Trade tensions are rising as US President Donald Trump threatens new tariffs in Southeast Asian countries.
Analysts warn that this could disrupt local supply chains and build a “custom barrier” that will raise prices for American consumers.
Trump’s new threat comes as the August 1 deadline for trade trading approaches. He said he was going to impose New tariffs25% to 40% in countries including Cambodia, Indonesia, Laos, Malaysia and Thailand. These countries have become the main ports of shuffling Chinese products redirected to skirt current US tariffs.
Vietnam, the largest in this transship chain, receives 20% tariffs on goods exported to the US, reaching 40% on re-routed goods. The tariffs will generate more than $300 billion by the end of the year, starting in August with what is called “big money.”
Tariffs rebuild the global supply chain
Trump’s attitude may strike a chord with people leaning towards protectionism, but warning bells are ringing by economists and trade experts. They warn that creating “customer walls” around Southeast Asia will cause major disruptions in global supply chains and increase costs for US consumers and businesses.
Alicia Garcia Herrero, chief Asia-Pacific economist at Naticus, says there are still countries where countries like Malaysia, Cambodia and Thailand are seeking better conditions, and better conditions. She said that customs contracts with Vietnam should not be a template for the region.
Regardless of the final tariff level agreed, the prices of goods exported from Southeast Asia are expected to rise under Trump’s plan. The region remains a major manufacturing hub for US consumer products, with increased costs likely to ripple through the US market.
“In general, manufacturing is more expensive in Asia, but in principle, there may be a 20% “custom barrier” in countries with smaller inputs from China. I think it has to be the same,” she said.
Capital Economics chief economist Mark Williams warned that implementing the proposed tariffs could be consistent and unpredictable. He said that lack of clarity could lead to disruption and inefficiency across the world trade network, as different rates could be applied to countries and industries.
Williams also added that tariffs in Southeast Asian countries could have unintended consequences. He said many companies moved from China to countries like Vietnam and Indonesia during President Trump’s first term to escape existing tariffs. However, he warned that the construction of a new tariff wall could hinder this trend. If the difference between China’s tariffs and other nearby tariffs is reduced, he said, the motivation for businesses to move could wander and halt the momentum of diversifying supply chains.
Rising costs narrow shoppers under new tariff regulations
Even sudden tariffs rarely meet Trump’s goal of returning manufacturing to the United States. American industries often lack the scale and cost benefits needed to replace Asian production.
According to Williams, American businesses and consumers will face a dilemma. He noted that even with tariffs, domestic production remains uncompetitive in many sectors.
This increases the risk of inflation for American consumers. Customs duties are essentially taxes on imports, so they usually fall on consumers. And even minor policy shifts can cause widespread ripple effects due to the deep intertwining of global supply chains.
At the same time, stricter rules on “transship” products (routed through third countries) can lead to more scrutiny once the product reaches US ports. This could pave the way for new industries to emerge that focus on compliance and processing.
