U.S. imports from 125% to 10%. The reductions will hold for the next 90 days, while the two countries negotiate a longer-term deal. A few days later, the U.S. cut the so-called ‘de minimis’ tariff for low-value shipments from China to as low as 30%. Meanwhile, the Chinese Commerce Ministry said it had paused some non-tariff measures taken against 17 U.S. entities put on its unreliable entity list in April and 28 U.S. entities on its export control list.
‘A full-blown trade war between the world’s two largest economies would have been disastrous for the global market. Thankfully, the officials agreed to de-escalate it quickly. However, we are still not out of the woods yet’, says Kar Yong Ang, a financial market analyst at Octa Broker, adding that a long-term trade agreement between China and the U.S. is yet to be finalized and that markets are being a bit too optimistic right now. ‘Let’s not forget that Trump tried to renegotiate a trade deal with China during his 1st term, but the talks failed in 2019 despite the fact that there was agreement in principle. And I personally believe that the markets are a bit too optimistic about the prospects for a grand deal this time’.
Indeed, U.S. equity indices have recovered swiftly following the decision to de-escalate, but the rally may not last. ‘It would not take much for the bearish sentiment to reemerge. Although tariffs have been lowered, the existing tariffs are still doing damage to the global economy. U.S. inflation is likely to pick up in the months ahead and that would prevent the Federal Reserve (Fed) from delivering on anticipated rate cuts, which may trigger a major selloff in equities’, comments Kar Yong Ang. Either way, other Asian countries are monitoring the progress carefully and are also engaged in active discussions with the U.S. officials.
Vietnam faces duties of 46% on its exports to the U.S. if a reduction cannot be negotiated before a global moratorium expires in July. As a major export-reliant industrial hub, to where numerous companies have relocated (not least in order to lower their exposure to China), Vietnam runs the second-largest trade surplus with the U.S. among Asian countries. It is, therefore, unsurprising, that the two countries began informal talks to avoid tariffs well before Trump announced global reciprocal duties on 2 April. Among the issues discussed are the reduction of Vietnam’s big trade surplus, the fight against trade fraud such as illegal transshipments, the lowering of tariff and non-tariff barriers for U.S. businesses and enhanced protection of intellectual property, including the fight against counterfeits and digital piracy.
‘Vietnam stands to lose a lot should trade talks fail. Companies like Apple, Nike, and Samsung Electronics have large manufacturing operations in the country and may consider leaving altogether if a 46% duty is introduced. I think Vietnamese authorities will do their best to achieve a trade deal with the U.S.’, commented Kar Yong Ang.
Indeed, just a few days ago, Vietnam News Agency reported that Vietnamese Prime Minister Pham Minh Chinh ordered a one-month intensive campaign to crack down on smuggling, trade fraud and counterfeit goods. Previously, the news surfaced that the Trump Organization was partnering with Vietnam on potential investments in hotel, real estate and golf course projects possibly worth billions of dollars.
According to the WorldBank, the U.S. is Vietnam’s largest export market with a share of at least 30% and more than $110 billion worth of shipments.
Thailand faces duties of 36% on its exports to the U.S. According to the Bangkok Post, Thai government had said that it would increase imports of U.S. goods, such as corn, soybean meal, crude, ethane, liquified natural gas, autos and electronics to reduce its bilateral trade surplus. In addition, the government submitted a separate trade proposal to the U.S., which included 5 to 6 key points. Last Monday, the head of Thailand Trade Representatives met with U.S. senators, congressional leaders, and major American companies, in a bid to reaffirm Thailand’s role as a key investor in the country and explore joint Thai-U.S. manufacturing.
‘Thailand has clearly taken the trade matters quite seriously despite its relatively small trade surplus. There are good chances that a final agreement could be reached before global pause expires in July’, commented Kar Yong Ang.
According to the WorldBank, the U.S. is Thailand’s largest export market with a share of at least 16% and more than $50 billion worth of shipments.
Malaysia faces duties of 24% on its exports to the U.S. However, Tengku Zafrul Aziz, Malaysia’s Minister of Investment, Trade, and Industry, recently said that he was ‘optimistic‘ for a trade agreement with the U.S. within a 90-day period. He visited the U.S. at the end of April and was fully committed to resolving the differences. ‘All communication lines remain open and we will continue to work towards an amicable solution to this reciprocal tariff matter’, Tengku Zafrul Aziz said.
‘It seems like the Forex market shares the trade minister’s optimism. The Malaysian ringgit has been strengthening lately. USDMYR may potentially drop below 4.240 if a trade deal is struck’, commented Kar Yong Ang.
According to the WorldBank, United States is Malaysia’s third largest export market with a share of at least 11% and more than $40 billion worth of shipments.
Indonesia plans to “narrow” or even eliminate its trade surplus with the U.S. by importing more agricultural products such as wheat, soybeans and corn from the U.S. Overall, Indonesia’s reaction to Trump tariffs has been rather muted probably because exports to the U.S. account for just around 2% of Indonesia’s Gross Domestic Product (GDP). Moreover, Indonesia’s exports are relatively well diversified and although the U. S. is an important export destination, its share is relatively minor.
According to the WorldBank, the U.S. is Indonesia’s second largest export market with a share of at least 10% and more than $30 billion worth of shipments.
On balance, Asian nations find themselves in a crucial period, actively negotiating with the U.S. to mitigate the impact of potential tariffs. While the progress achieved during the U.S.-China talks offers some hope, the diverse situations and negotiating stances of countries like Vietnam, India, Thailand, Malaysia, and Indonesia highlight the complexity of reaching widespread agreements. As Octa Broker analysts suggest, the optimism surrounding these trade discussions should be tempered with the understanding that lasting resolutions remain uncertain, and market reactions may be premature.
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