Vietnam and Indonesia ahead in negotiations; Thai turmoil takes toll on deal attempt.
From buying dozens of Boeing planes to importing more U.S. soybeans, Southeast Asian countries are doubling down to appease Donald Trump as the deadline for a pause on the U.S. president's hefty tariff threats fast approaches.
Trump's 90-day pause on "reciprocal" tariffs beyond a 10% baseline against most countries around the world is set to expire on Wednesday.
In Southeast Asia, only Vietnam has clinched a deal, following a phone call on Wednesday between Trump and Vietnamese Communist Party General Secretary To Lam. Indonesia seems to have secured a promising result as well, after a call last month between Trump and President Prabowo Subianto.
Trump announced on his Truth Social app on Wednesday night that imports from Vietnam will be hit with a 20% tariff and transshipments from Vietnam will be slapped with a 40% rate.
As Trump phrased it, "Vietnam will pay the United States a 20% Tariff on any and all goods sent into our Territory, and a 40% Tariff on any Transshipping."
In return, Vietnam will give the U.S. "total access" to its market, Trump said.
That is a considerable reduction from the original 46% rate on all shipments from Vietnam that Trump originally threatened, displeased by what is one of the U.S.'s widest trade deficits.
The countries went through multiple rounds of technical negotiations, and Vietnam has signaled a willingness to buy planes from Boeing as well as U.S. energy and agricultural products to reduce the trade imbalance.
Vietnam had a head start. Before the reciprocal tariff announcement on April 2, the country had reduced import tariffs on U.S. products, including liquefied natural gas and cars, and moved to allow SpaceX to launch its Starlink satellite internet service in the country. Vietnamese government officials also conducted a series of meetings with U.S. businesses to discuss potential projects and clear hurdles.
Vietnam has also fast-tracked a $1.5 billion golf resort and luxury residential project spearheaded by the Trump Organization near Hanoi. Construction began in May. In addition, Eric Trump, the president's second son, has visited Ho Chi Minh City to scout locations for another project.
In Indonesia, Coordinating Minister for the Economy Airlangga Hartarto said a Jakarta proposal made after the Trump-Prabowo phone call on June 13 has been "well received."
ASEAN leaders pose in Kuala Lumpur on May 26. Malaysia's attempt for a united ASEAN response to Trump's tariff threats has failed to gain traction. © Reuters
On Monday, Hartarto announced a deregulation package that includes easing import restrictions and removing non-tariff barriers for doing business in Indonesia. He said the package was born out of the negotiations with Washington. Facing a 32% tariff, Southeast Asia's largest economy also repeated an invitation for U.S. companies to invest in critical mineral and electric vehicle supply chain projects in the country. These steps are in addition to Jakarta's previous offers to buy more gas, oil, soybeans and wheat from the U.S.
On Thursday, Hartarto said Indonesia and its business partners will sign a pact next week worth $34 billion to boost purchases from the U.S. Some $15.5 billion has been earmarked for energy and agricultural imports. Separately, Reuters reported that flag carrier Garuda Indonesia is in talks with Boeing to buy up to 75 planes.
Malaysia, which faces a relatively mild 24% tariff threat, has similarly pledged to reduce its trade imbalance with Washington by increasing imports of LNG and agricultural goods like soybeans. Kuala Lumpur is also addressing non-tariff barriers and exploring the possibility of a bilateral trade agreement.
"Malaysia is prioritizing sectors where it has strong ties with the U.S., such as semiconductors and palm oil," Tengku Zafrul Aziz, Malaysia's lead negotiator with Washington and its minister of investment, trade and industry, told Nikkei Asia last week. "A key aim is to achieve zero tariffs with the U.S. for targeted sectors, including automotive."
With Malaysia acting as ASEAN chair this year, Prime Minister Anwar Ibrahim in late May told the region's leaders that he had written to Trump, proposing a U.S.-ASEAN summit to alleviate fallout from the tariff tensions. But an attempt for a united ASEAN response has failed to gain traction.
"Given the variation of the trade balances between each ASEAN country with the U.S., it is unlikely that a common approach will be adopted," Lawrence Loh, a professor at NUS Business School in Singapore, told Nikkei. "The reality is that each country might end up just fighting for the best possible deal for itself."
Loh noted that while Vietnam and Indonesia are ahead of others in negotiations with the U.S., Thailand's efforts "will be further complicated by the unstable internal leadership situation involving its prime minister."
The Thai Constitutional Court on Tuesday suspended Paetongtarn Shinawatra from her prime ministerial duties. Pichai Chunhavajira, Thailand's deputy prime minister and finance minister, is currently in the U.S., with Washington belatedly agreeing to start negotiations with Southeast Asia's second largest economy.
Thailand faces a threatened 36% tariff, which its business sector would like the Pichai-led delegation to negotiate to around 10%.
Thailand has offered to import more liquefied natural gas from the U.S. Thai energy conglomerate PTT Group signed a deal in late June to import 2 million metric tons of LNG annually for about 20 years from the U.S. Glenfarne Group. Additionally, Thai officials have said they would consider importing more U.S. soybeans and soymeal for the Thai feedstuffs industry.
Facing the 10% baseline tariff, Singapore is pushing for concessions in categories such as pharmaceutical exports. Whether the Trump administration will budge remains unclear.
Singapore, which runs a trade deficit with the U.S., has been stressing this fact while calling for the Southeast Asian financial hub to be free from even the baseline tariff.
"I highlighted how tariffs could adversely impact Singapore's small and open economy," Singaporean Foreign Minister Vivian Balakrishnan said after a meeting with U.S. Secretary of State Marco Rubio in Washington in June. "We will continue to closely engage the U.S. administration to mitigate these risks."
The Philippines is facing a 17% tariff rate despite being a treaty ally of the U.S.
A Malacanang Palace spokesperson said the sides are in "constant communication" but declined to say more "because we are covered by a confidentiality agreement." Earlier, the Marcos Jr. administration expressed "satisfaction" that negotiations remain underway.
An analyst at a consultancy who requested anonymity said Trump's deal with Vietnam might "demotivate" other ASEAN countries from making significant concessions.
"ASEAN negotiators in Washington are trying to make sense of what this means for their negotiations," the analyst said, "as Vietnam made significant concessions and is still being hit with 20%."
Source: Nikkei Asia
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<p>Time: 2024 By: Ministry of Industry and Trade</p>
