VARYING IMPACT ACROSS SOUTHEAST ASIA
For now, the impression of the sectoral tariffs will differ throughout Southeast Asia.
Late on Tuesday, it was reported that the White Home had paused its plan for the pharmaceutical tariffs, pointing to ongoing negotiations with pharmaceutical giants corresponding to Pfizer. These firms might earn a couple of years of reprieve, although international locations corresponding to Singapore should still face better dangers within the medium time period given its export of patented and branded merchandise.
The quick concern can be for small furnishings producers in international locations corresponding to Malaysia and Cambodia, which don’t have the assets to relocate manufacturing to the US.
Extra broadly, Southeast Asian governments face an unenviable conundrum: Their important recourse towards the upper sectoral tariffs is to proceed participating Washington to attempt to safe exemptions, however doing so reinforces Washington’s perception that tariffs work and incentivises their continued utilization.
The uncomfortable reality is that there’s little alternative however to proceed participating Washington within the quick time period. Within the medium time period, nonetheless, governments are creating commerce networks that cut back their publicity to US coercion to interrupt this cycle.
For instance, Indonesia lately signed free commerce agreements with the European Union and Canada, whereas Vietnam is exploring financial cooperation with the South American MERCOSUR grouping. Singapore additionally concluded the Future of Investment and Trade (FIT) Partnership with 13 different international locations, together with Chile and Rwanda.
If Washington really seeks self-sufficiency, governments may properly oblige their needs within the medium-to-long time period and discover different markets for his or her items. In spite of everything, “deal with us like we deal with you.”
Kevin Chen is an Affiliate Analysis Fellow with the US Programme on the S Rajaratnam College of Worldwide Research (RSIS), Nanyang Technological College (NTU), Singapore. He writes a month-to-month column for CNA, revealed each first Friday.
