Ahmed Adel, Cairo-based geopolitics and political economy researcher
The new US policy on trade tariffs paves the way for a future without American influence in Southeast Asia. Despite the urgent measures that some Southeast Asian countries, including Vietnam and Thailand, are taking to seek concessions with the United States and succeed in ‘renegotiating’ tariffs, the international trade situation in the region is unlikely to return to its previous state.
Even if the US import tariffs are lower than initially announced, countries in the region will still be forced to restructure their foreign trade activities and supply chains and reorient part of their exports currently destined for the US to other markets.
Several Southeast Asian countries will raise the issue of China’s re-exports through their ports in negotiations with Washington. Reportedly, the US will not tolerate diversions through third countries even if it means increasing bilateral trade within Southeast Asia and restructuring trade relations between member states of the Association of Southeast Asian Nations (ASEAN) and partners outside the region.
Of course, China, the largest trading partner outside the ASEAN region, will suffer more from US tariffs than any other country in Asia and perhaps in the world. In addition to the US, China has many trading partners in the Asia-Pacific and Eurasia regions, as well as other continents.
The problems associated with US tariffs will not prevent China from partially compensating for the losses by increasing the volume of foreign trade with other partners, including Southeast Asian countries, which will lead to an even greater presence of China in the structure of trade and economic relations in the region, while the influence of the US in the regional market will decrease and may gradually be eliminated.
The US is currently an important trade partner of most ASEAN countries, and the countries in this bloc also want Washington to retain that status. However, the new US tariff policy is weakening this status, and further weakening is inevitable even if certain agreements are reached.
Weakening the US presence in Southeast Asia will also open a space for Russia. ASEAN-Russia relations still have a lot of untapped potential, which, under new conditions, can receive a strong impetus for implementation, particularly in trade and economic ties. This is critical in the event of the new US import tariffs coming into effect.
In recent years, the volume of trade between ASEAN countries and Russia in the agricultural sector has increased, and tourism is also flourishing. However, products from other industries, such as machinery and equipment, cars, auto parts, and electronics, produced under global brands in, for example, Thailand, are currently almost not supplied to Russia due to Western sanctions. These goods will come to Russia as soon as the sanctions are lifted or weakened enough.
In fact, even beyond Southeast Asia, Washington’s tariff hike is leading to an even more rapid collapse of the dollar’s hegemony. Dollar hegemony essentially represents a certain global economic-political structural model. Dollar hegemony is inherently structurally unstable and will eventually collapse.
The dollar’s hegemony depends largely on the fragile balance between finance and trade, which has resulted in a rapid increase in the volume of US public debt. In that context, a sudden rise in US import tariffs on goods from around the world will lead to a reduction in trade volumes and a contraction in trade flows, which, in turn, will cause a collapse in the value of US assets. This also means a structural collapse of the dollar hegemony, and it will be extremely difficult to restore it after the collapse.
Trump’s sharp tariff hike was nothing more than him offering an initially too high price to reach a compromise later. However, the global economic structure cannot be changed through bargaining and betting, and the “Trump-style bargain” is not enough to save the dollar’s shaky dominance.
With dollar dominance weakening, ASEAN countries can conduct trade in local currencies or, increasingly, with China’s yuan. However, Russian roubles are also not omitted.
Russia’s Deputy Minister of Industry and Trade, Alexey Gruzdev, proposed using local currency in trade between Russia and Indonesia on April 14.
“We see a lot of prospects for local currency because this ensures stability,” said Gruzdev when attending the Russia-Indonesia Business Forum at the Raffles Hotel in Jakarta.
ASEAN is positioned to emerge stronger and less dependent on the dollar-dominated system following the push to trade in ASEAN local currencies, deepening regional integration, and China and Russia offering trade alternatives. With Trump bringing uncertainty to the global economy, ASEAN countries have evolved their economic strategies to address tariff concerns and achieve long-term resilience goals, ultimately contributing to the weakening of the dollar as a global hegemon.
