When US President Donald Trump finally unleashed his long-threatened tariff blitz, the scale and scope were far worse than most governments expected. It came as no surprise that China would be the hardest hit, but the punishing duties imposed on most Asian countries were a profound shock. Fortunately, with financial markets reeling, Trump announced a 90-day pause on most of these “reciprocal” tariffs just hours after they took effect. Asian governments benefiting from this reprieve must now use the time they have gained to forge a more unified response and take bold initiatives that give them more leverage with the US.
Consider that the tariff rate initially imposed on my country, Sri Lanka, which is only a few years removed from a political and economic crisis that forced our president to flee and pushed the economy to the brink of collapse, was a whopping 44 percent. Given that the US is Sri Lanka’s largest export market by far, Trump’s “Liberation Day” tariffs would deliver a massive blow to the country’s recovery when (I hesitate to say “if”) they are imposed.
Other Asian countries fared little better, and a few were hit even harder, with rates of 49 percent for Cambodia, 48 percent for Laos, and 46 percent for Vietnam. So onerous were these proposed duties that one might wonder whether Trump is compensating for his avoidance of military service in the Vietnam War by waging economic warfare on the countries of Indochina that were involved in that conflict. Now that the Vietnamese government — which swiftly raised the white flag by offering to eliminate all tariffs on US imports — has agreed to start trade talks during the pause, Trump must already think that he has won.
Illustration: Kevin Sheu
Vietnam’s attempt to appease Trump would yield few, if any, benefits for the country, because Trump never negotiates in good faith. Worse, the country’s actions are setting a high bar — at least in the eyes of the US administration’s trade negotiators — for what its partners in ASEAN would now be expected to deliver.
However, the current ASEAN chair, Malaysian Prime Minister Anwar Ibrahim, could still marshal the full power of the bloc to present a unified front and develop policy initiatives to help shield members from the economic disruption caused by Trump’s tariffs. This would be consistent with Anwar’s efforts as ASEAN chair to deepen economic integration within the bloc and forge closer commercial links with the Gulf Cooperation Council and other Asian economies.
The ASEAN summit that Anwar is hosting next month would provide a venue for advancing this agenda. The assembled leaders would likely talk about diversifying trade partnerships — one of the best things any country or bloc can do when facing the kind of pressure that the US is applying. They should also look for other ways to advance regional cooperation and enhance their economies’ resilience.
Here, ASEAN could take a page out of the EU’s playbook, despite not pursuing the same goal of an “ever closer union”; expansion as a way to enhance stability along its borders. Perhaps the clearest example is the EU’s “big bang” enlargement of 2004, when it admitted ten countries, mainly in Central and Eastern Europe. The bloc’s continued outreach to the Balkan countries and Ukraine, as well as its efforts to stimulate economic development in North Africa, are part of this strategy.
ASEAN has already embarked on accession negotiations with Timor-Leste, which, if admitted (as many expect), would be the bloc’s poorest member by far. However, membership would help Timor-Leste diversify its economy and allow it to work with new partners. It would also diminish lingering antagonism with Indonesia, which occupied the country for more than 20 years following its independence from Portugal.
Anwar and his diplomats have already made impressive headway on accession talks with Timor-Leste, and a breakthrough during Anwar’s chairmanship would boost ASEAN’s international prestige at a pivotal moment, and help strengthen regional stability and security. If Anwar wants to be even bolder, he should look outside the bloc’s immediate vicinity for a new member: Sri Lanka.
True, Sri Lanka’s GDP per capita would rank it in the bottom half of ASEAN members, but its location in the Indian Ocean would provide ASEAN businesses with access to the region’s burgeoning economy. With the Indo-Pacific destined to become the world’s economic center of gravity in the twenty-first century, Sri Lanka’s strategic position could be a powerful boost to trade and investment. Sri Lanka itself offers plentiful investment opportunities for ASEAN construction, logistics and tech companies.
Standing up to Trump — or any other superpower bully that might come along — requires engaging from a position of power. ASEAN enlargement — quickly accepting Timor-Leste and opening talks with Sri Lanka — would advance this goal. In Trump’s notorious Oval Office meeting with Ukrainian President Volodymyr Zelenskiy, he repeatedly told his guest: “You don’t have the cards.” ASEAN, for its part, does have cards to play when dealing with the US administration, so long as it sticks together. Expanding the bloc would only strengthen its hand.
R.M. Manivannan is chairman of Supreme Global Holdings.
Copyright: Project Syndicate
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