Trump Is Reshaping Southeast Asia's Future. Does He Realize That?
U.S. Secretary of State Marco Rubio meets with the press in Kuala Lumpur, Malaysia, July 10, 2025, on the sidelines of the 58th ASEAN Foreign Ministers Meeting.
U.S. Secretary of State Marco Rubio was handed an unenviable task on his visit to Malaysia for ASEAN meetings last week. He needed to signal U.S. commitment to the region at the same time President Donald Trump was releasing tariff decisions on social media.
Despite claiming that many ASEAN countries would receive better tariffs than other parts of the world, Rubio was handed a diplomatic rebuke by ASEAN foreign ministers, who declared that unilateral tariffs are counterproductive and 'pose complex challenges to ASEAN's economic stability and growth.'
The awkward timing around Rubio's visit perhaps reflects a deeper problem: Trump and his team appear to pay little attention to the region. When it comes to global affairs, the Middle East, Ukraine, and trade with China have occupied much of their focus.
Likewise, Trump's Cabinet has had only limited engagement with the region to date. In addition to Rubio's visit, Defence Secretary Pete Hegseth has visited Singapore and the Philippines.
When U.S. officials do visit Southeast Asia, they've rolled out talking points about U.S. commitment to the Indo-Pacific that have done little to reassure regional countries struggling to deal with U.S. unpredictability.
Despite the apparent disinterest in the region, whether by design or accident the Trump administration is making decisions that are fundamentally altering Southeast Asia's future.
The question for ASEAN member states is whether they will take steps individually and collectively to avert the worst possible future.
Trump is exacerbating divisions within ASEAN. Unity in the bloc has always been paper thin. It has struggled to deal with difficult issues like the South China Sea or the conflict in Myanmar.
As current ASEAN chair, Malaysian Prime Minister Anwar Ibrahim has called on member states to take a coordinated approach to negotiating U.S. tariffs. The opposite has happened as each country has tried to strike its own deal with the United States. Vietnam was first out of the blocks, with others continuing bilateral talks.
The United States has also widened existing differences within the bloc on how to engage China by doubling down support for its close partners and alienating others. The delicate dance that ASEAN member states do as they hedge between the U.S. and China is becoming trickier.
Hegseth was vocal in his support for the Philippines, talking about an 'ironclad' alliance in the face of China's aggression in the South China Sea. Meanwhile, higher U.S. tariffs appear to be targeted at countries that are seen as leaning toward China: Laos (40 percent), Cambodia (36 percent), and Thailand (36 percent) have been hardest hit. If the main game for the U.S. is to compete with China, it's unclear why it is imposing hefty tariffs that will push regional countries closer to it.
The Trump administration isn't just exacerbating regional divisions, it is altering the economic outlook. Tariff decisions will amplify and accelerate long-term economic trends, creating winners and losers.
Take Indonesia. President Prabowo Subianto's 8 percent growth target is as distant as ever and even 5 percent growth seems challenging. The rupiah has weakened, the stock market has backed away from the highs of last year and the middle class is under pressure.
Trump's 32 percent tariff will further weaken Indonesia's outlook. Growth will take a hit and foreign investors may look at other markets that received better tariff rates. If these trends hold long-term, Indonesia will struggle to achieve its goal of becoming a middle income country by 2045.
In contrast, the strong economic outlook for Vietnam and the Philippines will be bolstered by their tariffs of 20 percent, the lowest rates in ASEAN.
The tariff on Vietnam (which rises to 40 percent for transshipped goods) is likely to put a dint in its 6 percent-plus forecast growth in 2025. However, foreign investment should hold up as the tariff rate maintains Vietnam's attractiveness relative to other ASEAN economies.
Likewise, forecasted growth of over 6 percent in the Philippines is likely to take a hit. As with Vietnam, the impact will be temporary and the 20 percent tariff rate will likewise strengthen its attractiveness to foreign investors relative to ASEAN peers.
If these trends hold, Trump may help Vietnam and the Philippines escape the middle income trap while Indonesia becomes increasingly stuck.
Nothing is ever set in stone with Trump. He's flagged yet another deadline of August 1 before the tariffs come into effect, so countries still have a chance to negotiate better deals.
Of course, Southeast Asian countries have agency and are not completely beholden to Trump's whims. Individually they can choose to undertake structural reforms, adjust their growth model, and diversify trading partners. Collectively, there's room to rethink ASEAN's norms and procedures. But all these changes take time and political will.
There will also be plenty of twists and turns to come, as we are not even a year into Trump's presidency. But if existing trends continue, the long-term impact will be a region that is more divided politically and economically.
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