New tariffs imposed last Thursday, 3 April, by President Donald Trump walloped Asian markets, including ASEAN member states, leaving investors aghast not so much because they were actually enforced — that was expected — but because the tariffs were shockingly sizeable and many of the countries not spared by Trump were US allies.

Cambodia and Laos were among those hit the hardest with new import tariffs of 49 percent and 48 percent, respectively, followed by Vietnam with 46 percent and Myanmar with 44 percent. Next, Thailand, a US security treaty partner, and Indonesia were imposed tariffs of 36 percent and 32 percent, respectively.

The tariff on Vietnam was particularly severe and could have long-lasting effects on global trade seeing how vital the country has become as a substitute to manufacturing in China.

In recent years, Vietnam has become among the biggest beneficiary of shifting global supply chains, as US businesses moved their factories out of China into Vietnam because of hiked costs and growing tension between China and the United States.

This resulted in a boom in Vietnam, its trade surplus with the US ballooning to $123.5 billion last year, the third highest after China and Mexico.

Vietnam, Cambodia, Myanmar, Laos, and Thailand are Indochinese countries which are part of the greater Mekong Region.

Other countries in the ASEAN region were hit with comparatively lower tariffs with Malaysia and Brunei each at 24 percent, the Philippines at 17 percent, and Singapore at 10 percent. Singapore — a close partner of the US — was the least hit; nevertheless, its government expressed disappointment and said it will seek an explanation as to how the US calculated the tariffs.

Analysts say the Indochinese countries were most likely targeted because of their perceived stronger trade relations with China.

The US, which views China as its primary foe in the global trade war, wants to inflict pain on these nations, according to economist Woo Wing Thye, an expert on East Asian economies and Vice President for Asia of the UN Sustainable Development Solutions Network.

Woo says Trump “is doing what he sees as leveling the playing field in trade relations, paying particular attention to countries closely allied to China.”

Targeting the Indochinese countries stretches his confrontation with China, unfortunately driving them further into China’s arms.

For Woo, Vietnam and Cambodia were targeted because they have strong trade surpluses with Washington, and are among the biggest gainers from Beijing’s China Plus One strategy.

The strategy involves companies previously diversifying their supply chains to avoid US tariffs on goods from China by relocating operations to countries in the region and disguising their products’ origins.

Vietnam, for instance, has a trade surplus with the US hitting a record high of $123 billion in 2024, placing it behind only China, the European Union and Mexico in its trade imbalance with the US.

This can be attributed to firms formerly located in China which had moved to Vietnam before exporting to the US to avoid paying tariffs previously imposed on China.

American business owners like Patrick Soong who helps US companies make their products in Asia had actually started looking for alternatives to China for his clients after Trump’s election in November.

Last Thursday, when the new US tariffs were announced, Soong was already making plans to move some of his production out of Thailand and Vietnam, and was preparing to visit factories in the Philippines with a plan to move his manufacturing here.

With the Philippines’ imposed tariff at 17 percent, that would make Soong’s exported goods to the US substantially cheaper than if these were exported from either Thailand or Vietnam.

Oh Ei Sun, principal adviser for Pacific Research Center of Malaysia, likewise sees the possibility of companies in Vietnam relocating their operations to the Philippines which is perceived as being more attractive to American investments given Manila’s close bilateral ties with the US.

Meanwhile, experts on Asian economies are cautioning countries in the region against retaliation because individually, for instance, ASEAN states do not have enough leverage to retaliate against the new US tariffs.

ASEAN countries should resist the temptation to retaliate, stressed Jayant Menon, former lead economist in the Office of the Chief Economist of the Asian Development Bank and an expert on trade and investment issues as they relate to ASEAN, because ultimately, he says, “tariffs hurt the countries imposing them more than anyone else.”