Southeast Asia Will Be Challenged by Trump 2.0

The return of Donald Trump to the White House is generating shock waves across the international system. He has only been in office for a few weeks, but already allies, friends, and adversaries alike have realised that a major reset in their relations with Washington is being demanded. How will these tectonic shifts affect Southeast Asia and ASEAN? An assessment points to many challenges and a few opportunities for the region.

The ASEAN region started the year from a relatively strong position on economics and security. According to the Asian Development Bank, the region’s economic growth forecast was 4.7 per cent in 2024 (with Malaysia, Singapore, Thailand, and Vietnam showing stronger performance) and is expected to maintain similar growth rate in 2025. Shifts in supply chains away from China have benefited key Southeast Asian economies such as Vietnam and Indonesia, but there are also other domestic drivers of growth, including effective trade policies and downstreaming industrial strategies.

Southeast Asia also remains largely at peace. The exceptions are the raging civil war in Myanmar and increased confrontations between the Philippines and China in the South China Sea. While ASEAN has yet to solve the Myanmar challenge, the grouping has not been paralysed by it, as evidenced by the successful Indonesian Chairmanship in 2023, and Laos’ creditable performance as ASEAN Chair in 2024. There also appears to be an energetic start under Malaysia’s Chairmanship in 2025 with the appointment of Tan Sri Othman Hashim as the new Special Envoy of the ASEAN Chair to Myanmar. The South China Sea escalation is worrying but, so far, remains below the level of a full-blown military crisis.

In Washington, Donald Trump has far fewer constraints as compared to his first time due to weaker opposition in Congress and the courts, and greater domestic legitimacy from his clear win in the popular vote in the 2024 election. The Trump administration’s biggest moves in less than four weeks in office have been on immigration, trade and aid, the Israel-Hamas conflict, and the Russia-Ukraine war. These four aspects of the Trump administration’s policies have the potential to affect the strategic environment for Southeast Asia.  

Immigration appears to be the most tractable of these. Donald Trump’s zeal in expelling undocumented immigrants should not be underestimated. The Philippines is an exception in Southeast Asia with regard to undocumented immigration to the US, with an estimated 130,000 such immigrants present in-country. However, Manila has taken a conciliatory stance on the expected deportations, with its ambassador to the US repeatedly asking for illegal migrants to leave voluntarily before they are deported. Thus, on closer examination, it is unlikely that immigration will derail or seriously affect US-Southeast Asia ties.

The picture is more complicated on trade. ASEAN has a high trade-to-GDP ratio of 93 per cent. Manufacturing exports add significant value to the region’s GDP in the automotive, semiconductor, electrical machinery, processed minerals, and textile sectors. ASEAN therefore has a strong interest in preserving the multilateral trading order.

However, Trump 2.0 is assaulting the multilateral trading order with a slew of tariffs threatened or imposed. So far, the targets of Trump’s ire have been Canada, Mexico, Colombia, and China. But the president has promised to implement “reciprocal” tariffs, in principle, against all countries. The sectors most relevant to ASEAN — automotive, semiconductors, and critical minerals (such as nickel) — are high on Trump’s agenda. Several countries running large trade surpluses with the US are likely targets for protectionist measures. They include Indonesia, Malaysia, Thailand, and Vietnam.

The Trump administration also uses tariff threats as a tool to force concessions on a range of issues, including those related to US-China competition. Supply chains are also likely to come under major pressure. Aufa Doarest and Maria Monica Wihardja write that “ASEAN’s high trade reliance on China while having the US … as its largest investor and key source of technology transfers puts it in an increasingly precarious situation.”

Washington’s massive foreign aid cuts with the near-abolishing of USAID will affect the less developed ASEAN states of Cambodia, Laos, and Myanmar the most. Except for Myanmar, the region is broadly a growth story. If national governments step in to cushion the damage, the region will largely be able to mitigate the fallout. The US aid pullout also creates donor-specific opportunities for China and Japan, among others, to fill the void and expand their influence.

The Israel-Palestine issue has a serious bearing on Southeast Asia. Three of the 10 ASEAN states – namely Indonesia, Malaysia, and Brunei – are Muslim-majority countries. Beyond these, other countries such as Thailand and Vietnam, mirroring much of the broader Global South, have also expressed concerns about the massive violations of international law in Gaza. Trump’s diplomatic push did enforce a ceasefire in Gaza, which the Biden team had failed to do for months. However, Trump’s subsequent proposal to take over Gaza and transfer its Palestinian population to other Arab countries has not gone down well in parts of Southeast Asia. The proposal may simply be a pressure tactic, but if pursued, would likely erode US ties with Indonesia and Malaysia.

Trump’s radical break from previous US policy on the Russia-Ukraine conflict has major lessons for Southeast Asia. By cutting the Gordian knot on ending the war and mostly disregarding the views of its European allies and Ukraine, Washington now is pursuing a model of great power relations that is focused even more on its own perceived interests, even as top administration officials seem woefully ignorant of the ASEAN region.

Despite his focus on other global issues, there are few reasons to believe that Trump will seek a major tamp down on competition with China. His National Security Council and State Department are dominated by China hawks such as National Security Advisor Michael Waltz and Secretary of State Marco Rubio. Such competition will likely continue, and even intensify, when it comes to the overall military balance, leading-edge technology, and critical minerals. The administration’s outreach to Russia is partly driven by creating more space for a focus on China.

Trump’s Department of Defense however, has more than a few key voices from the “Restraint” camp, including Dan Caldwell, senior advisor to US Defense Secretary Peter Hegseth, and Andrew Byers, Deputy Assistant Secretary of Defense for South and Southeast Asia. These voices are skeptical of what they see as an expansive view of US vital interests and presence previously pursued by US presidents from both parties.

Caldwell, for example, has expressed opposition to any security guarantee for Taiwan and prefers East and Southeast Asian allies and partners to do much more for their own defence. In a recent paper, Byers proposed “removing US military forces or weapons systems from the Philippines in exchange for the China Coast Guard executing fewer patrols.”  Even more ambitious proposals on the South China Sea have been floated by the Quincy Institute, a Restraint-oriented think-tank in Washington. This does not imply a US pullout from Asia – conservative restrainers take competition with China very seriously. But Washington might redraw its notional defense perimeter in East and Southeast Asia to defend less, while doubling down on securing interests deemed as truly vital.

The possibility of such shifts in American grand strategy ought to be reason for a significant rethink within ASEAN. The Philippines – the key US ally in Southeast Asia at the frontline of China’s intrusive activities in the South China Sea – could be the most affected, security-wise. The US could adopt a narrower American approach that de-prioritises the South China Sea’s maritime features and retains the focus on defending the Philippine mainland. If this happens, Manila could take a more cautious approach in its South China Sea dispute with China. This could narrow the growing differences between the Philippines and other ASEAN states on how best to respond to Beijing.

On the other hand, stronger and bilaterally differentiated pressures from the US on trade, supply chains, and access to natural resources could generate internal competition among Southeast Asian states for the best side-deal with Washington, thereby acting to weaken ASEAN unity. Such pressures can also make China, Japan, and India more attractive to individual ASEAN states in variable ways. Much deeper intra-ASEAN consultation and coordination will be required to adapt and respond to these new realities.

---

Editor’s Note:
ASEANFocus+ articles are timely critical insight pieces published by the ASEAN Studies Centre.