What's the Deal With Trump's Trade Agreements in Southeast Asia?

The Diplomat

29-07-2025

The United States recently announced it had struck trade deals with Indonesia, Vietnam, and the Philippines, which would allow those countries to avoid the punitively high tariffs President Donald Trump was threatening to enact. Much of this information is coming from Donald Trump's social media account, so we should be clear that none of this is legally binding and many important details are missing. In fact, many of the countries on the other side of these deals quickly made it known they viewed things a bit differently than President Trump.
Vietnam is a case in point. In early July, Trump wrote on Truth Social (a social media platform that he also owns) that Vietnamese exports to the United States would be subject to a 20 percent tariff. In exchange, Vietnam would do 'something that they have never done before, give the United States of America TOTAL ACCESS to their Markets for Trade.' Similar deals with the Philippines and Indonesia were announced shortly thereafter, also on Truth Social and using similar language.
But Vietnam has so far not acknowledged that this deal exists or that they agreed to it. According to Politico, Vietnamese negotiators believed they were agreeing to an 11 percent tariff on exports when Trump suddenly 'disregarded that figure in his phone call with Vietnamese General Secretary Lâm – who had not been part of the initial tariff negotiations – and instead declared the U.S. would impose a tariff nearly twice as high.'
Something similar happened with the Philippines. During a recent visit to the United States, President Ferdinand Marcos Jr. and Trump reached the basic terms of an agreement. According to Trump, this would involve a 19 percent tariff on exports from the Philippines to the United States. The Philippines, much like Vietnam, would then go 'OPEN MARKET with the United States, and ZERO Tariffs.' Marcos quickly clarified that details were still being worked out, and that the zero tariffs were understood to apply only to American automobile imports to the Philippines, not all imports.
Indonesia also agreed to a 19 percent tariff rate on exports to the United States, while committing to buy airplanes, soybeans, and energy from the United States. Again, this deal was struck after a direct conversation between Trump and Indonesian President Prabowo Subianto. Somewhat surprisingly, the U.S. and Indonesia issued a joint statement confirming some of the terms, although I would again note that none of this is legally binding and the details are still being worked on. Nevertheless, like the Philippines, they seem to have accepted the base tariff rate of 19 percent.
How can we make sense of all this? Well, back in April when the first round of tariffs were announced, I wrote the following: 'The U.S. will probably try to secure some concessions from each country, then lower the tariff and champion it as evidence of Trump's deal-making prowess.' I think this is precisely what we are now seeing. The Philippines and Indonesia appear willing to make some concessions so Trump can feel like he got a win, including accepting a nominal tariff rate of 19 percent.
Why would they do this? One reason is that the U.S. is not a huge export market for either country. As I noted last week, the U.S. accounted for about 8 percent of Indonesia's exports in 2023. Indonesia already purchases a significant number of Boeing aircraft and soybeans, so they aren't giving away anything major by committing to buy more of these items. For the Philippines, it's about the same, with only around $11 billion in exports to the U.S. in 2023.
Neither country is particularly export-dependent, and in fact, they often run deficits in the balance of trade, meaning they import more than they export. Nobody wants to be hit with a 19 percent tariff, but if you are forced to deal with an antagonist trade partner with the size and power of the United States, there is a logic to making some concessions in the interest of preserving the relationship, especially if you suspect the terms may change again in the future anyway.
Vietnam, it appears, is less willing to make similar concessions. Why? Again, the answer is in the trade data. Vietnam's economy is heavily export-dependent, with about $400 billion worth of exports in 2023, when you include services. Nearly a quarter of that went to the U.S. market. That means the difference between 11 and 20 percent is significant, and Vietnam may be less willing to make such concessions simply to stay in Trump's good graces.
A country like the United States has considerable geopolitical, economic, and diplomatic leverage that it can wield to achieve a variety of objectives. That it is choosing to wield it in this way is unfortunate, and will almost certainly drive countries in the region away from America and toward other trade and development partners in Europe, the Middle East, and elsewhere.