Not just tariffs: Trump 2.0 could bring some trade deals for Southeast Asia too
The tariffs may sting, but Southeast Asia can still strike some sweet deals with the growth-focused Trump administration.
Even amid a generally gloomy outlook under protectionist President-elect Donald Trump, who is due to begin his second White House term on Jan 20, prospects look good for more trade in energy, infrastructure and defence equipment.
With some luck, there might even be a digital free trade agreement (FTA) with ASEAN.
To decode what lies ahead in the next four years, The Straits Times spoke to seasoned experts in trade, business and diplomacy in the US as well as in the region.
Of topmost concern is Trump’s idea of universal tariffs of up to 20 % on all trade partners and at least 60 % on Chinese goods. These actions can set off tit-for-tat spirals and hit global trade volumes – a worrisome prospect for a trade-dependent region.
Still, the mix of Trump’s unpredictable decision-making, his penchant for transactional diplomacy, and specific plans such as achieving “energy dominance” and expanding oil drilling and the export of natural gas suggest that there could be gains for the region.
“Singapore’s status as a regional energy trading hub could align with Trump’s energy export drive,” said Daniel Russel, vice president for International Security and Diplomacy at Washington-based think-tank Asia Society Policy Institute.
It could also benefit nations such as Vietnam and the Philippines, which are seeking to diversify their energy sources and modernise infrastructure, he added.
Ted Osius, president of the US-Asean Business Council, which represents 180 of the largest American businesses in Southeast Asia, said that while there is no room for a proactive trade agenda under Trump, there could be a strategic sectoral approach.
“Our companies care a lot about the energy transition and the digital economy,” he said.
An agreement on trade in critical minerals – such as lithium, cobalt, graphite and gallium, which play a key role in the clean energy and digital transition of economies – is another area, Osius added.
Russel said he could see US private-sector investment in infrastructure and renewable energy gain traction as the Trump administration tries to promote an alternative to China’s Belt and Road Initiative.
The other area that evokes heightened interest is the digital economy.
ASEAN is expected to reach the world’s first regional digital economy agreement by the end of 2025. The Digital Economy Framework Agreement (Defa) will have rules for data flows, electronic transmissions and artificial intelligence standards as the region prepares for a trillion-dollar digital economy by 2030.
“The Defa that’s being negotiated within ASEAN could be a very positive launching point for discussions with the US on digital trade,” said Osius.
Frank Lavin, who was US ambassador to Singapore between 2001 and 2005 and had played a key role in negotiating the 2004 US-Singapore Free Trade Agreement, agreed.
Trump had signed a digital FTA with Japan during his first term, he pointed out, adding: “If he also pursues a digital FTA with ASEAN, this would be a nice step ahead for Southeast Asia and the US.”
Bhagyashree Garekar
The Straits Times
Asia News Network
