BANGKOK – U.S. President Donald Trump’s sweeping new tariffs are likely to cause particular pain in developing Asian countries that rely on export industries to raise living standards and provide jobs for burgeoning youth populations.
Southeast Asian nations were some of the hardest hit by the tariffs announced Wednesday, at nearly 50% in some cases. The tariffs will be paid by U.S. importers and could have a range of consequences – from higher prices for American consumers to falling incomes for the exporting nations.
China, the world’s second-largest economy after the U.S., faces an additional 34% tariff on top of the 20% the U.S. imposed earlier this year when Trump demanded the country buy more U.S. goods and stop the flow of the deadly synthetic opioid Fentanyl.
“China firmly opposes this and will resolutely take countermeasures to safeguard its own rights and interests,” the country’s commerce ministry said Thursday, accusing Trump of adopting bullying and damaging tactics.
The tariff shock therapy is aimed at encouraging a revival of American manufacturing, which fell as a share of the economy and employment over several decades of global free trade and competition from production in lower-cost countries.
Any changes could take years as many U.S. corporations have made substantial investments in overseas production. Manufacturing in the U.S., like elsewhere, also is reliant on components produced in other countries.
The 49% duties imposed on Cambodian exports will force the country’s garment industry to slow to a near halt, according to Stephen Higgins, managing partner at Mekong Strategic Capital in Phnom Penh.
The broader economy is likely to suffer since the garment and apparel industries contribute more than one third of Cambodia’s gross domestic product. Higgins says production may shift to India, which only faces a 36% U.S. tariff and giving workers the skills to produce more high-end products may have little immediate impact.
“In the short term, things like tech innovation and training just aren’t going to shift the dial enough to help Cambodia, or any country, weather these punitive tariffs. Redirecting trade is going to take time, and in the interim, a lot of Cambodians who can least afford it are going to lose their jobs,” Higgins said.
“If there’s one thing we’ve learned, it is that Washington is highly unpredictable these days. Hopefully once constituents in red (Republican) seats start seeing prices go up, or they start suffering from retaliatory tariffs from the E.U., they’ll put a lot of pressure on their representatives to do something about these tariffs. But I just don’t see that happening overnight.”
Vietnam, meanwhile, had the fourth-largest trade surplus with the U.S. last year at a record US$123 billion and faced growing pressure from Washington to lower it.
Hanoi lobbied unsuccessfully to try to avoid higher tariffs. Prime Minister Pham Minh Chinh met U.S. Ambassador Marc Knapper last month and promised higher imports of American products.
On Tuesday, Vietnam cut import duties on some American fuel, automobile and agricultural products, but that did not stop Trump targeting the country’s exporters with a 46% tariff, the second-highest in Asia.
Pham met with Trade and Industry Minister Nguyen Hong Dien on Thursday to discuss the impact on Vietnam’s economy and to look for ways of reducing the trade surplus, Tien Phong online reported.
Trump has a track-record of abruptly raising and lowering tariffs imposed on Canada and Mexico and, according to Tien Phong, Vietnam’s Deputy Prime Minister Ho Duc Phoc is hoping to persuade him to roll back import duties when he visits the U.S. capital next week.
In Thailand, Prime Minister Paetongtarn Shinawatra said her government was working to help affected exporters and would set up a committee to negotiate with the U.S. over the 36% tariffs slapped on its exports.
She said Thailand was willing to lower the 72% duties the U.S. says Thailand charges, which include the effect of currency manipulation and market barriers.
Edited by Stephen Wright.
This content originally appeared on Radio Free Asia and was authored by Mike Firn for RFA.