One year of Trump tariffs: What has changed and what’s next for South-east Asia?

Nguyen Thi Lan still remembers the WhatsApp messages that flooded her factory floor in Bac Ninh on the morning of April 3, 2025. The production manager at a Foxconn supplier had stayed up watching the “Liberation Day” announcement from Washington—and by dawn, she was fielding panicked calls from buyers in Texas who wanted to know whether to rush their orders before new tariffs hit. Within seventy-two hours, her factory was running double shifts. Twelve months later, that same plant exported more electronics than ever before. Her story, repeated across thousands of workshops from Hanoi to Ho Chi Minh City, encapsulates the central paradox of one year of Trump tariffs on South-east Asia: a region initially earmarked for punishment has, in many respects, survived—and in some corners, even thrived.

But survival is not the same as security. Twelve months on from Liberation Day, the landscape for Trump tariffs in South-east Asia has been permanently altered by front-loaded shipments, bilateral deal-making, a landmark Supreme Court ruling, and now a fresh wave of legal uncertainty. The full reckoning is still unfolding—and what comes next may be more consequential than the original shock.

The Initial Shock: Liberation Day Hits ASEAN Where It Hurts

On April 2, 2025, President Donald Trump invoked the International Emergency Economic Powers Act (IEEPA) to impose a 10% baseline tariff on most US imports, layered with country-specific “reciprocal” duties tied to bilateral trade surpluses. South-east Asia bore a disproportionate share of the pain.

The headline rates were staggering:

• Cambodia: 49%
• Vietnam: 46%
• Thailand: 36%
• Indonesia: 32%
• Malaysia: 25%
• Philippines: 17%
• Singapore: 10%

For a region whose economic model is built on export-led growth and deep integration into US-bound supply chains, the numbers were existential. Vietnam’s exports to the United States had reached $136.6 billion in 2024, representing roughly 30% of its GDP. Cambodia’s garment sector, which ships nearly 40% of its textiles to American retailers, faced near-annihilation at a 49% rate. Thailand’s automotive and electronics exporters confronted the steepest competitive shock in a generation.

The CSIS Southeast Asia programme noted that Vietnam, Indonesia, Thailand, and Cambodia were among the first governments to reach out to Washington after the announcement, reflecting acute exposure rather than diplomatic formality. ASEAN’s collective response was muted—Malaysian Prime Minister Anwar Ibrahim urged a unified bloc response, but cohesion proved elusive when every nation was simultaneously scrambling for bilateral favours.

How South-east Asia Weathered the Storm

The region’s initial survival relied on four mechanisms that, taken together, blunted the sharpest edges of the tariff regime.

Front-loading and shipment surges were the first reflex. US importers, facing an April 9 implementation date on the reciprocal tariffs, accelerated orders en masse. Vietnam’s Hai Phong port logged record throughput in Q2 2025. According to PwC’s Vietnam economic update, total exports grew by approximately 16% in the first nine months of 2025, led by electronics, computers and components—up 46% year-on-year—with the US accounting for roughly 32% of total exports throughout. Some of this was inventory stuffing; buyers pulled forward months of orders to beat the tariff clock. It worked—temporarily.

The ninety-day pause bought critical breathing room. Within a week of Liberation Day, Trump suspended the reciprocal tariffs after claiming over 75 countries had sought negotiations. That window became the region’s dealmaking season.

Sector exemptions provided a structural lifeline, especially for technology. Under heavy lobbying from Apple, Nvidia, and other US tech giants, consumer electronics—including laptops, smartphones and components—were carved out of the reciprocal tariff regime. This was quietly transformative for Malaysia and Vietnam, where semiconductor and electronics exports constitute the bulk of trade flows. The Lowy Institute estimates that Malaysia’s effective US tariff rate in late 2025 was approximately 11%—far below its headline 19% rate—precisely because electronics, its dominant export, remained largely exempt.

Bilateral deals followed in rapid succession. By October 2025, the US had announced trade agreements with Cambodia and Malaysia and framework deals with Thailand and Vietnam at the ASEAN summit. These deals collectively covered approximately $323 billion in US-ASEAN trade—about 68% of the two-way total. The resulting tariff rates, 19% for most ASEAN exporters and 20% for Vietnam, were far higher than pre-Liberation Day levels, but dramatically lower than the initial shock rates—and, critically, lower than the 145% still applied to Chinese goods.

The deals had teeth beyond tariffs. Cambodia and Malaysia agreed to adopt US tariff schedules on third countries—a thinly veiled anti-China clause. Vietnam committed to cracking down on transshipment, accepting a punitive 40% levy on goods rerouted from China. Malaysia pledged a $70 billion capital investment fund in the US and commitments to purchase $150 billion in American semiconductors, aerospace components and data centre equipment over the life of the deal.

The Supreme Court Ruling: Game Changer or New Uncertainty?

The most dramatic chapter of this twelve-month arc arrived not in a trade negotiating room but in the marble halls of the US Supreme Court.

On February 20, 2026, the Court ruled 6-3 in Learning Resources, Inc. v. Trump that IEEPA does not authorise the President to impose tariffs. Chief Justice John Roberts, writing for the majority, held that IEEPA’s authority to “regulate importation” cannot be stretched to encompass the power to tax—a power that, under the Constitution, belongs to Congress alone. “Those words,” Roberts wrote of the two clauses invoked by the administration, “cannot bear such weight.” The ruling invalidated both the reciprocal tariffs and the fentanyl-related duties on China, Canada and Mexico—the entire IEEPA-based tariff architecture.

The Court’s decision was, technically, a victory for free trade. In practice, it was a pivot, not a retreat.

Within hours, Trump signed a proclamation invoking Section 122 of the Trade Act of 1974 to impose a replacement 10% global tariff, which he raised to the statutory maximum of 15% the following day. Section 122, rarely used before this administration, authorises a temporary import surcharge of up to 15% for up to 150 days to address balance-of-payments deficits. Treasury Secretary Scott Bessent stated publicly that combining Section 122, Section 232, and Section 301 tariffs “will result in virtually unchanged tariff revenue in 2026″—an extraordinary admission that the intent was to maintain the same aggregate tax burden through different legal wrappers. The Section 122 tariffs are set to expire on July 24, 2026, unless extended by Congress.

For South-east Asia, the ruling introduced a new problem: legal fragility. Trade deals struck under the IEEPA regime now occupy uncertain territory. If the underlying executive orders were unlawful, the bilateral concessions extracted from ASEAN governments—market access commitments, anti-transshipment pledges, investment promises—rest on a legally contested foundation. Importers who paid an estimated $160–$175 billion in IEEPA tariffs over the past year are now pursuing refunds through the Court of International Trade, though the administration has signalled it does not plan to issue refunds voluntarily.

As the Peterson Institute for International Economics warned, the central challenge for businesses in 2026 is not the level of tariffs—it is their chronic instability. “Rates changed with little notice, creating planning challenges for firms managing inventory, contracts, and payroll,” PIIE analysts noted. The US average effective tariff rate climbed to nearly 17% in 2025—the highest since the early 1930s.

What Has Changed: Supply Chain Reshaping, Winners and Losers

Vietnam: The Reluctant Champion

No country in South-east Asia embodies the tariff era’s contradictions more sharply than Vietnam. Despite facing a 46% headline rate—among the steepest globally—the country’s economy grew 8.02% in 2025, its second-best performance in fifteen years. Exports to the US leapt 28% year-on-year to $153.2 billion, and its trade surplus with Washington hit a record $134 billion—higher, not lower, than before Liberation Day.

The engine of this paradox was electronics. A Bloomberg analysis of customs data published in April 2026 found that Foxconn’s Fukang Technology factory in Bac Ninh alone exported $8.6 billion in electronics—more than double its 2024 value—with most shipments being MacBooks bound for the US. Laptop output in Bac Ninh province surged 130% in 2025; smartphone production rose 39%. Vietnam had quietly surpassed neighboring Southeast Asian competitors as one of the US’s leading chip and electronics suppliers.

The caveat is profound. The same Bloomberg analysis revealed that Fukang’s exports generated only 7.8% of their value in Vietnam—the rest was imported components, primarily from China. The China+1 story is, in many cases, a China+assembly story. As ING analysts noted, imports from China into Vietnam surged 24% year-on-year in the first half of 2025, raising the spectre of rampant transshipment. The 40% tariff on Vietnamese transshipped goods is designed to address exactly this structural problem—but enforcement is technically complex and politically fraught.

Malaysia: Tech’s Safe Harbour

Malaysia’s effective tariff arithmetic worked strongly in its favour. Its headline rate of 19% masked an effective rate of roughly 11% due to electronics exemptions—and the country’s deal with Washington, anchored by that landmark $70 billion investment pledge and semiconductor purchase agreement, secured considerable market access. FDI inflows into Malaysia’s semiconductor ecosystem, already boosted by TSMC’s and Intel’s regional expansions, accelerated through 2025. The East Asia Forum noted that Malaysia’s effective tariff advantage over China has widened substantially, reinforcing its role as a chip-packaging and testing hub.

Cambodia: The Casualty

The story of Cambodia is the story the tariff triumphalists do not tell. As a garment-dominated economy with limited capacity for deals or diversification, Phnom Penh was structurally exposed. Even after negotiations brought its rate from 49% down to 19%, Cambodian textiles—unlike Vietnamese electronics—enjoy no sector exemptions and limited productivity edge. The Lowy Institute found that Chinese consumer imports into Cambodia rose by 128% as deflected Chinese goods flooded the domestic market, squeezing local producers from both directions: losing US market access at the top while competing with surging Chinese imports at the bottom.

Indonesia and Thailand: Cautious Resilience

US goods trade data shows the deficit with Indonesia rose 11% and with Thailand 23% in 2025, with US imports actually rising even under 19-20% tariffs. Indonesia’s September 2025 effective tariff rate was 19.7%—the highest among ASEAN’s five largest trading partners—because its electronics sector, smaller than Malaysia’s or Vietnam’s, captures fewer exemptions. Thailand’s effective rate was around 10%, reflecting both sector exemptions and its July 2025 deal, but automotive and industrial exporters remain squeezed.

What’s Next: The 2026 Outlook

The 150-day Section 122 tariff clock is running. It expires on July 24, 2026—and Congress, which has passed bills disapproving of the IEEPA tariffs, is unlikely to extend them. What happens after July 24 will define South-east Asia’s trade environment for years.

The Section 301 Sword

The most alarming development for the region arrived on March 11, 2026, when the US Trade Representative launched sweeping Section 301 investigations targeting 16 economies for “structural excess manufacturing capacity”. The target list reads like an ASEAN who’s who: Vietnam, Thailand, Malaysia, Cambodia, Indonesia, Singapore. Unlike Section 122, Section 301 tariffs carry no time limit and no statutory cap. They are the administration’s mechanism of choice for permanent, targeted levies—and the March investigations are almost certainly the vehicle for reimposing tariffs equivalent to the now-unlawful IEEPA rates after July.

For governments that signed bilateral deals under the IEEPA regime, this creates a Kafkaesque dilemma: they made substantial concessions in exchange for tariff relief that the Supreme Court has since voided—and they may face equivalent tariffs again through a different legal channel, without the negotiating leverage that initial shock created.

The Diversification Imperative

The one structural positive to emerge from this tumultuous year is the acceleration of diversification. The EU has concluded FTAs with Indonesia and is exploring enhanced cooperation with Malaysia, the Philippines, and Thailand. The CPTPP has expanded its footprint; Indonesia and the Philippines have applied for membership. The China-ASEAN FTA has been upgraded. These initiatives will not replace US demand in the near term—the American market’s $1+ trillion appetite for manufactured goods remains without peer—but they create structural alternatives that previous generations of ASEAN policymakers never fully developed.

The China Tilt Risk

There is also a darker possibility that few in Washington appear to be taking seriously. Every punitive measure that the US imposes on ASEAN without commensurate market access has a mirror-image effect: it pushes the region’s economic centre of gravity toward Beijing. China is already Vietnam’s largest trading partner, Malaysia’s top import source, and the primary origin of investment capital flooding into Cambodia and Myanmar. If the Section 301 investigations result in tariff rates that undo the competitive advantages ASEAN countries have spent a decade cultivating, the incentive to deepen China linkages—on infrastructure financing, digital standards, and supply chain integration—grows commensurately.

Conclusion: The Long Game Has Only Just Begun

One year of Trump tariffs has produced a South-east Asia that is, by most headline metrics, more resilient than anyone predicted in April 2025. Vietnam grew 8%, Malaysia deepened its semiconductor edge, and even Cambodia negotiated its tariff rate down by 30 percentage points. The region demonstrated formidable diplomatic agility.

But the structural uncertainties compounding through 2026—the Section 301 sword hanging over every bilateral deal, the Section 122 expiry cliff, the unresolved refund litigation, and the administration’s demonstrated willingness to use trade as a geopolitical lever for any and all foreign policy goals—mean that celebration is premature. As the Brookings Institution noted, the challenge was never just the size of the tariffs; it was the instability surrounding them that forced businesses to make hiring, pricing and investment decisions in a fog.

For South-east Asia’s policymakers, three imperatives now dominate. First: lock in trade diversification with the EU and CPTPP partners before the next tariff wave hits, reducing the region’s structural vulnerability to a single bilateral relationship. Second: invest urgently in domestic value-add capacity—Vietnam’s 7.8% local content share in its flagship electronics exports is a long-term vulnerability that no trade deal can fix. Third: present a unified ASEAN voice in the next round of Section 301 negotiations; the fragmented, each-nation-for-itself approach of 2025 produced deals of widely varying quality and left smaller economies like Cambodia badly exposed.

The Liberation Day tariffs may have been struck down by the Supreme Court. But the forces that produced them—America’s $760 billion goods trade deficit with Asia, domestic manufacturing anxieties, bipartisan economic nationalism—remain entirely intact. What’s next for South-east Asia after Trump tariffs is, ultimately, what has always been true: the region’s best defence is not diplomatic dependence on any single patron, but structural self-sufficiency that no tariff schedule can easily undo.

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Key Data at a Glance (April 2026)

Country	Liberation Day Rate	Current Effective Rate	GDP Growth 2025	Key Sector
Vietnam	46%	~12.7% (post-deal, 20% headline)	8.02%	Electronics, semiconductors
Malaysia	25%	~11% (exemptions)	~4.5% est.	Chips, manufacturing
Thailand	36%	~10% (exemptions)	~3.2% est.	Automotive, electronics
Indonesia	32%	~19.7%	~4.8% est.	Commodities, manufacturing
Cambodia	49%	~19%	~5.1% est.	Textiles, garments
Singapore	10%	~2.6% (FTA buffer)	~3.0% est.	Financial services, logistics