Tariffs: Intended or unintended tool for regime change? — Phar Kim Beng

Malay Mail

10-07-2025

July 10 — The sudden imposition of sweeping tariffs by President Donald Trump in early July — well ahead of the anticipated deadline — signals more than an effort to rectify trade imbalances.
It reflects a calibrated exercise of economic statecraft where tariffs become not only tools of negotiation, but instruments of political pressure.
When viewed in their broader context, these tariffs, despite exempting key sectors such as semiconductors and integrated circuits, are capable of precipitating political instability, policy reversals, and potentially even regime change in targeted states.
Exemptions that signal strategic intent
Significantly, the tariffs exclude semiconductors, motherboards, and integrated circuits — components that form the backbone of both global supply chains and bilateral trade between the US and countries such as Malaysia, South Korea, and Japan.
This is no coincidence. These sectors constitute the bulk of US trade — estimated at nearly two-thirds of total trade volume — making their exemption a tactical calculation rather than an economic oversight.
By sparing these industries, Trump avoids disrupting American corporate interests and consumer markets while still signalling political dissatisfaction.
In Malaysia's case, this pressure has not gone unnoticed. In a clear move to placate Washington, Malaysia has committed to acquiring a fleet of thirty Boeing aircraft — an unmistakable gesture of goodwill designed to signal alignment and buy strategic space.
Punishment without collapse
Trump's tariffs are not aimed at fully collapsing economies or dismantling vital production lines. They are surgical strikes intended to sow uncertainty, prompt capital outflows, and provoke policy concessions.
The strategy lies in creating just enough discomfort to trigger domestic recalibration — without harming US supply chains.
For politically fragile or externally dependent economies, this can be destabilising. Governments facing economic slowdowns may be forced to reduce subsidies, cut development budgets, or raise taxes — all of which can incite public anger or expose rifts among political elites.
While the tariffs stop short of sanctions, they function similarly in effect: they extract behavioural shifts without requiring boots on the ground.
Malaysia's delicate balancing act
Malaysia is no stranger to external pressure. As a trade-dependent nation with global linkages, especially in electronics, it finds itself in the crosshairs of Trump's selective tariff regime. Though spared in the semiconductor and integrated circuit categories, Malaysia remains vulnerable to broader policy risks.
The recent decision to purchase Boeing aircraft, widely interpreted as a gesture of mollification, illustrates the kind of transactional diplomacy Trump has championed.
In this view, economic relief is not merit-based but conditional — contingent on visible political gestures, economic alignment, or foreign policy moderation.
When viewed in their broader context, these tariffs, despite exempting key sectors such as semiconductors and integrated circuits, are capable of precipitating political instability, policy reversals, and potentially even regime change in targeted states. — Reuters pic
Yet such concessions come at a cost. Prioritising foreign appeasement over domestic priorities can invite criticism at home, undermine industrial policies, or trigger a sense of lost sovereignty. In more extreme scenarios, public perception of economic capitulation may erode a government's legitimacy, feeding into opposition narratives and electoral volatility.
Regime change by other means
To be clear, Trump is not openly calling for regime change. But his policy toolkit enables outcomes that mirror it. When tariffs weaken a government's economic foundation, erode investor confidence, or amplify societal frustrations, they set the stage for political transitions.
In democratic systems, this might mean a loss of parliamentary control or a change in administration. In authoritarian or hybrid regimes, it may lead to intensified repression, elite defections, or shifts in geopolitical alignment.
The outcomes vary — but the pressure originates from the same source.
The flawed genius — and danger — of Trump's tariff strategy lies in its deniability. Unlike overt sanctions or military actions, tariffs wear a mask of legitimacy. They can be explained away as economic tools while quietly forcing nations to rethink their entire policy compass.
Strategic autonomy or strategic submission?
The challenge for countries like Malaysia is to navigate between appeasement and autonomy. Excessive alignment with the US may yield short-term relief but weaken long-term resilience.
Conversely, hedging toward alternative blocs such as BRICS or deepening ties with China risks further economic retaliation.
This is the exact trap Trump's tariffs are designed to create. They force nations into binary choices where neutrality becomes untenable.
By weaponising trade, Trump reduces diplomacy to a transaction and multilateralism to an afterthought.
Conclusion: The political cost of economic coercion
Trump's tariffs, though selectively applied and politically packaged, are far from benign. They are instruments of economic coercion with deeply political consequences. Whether or not intended, they are capable of reshaping national strategies, unsettling governments, and accelerating regime change without firing a single shot.
Malaysia and its neighbours in Southeast Asia would do well to read the subtext. The exemptions granted today may be revoked tomorrow.
The deals made now may come with deeper expectations later. And the space for independent decision-making may shrink under the growing weight of transactional power politics.
In this era of manufactured economic pain, survival depends not just on trade diversification — but on strategic clarity, regional unity, and the courage to say no when pressure comes dressed as partnership.
* Phar Kim Beng is the Director of the Institute of Internationalization and Asean Studies (IINTAS) and Professor of Asean Studies in International Islamic University of Malaysia. He writes frequently on regional trade, diplomacy, and international strategy.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.