Despite relatively uniform nominal tariffs, effective tariff rates and pending investigations put most ASEAN goods at risk of additional tariffs amid the unpredictable US policy.

In a recent article on the East Asia Forum website (eastasiaforum.org), John Goyer, Vice President for Southeast Asia and Oceania at the U.S. Chamber of Commerce, stated that as we enter 2026, U.S. tariff policy towards Southeast Asia will remain a volatile hotspot amidst the ongoing U.S.-China trade tensions. While reciprocal tariffs are relatively uniform across countries, their practical application reveals significant disparities, putting businesses at risk of considerable disruption this year.

The difference between the published and actual tax rates.

Mr. Goyer noted that the US's reciprocal tariffs on key partners in Southeast Asia are fairly uniform at 19% for Indonesia, Malaysia, the Philippines, and Thailand, while Viet Nam faces a rate of 20%. Singapore enjoys a preferential rate of 10% due to its trade surplus and free trade agreement.

However, the actual tax rates vary considerably. As of September 2025, Indonesia has an effective tax rate of 19.7%, while Thailand is 10.1%, Malaysia 8.7%, and Singapore only 2.6%.

This disparity stems from the fact that many products under investigation under Section 232 of the U.S. Trade Expansion Act of 1962 are now exempt from tariffs, along with items such as coffee and bananas not grown in the U.S. As a result, 75% of imports from Singapore are tariff-free, while this figure is only 11% for Indonesia.

The biggest risk for Southeast Asian countries is the potential for additional tariffs from pending investigations. 94% of imports from Thailand, currently tariff-free, could be subject to tariffs under these investigations. Indonesia faces a similar situation at 84%, while Malaysia and Singapore are at 72% and 71%, respectively.

The financial burden has been enormous. From the beginning of April to the end of September 2025, US importers paid nearly $17 billion in tariffs on goods from these countries.

Bilateral agreements and the price to pay.

By December 2025, the U.S. administration had signed bilateral trade agreements with Cambodia and Malaysia, including commitments to eliminate tariffs, address non-tariff barriers, and advance U.S. digital economy priorities. Joint statements were also issued with Thailand and Viet Nam.

Discussions with Indonesia progressed by the end of December 2025, with many key issues believed to have been resolved. Preparations are underway for Indonesian President Prabowo Subianto to sign the agreement with US President Donald Trump by the end of January 2026. Meanwhile, negotiations with the Philippines continue but at a slower pace, and there are no talks with Singapore.

To some extent, the agreements reflect traditional negotiating objectives. Tariff and non-tariff barriers, acceptance of U.S. product standards, licensing requirements, rules on domestic content ratios, and other long-discussed obstacles for U.S. exporters in these markets have been in dispute for a long time.

Ironically, the Trans- Pacific Partnership (TPP) agreement, which the U.S. abandoned in 2017, would have achieved many of these goals. Current negotiations may ultimately realize some of these goals, but this time, U.S. importers will have to pay a 19 or 20 percent tariff to enjoy those privileges.

However, businesses hope that these agreements will usher in a period of greater policy stability and certainty. Many officials in the region implicitly acknowledge that some of Washington's demands are measures these governments should have taken long ago. In that sense, the agreements reflect external pressure being used to push through difficult but necessary internal reforms.

Dependence on US-China relations

Southeast Asia's position in the US market is strongly influenced by US-China trade relations. Analysis from the US Chamber of Commerce shows that following the tariffs imposed on Chinese goods under Section 301, ASEAN countries enjoy an average tariff advantage of 12-19% over China in the US market.

As of December 2025, the average effective tariff rate on goods from China is approximately 30%, indicating that ASEAN continues to enjoy a significant advantage. However, the ability to exploit this advantage depends on the sustainability of the US-China agreement. If trade truce negotiations break down and US tariffs increase, Southeast Asia will benefit, but if the détente continues and tariffs decrease, the region's advantage will diminish.

In summary, businesses should continue to prepare for volatility in 2026, given the continued uncertainty surrounding US tariff policies toward Southeast Asia.

Source: Tin Tuc News

• USTR Makes Findings and Proposes Action in 60 Section 301 Investigations Relating to Failures to Take Action on Trade in Forced Labor Goods
• [VCCI] The US officially initiates a Section 301 Investigation into Vietnam on Intellectual property
• General Secretary and President To Lam's working visit to three ASEAN countries: Demonstrating the stature of proactive and constructive diplomacy.
• Viet Nam accelerates innovation drive as skilled workforce becomes key to science and technology growth
• The US is increasing controls on AI chip exports