US tariffs won't stop China's long game in SE Asia

AllAfrica

12 hours ago

As the United States presses its 'reciprocal tariffs' campaign against ASEAN members, Washington's hard-nosed trade tactics are sending ripples far beyond the negotiating rooms of Singapore, Jakarta and Hanoi.
US negotiators may frame this as an effort to win better market access for American goods and chip away at Chinese expansion in Southeast Asia, but Beijing is watching closely and repositioning itself to turn US-ASEAN tensions to its long-term advantage.
The Trump administration's strategy has been characteristically direct: levy hefty tariffs first and then issue a laundry list of concessions in return for partial relief.
This year, on April 2, the US implemented 'reciprocal tariffs' ranging up to 49% on imports from certain ASEAN nations, including Vietnam and Cambodia, while others, such as Singapore, were subject to 10% duties.
Those came down after negotiations but are still in the range of 19-24% for top trading partners like Thailand (19%), the Philippines (19%), Vietnam (20%) and Malaysia (24%).
For most ASEAN economies, where the US is a key export market, forfeiting preferential access jeopardizes GDP growth, jobs and even political stability. The US calls for restricting Chinese exports and future compliance with possible future sanctions against Beijing puts ASEAN directly in the middle of a raging competition.
This is where China sees both a challenge and an opening. For 15 consecutive years, China has been ASEAN's largest trading partner. In the first quarter of 2025, two-way trade hit $234 billion, with full-year figures projected to surpass $1 trillion, far ahead of US-ASEAN trade volumes.
The US push to force ASEAN to cut Chinese goods directly targets the integrated supply chains that underpin this relationship. But rather than counter with public threats, Beijing is moving toward a more subtle, calculated response: embedding itself more deeply in ASEAN's economic fabric in ways that US tariff policy will struggle to unwind.
Another important prong is accelerating local production within ASEAN. Chinese enterprises are establishing or setting up factories inside Vietnam, Thailand, Indonesia and Malaysia, not to lower labor expenses, but to meet 'rules of origin' for more products to contribute in the global supply chain.
The policy is not new. It is a rerun of the 'China plus one' diversification strategy popular during the US-China trade war, but its pace is picking up speed. Regional trackers show that Chinese greenfield spending on ASEAN production reached a record US$26.4 billion level during 2023, surpassing US spending, which was around $7 billion.
Its logic is straightforward as by having the US specifically target products having as little as 10-20% Chinese content, direct production inside ASEAN makes Washington's market-access blocking increasingly difficult. The move also binds ASEAN economies to Chinese industrial complexes all the more securely via supply deals, shared infrastructure and local employment integration.
Another dimension of Beijing's counterplay is to diversify China's outbound investment from its Belt and Road infrastructure construction to ASEAN's production clusters, tech parks and logistic hubs.
As such, China ensures that while goods are technically 'ASEAN-made,' financial, technological and logistical pillars thereof remain all strictly aligned with Chinese technology and funds. Such infrastructural presence makes it considerably harder for US trade policy to disrupt China's presence in the region's value chain.
At the same time, China is preparing to fill the inevitable gaps left by US-ASEAN trade adjustments. Many ASEAN negotiators have already signaled a willingness to buy more American agricultural products, aircraft and energy, often at higher cost than other suppliers, to placate Washington.
But there are sectors where US goods are simply too expensive or fail to meet local requirements. In steel, electronics, textiles, and increasingly in renewable energy equipment, China remains the more competitive supplier.
If ASEAN reduces imports of these goods from China to comply with US demands, Beijing can redirect supply to domestic markets or other fast-growing partners, while simultaneously offering ASEAN cooperation in emerging sectors such as electric vehicle (EV) manufacturing and agricultural technology.
Such versatility is coming up trumps. During the first half of 2025, China's shipments to Southeast Asia increased 16.6%, while those to the US fell 21.7%. These statistics indicate that although Washington can upset certain flows, it cannot readily compensate for the size and agility China brings to ASEAN's broad economy.
Apart from goods, China fills a gap in services and finance. With US tariff policy casting a cloud over ASEAN export planning, Beijing is making financial markets in China accessible, developing renminbi settlement mechanisms and reinforcing measures facilitating trade and decreasing reliance on the US dollar. These measures cushion ASEAN economies against US policy fluctuations and integrate them further into China's financial system.
Tone is no less significant than strategy. The warlike tack coming out of Washington, including reports of President Donald Trump boasting about countries 'kissing my ass' to get tariff relief, has backfired on the US across the globe. Such language can generate domestic backlash against leaders who are perceived to be buckling under US pressure.
By contrast, Beijing has been careful to refer to its engagement as 'mutually beneficial cooperation' and 'win-win development.' Such gentler, inclusive language works better not only with ASEAN leaders but also resonates well with public opinion and is therefore politically easier for governments to uphold or deepen economic relationships with China.
China's signal to ASEAN is already loud and clear: make the best possible deal with the US. Chinese Premier Li Qiang said, 'Facing rising protectionism and unilateralism in some places of the world, we must be committed to expanding opening up and removing barriers.'
The implicit message is also loud and clear: China will be waiting to invest, supply and promote. The message makes Beijing the pragmatic counterpart at a time when the US is coming across as unpredictable and crudely transactional.
Nevertheless, Beijing needs to be cautious. Push too hard, and it confirms Washington's storyline of ASEAN overdependence on China. Move too gradually, and ASEAN nations might rearrange supply chains in a fashion that actually diminishes Chinese clout.
The sweet spot is measured by integration through more joint enterprises, increased domestic employment, vigorous technology diffusion and jointly designed R&D centers. These programs make Chinese engagement not only economically essential but also politically acceptable to a range of different ASEAN governments.
Trump's 'reciprocal tariffs' policy is designed to push ASEAN away from China. However, Beijing's counter-steps, from localized production and diverted investment to plugging supply gaps and deepening financial links, underscore China's long-game strategy in the region.
For ASEAN, the most sustainable course is still balancing diversified trade with both powers. For China, the key is to make its economic presence in Southeast Asia too deep and too valuable to be uprooted.
If Beijing can achieve this balancing act, the very policies designed to weaken its influence in the region could end up bolstering them, not through public posturing, but through low-key, measured integration driving the very heart of ASEAN's economic future.
Bilal Habib Qazi is an independent researcher based in Pakistan with a PhD in international relations from Jilin University in China. His research interests span geopolitics and strategic competition, foreign policy analysis, international security and regional order, as well as global governance and international organizations. He may be reached at [e-mail]