Southeast Asia Navigates Trump’s Return: Quick Deals, Lasting Dread

Commentary by Gregory B. Poling

Published October 6, 2025

This commentary is part of a report from the CSIS Geopolitics and Foreign Policy Department entitled Navigating Disruption: Ally and Partner Responses to U.S. Foreign Policy.

Introduction

The policies of the second Trump administration have been worrying and disruptive for most partners across Southeast Asia, as is true around the world. Regional policymakers, many of whom thought they knew what to expect from Trump's return to the White House and believed themselves well-equipped to manage it, have been shaken by the scale and unpredictability of changes in U.S. foreign policy. Each regional capital is grappling with the implications of a United States that is at best unattached and at worst actively hostile to the postwar international order. And that order-particularly its economic pillars-has real cache in Southeast Asia, where it provided the stability that has driven rapid economic development.

The risks and, in rarer cases, opportunities of a radically changed U.S. approach to geopolitics and economics vary from country to country. Their responses will vary in turn. The Philippines, for instance, has been mostly reassured of U.S. commitment to a bilateral alliance-and even to key pillars of their economic partnership. Other governments are more anxious about whether the United States will remain a regional security provider. And many regional elites privately express a sense of betrayal at the United States' disregard for partnerships built over many years.

A clear pattern is emerging, however, in Southeast Asian responses to U.S. economic pressure, with most states seeking to mitigate both the short- and long-term risks of partnering with the United States. Governments have rushed to secure deals reducing the "reciprocal" tariffs facing their exports to the United States, while seeking new partnerships to hedge against future U.S. economic pressure and unpredictability.

Trump Administration Policies in Southeast Asia

Every government in Southeast Asia understood that a second Trump administration would alter U.S. foreign assistance programs, seek to address trade imbalances, and show less commitment to international rules and institutions. But they also thought they would be better able to navigate those shifts. None of them were prepared for the scale of changes in U.S. policy or the speed at which they took place.

On the trade front, Southeast Asian states risked being among the hardest hit by the reciprocal tariffs the White House announced in April. After Lesotho-which trades almost nothing with the United States-the highest threatened tariff rates (between 46 and 49 percent) were reserved for Cambodia, Laos, Myanmar, and Vietnam. About 40 percent of Cambodia's exports and roughly a quarter of Vietnam's go to the United States, making the tariff threat a national emergency for those two states. Thailand and Indonesia were also threatened with painfully high rates of 36 and 32 percent, respectively, followed by Malaysia and Brunei at 24 percent each. Philippine goods initially received a 17 percent tariff rate-which, while frustrating to Manila, could also have given Philippine exports a competitive edge over higher-tariffed neighbors. Singapore, as the only country in Southeast Asia to run a trade deficit with the United States, received only the new baseline 10 percent tariff rate.

When a major earthquake struck near Mandalay, Myanmar's second-largest city, the United States failed to deliver any assistance because of USAID's closure. Russian and Chinese first responders rushed in to help, while the United States was nowhere to be found.

Along with being targeted by the administration's trade war, Southeast Asia has been hit especially hard by cuts to foreign assistance and other U.S. government programs. The U.S Agency for International Development (USAID) was active throughout the region, and the unexpected cancellation of most of its grants left Southeast Asian citizens without vital services and local civil society groups unable to cope. Some of the worst stories came from the Thailand-Myanmar border, where hospitals and other services for vulnerable refugees who had fled civil war disappeared almost overnight-resulting in entirely preventable deaths. Later, when a major earthquake struck near Mandalay, Myanmar's second-largest city, the United States failed to deliver any assistance because of USAID's closure. Russian and Chinese first responders rushed in to help, while the United States was nowhere to be found.

The United States also halted most work addressing legacies of war in Cambodia, Laos, and Vietnam-including the clearance of unexploded ordnance and dioxin (infamously known as Agent Orange) left behind by the U.S. military. China eagerly offered to step in to fund those efforts in Cambodia, compelling Washington to reverse course. Then there was the closure of Voice of America and Radio Free Asia services across the region, depriving citizens in mainland Southeast Asia of honest news about both their own governments and those of U.S. competitors like China and Russia. The Lowy Institute reported that the Voice of America had been the most popular foreign media outlet in the region; one major beneficiary when it went silent was Russia's Sputnik, which had previously been a distant second.

The tariffs and radical shifts to U.S. government programs have left Southeast Asian states with no clear idea of what the United States will do next. That sense has been amplified by U.S. policy outside the region: threats of abandonment toward Ukraine and NATO, pressure on Northeast Asian allies and Taiwan, abandonment of certain international organizations and treaties, and waffling between competitive and cooperative approaches to China and Russia.

A notable exception on this front is the Philippines. The country has been affected by cuts to U.S. development assistance and the destabilizing effects of a global trade war (if far less than many others), but Washington has made a considerable effort to reassure Manila of its commitment to the U.S.-Philippines alliance, including a promise to defend Filipinos in the case of Chinese aggression in the South China Sea. A number of factors are probably at play here. The Philippines and the United States face a shared threat in the form of China; as a developing country, however, the Philippines defies the president's characterization of most allies as "free-riders." It has a relatively small trade surplus with the United States, while still being an important partner in fields like electronics and semiconductor manufacturing. And, of course, President Trump has repeatedly expressed a personal affinity for President Ferdinand "Bongbong" Marcos Jr., his family, and the Philippines overall.

Uniquely among U.S. treaty allies, the Philippines has faced no public demands to increase defense spending or to clarify its intentions in the case of a Taiwan crisis. President Marcos received the first Oval Office meeting of any Southeast Asian head of state, during which Trump was effusive in his praise. Secretary of State Marco Rubio and Secretary of Defense Pete Hegseth had earlier made sure their Philippine counterparts were their first meetings among Southeast Asian officials, and Hegseth made the Philippines the site of his first visit to Asia. In all of these meetings, the secretaries reiterated that the U.S.-Philippines Mutual Defense Treaty extends to the South China Sea.

The United States has even put some of its money where its mouth is. In April, the Philippines joined Taiwan and Ukraine as the first partners to have their foreign military financing ($336 million for the Philippines) unfrozen. And in July, the State Department announced $60 million for the Philippines in the first new overseas development assistance awarded to any country by the administration. Of that new assistance, $15 million will go toward the Luzon Economic Corridor, the Biden administration's marquee multilateral economic initiative in the Philippines, which the Trump administration continues to support. This has left the Philippine government less anxious than its neighbors about short-term instability emanating from the White House, although Manila is still seeking to diversify its economic partnerships in the long term.

Regional Responses

Outside of the Philippines, Southeast Asian government responses to the Trump administration have been driven primarily by the trade war. Vietnam is perhaps the best case study in how shocking the April tariff announcement was to regional governments. Vietnam was aware that its large bilateral trade surplus with the United States would cause tensions; it already had during Trump's first term, and the surplus had grown considerably in the years since. But Vietnamese leaders thought they had a good rapport with Trump and plenty of options to address his concerns. They also had broad support from lawmakers, officials, and policy elites on both sides of the aisle in Washington who viewed Hanoi as an important partner in the strategic competition with China. The Vietnamese public was so convinced that Trump's return would be good for the relationship-not least because they assumed he would be tough on China-that Vietnamese citizens said they would vote for him over Kamala Harris by margins of up to four to one if they could. The Vietnamese public and elites alike were, therefore, left feeling stunned and betrayed on "Liberation Day," when tariffs were declared. And while Hanoi was quick to find its footing and pursue negotiations, the sense of betrayal will be lasting.

Shortly after the initial tariff rates were announced, the finance ministers of the Association of Southeast Asian Nations (ASEAN) released a joint statement vowing to pursue a concerted response and avoid any retaliation. Malaysia, as the 2025 chair of ASEAN, continued to give lip service to the need for a unified response from the grouping. But in practice, all the Southeast Asian governments, including Malaysia, prioritized bilateral negotiations with the United States to try and secure the best deal for themselves. That is because the major exporters in the region-Cambodia, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam-compete for foreign investment in export manufacturing. Their greatest fear was thus being left behind if their neighbors secured a more favorable tariff rate. This anxiety was sharpened once Vietnam, which enjoyed a first-mover advantage in engaging the Trump administration early and often, secured an initial deal at the start of July 2025, reducing the topline tariff rate on its goods to 20 percent from 46 percent. Indonesia soon followed with a 19 percent tariff, tailed by the Philippines, Cambodia, Malaysia, and Thailand, all at that same rate. Only Laos and Myanmar have been left behind with tariff rates over 45 percent.

This short-term focus on securing the best bilateral deals possible to avoid major economic shocks is entirely expected from export-reliant developing economies. But the long-term response is shaping up to be more important, for both the region and the United States.

This short-term focus on securing the best bilateral deals possible to avoid major economic shocks is entirely expected from export-reliant developing economies. But the long-term response is shaping up to be more important, for both the region and the United States. The Trump administration's trade war has proven a major accelerant to new or stalled economic negotiations between ASEAN states and other partners. The 10 member states have agreed to upgrade the ASEAN Trade in Goods Agreement, and in May they concluded negotiations with Beijing to upgrade the ASEAN-China Free Trade Area. Both will be signed in October after years of negotiations and will include new chapters on things such as digital trade and emerging technologies.

Potentially more important are Southeast Asian efforts to deepen trade and investment ties with two key blocs: Europe and the Gulf states. The region has realized that these provide the best options to enhance their own economic resilience by avoiding overreliance on either a predatory China or a mercurial United States. Indonesia and the Gulf Cooperation Council (GCC) held their second round of talks on a free trade agreement (FTA) in February 2025 and hope to conclude a deal by the end of the year. Malaysia also launched FTA negotiations with the GCC in May, while the United Arab Emirates and Manila intend to sign a comprehensive economic partnership agreement (CEPA) and the now annual ASEAN-GCC summit holds out hope for a future bloc-to-bloc agreement.

On the European front, the shared shock of U.S. tariffs has broken through several logjams. The European Union has discovered a new flexibility on the thorny issue of palm oil imports from Indonesia and Malaysia and their links to deforestation. As a result, Indonesia and the European Union signed a CEPA in September. Indonesia also intends to sign a CEPA with Canada this year and-in a development that should concern the United States-has concluded an FTA with the Russia-led Eurasian Economic Union. The Philippines and the European Union have restarted their long stalled FTA negotiations, holding a third round in June. And both Thailand and Malaysia have signed economic partnership agreements in 2025 with the European Free Trade Association states of Iceland, Liechtenstein, Norway, and Switzerland.

Most importantly, the uncertainties spawned by the U.S. trade war seem likely to bring new members into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which the United States walked away from at the start of the first Trump administration. This high-standard 12-member FTA is already the largest of its type. It includes sizeable economies like Australia, Canada, Japan, and Mexico, along with four Southeast Asian states, and it most recently expanded to include the United Kingdom. Indonesia formally bid for membership in September 2024, and South Korea and the Philippines have expressed renewed interest in joining. Powerful voices in Thailand are urging the same, which would bring in all of ASEAN except Cambodia, Laos, and Myanmar. Crucially, the European Union is exploring closer alignment with the CPTPP, though no formal talks have begun as of this writing. Should the European Union ever join the agreement, the resulting bloc could provide the ballast the global trading system badly needs amid challenges from both Washington and Beijing.

Recommendations

The one relationship in Southeast Asia that the United States has going for it right now is the alliance with the Philippines. That remains stable, and its value in U.S.-China strategic competition is vital. The most important thing the U.S. government can do to keep that on track is to follow through on commitments already made. The administration released the remainder of the foreign military financing the Philippines was allocated for FY 2024, but it will have to continue to deliver for years to come. The Biden and Marcos administrations signed a 10-year Security Sector Assistance Roadmap to aid in the long-term modernization of the Armed Forces of the Philippines; Congress must appropriate, and the executive must spend, funds to that end in the year ahead. Not only will that show the Philippines that the United States remains reliable, but it will help the Philippines share more of the burden of the alliance. The Philippine government also needs to be able to tell its citizens that a close partnership with the United States delivers economic benefits. And to that end, the United States will need to continue programs that incentivize private sector investment in projects like the Luzon Economic Corridor and the redevelopment of Subic Bay.

Beyond Manila, most regional capitals now see Washington as much as a source of risk as of opportunity. This is ironic, since the first Trump administration worked so hard to convince Southeast Asian partners to view overreliance on China in much the same way. Now the administration has severely undermined the United States' latent advantage over China as the more trusted and influential partner for most of the region. Repairing that will not be easy, but it could start with steps to make U.S. policy more predictable: Staff up the (mostly vacant) positions for political appointees on Asia policy across the administration, articulate a clear China strategy, and stabilize overseas development assistance programs under the control of the State Department and other agencies like the Development Finance Corporation.

Gregory B. Poling directs the Southeast Asia Program and Asia Maritime Transparency Initiative at the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he is also a senior fellow.

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