Kuala Lumpur: Chinese President Xi Jinping’s high-profile five-day tour of Southeast Asia comes at a pivotal moment, as sweeping tariff hikes by the Trump 2.0 administration on China and key ASEAN exporters reverberate across global trade.

According to BERNAMA News Agency, the new tariffs announced on April 2 – including 49 percent on Cambodia, 46 percent on Vietnam, and 24 percent on Malaysia, alongside a staggering 145 percent on Chinese goods – have cast a long shadow over Southeast Asia’s export-reliant economies. Yet for some analysts, this disruption presents more than just economic risk – it offers a strategic opportunity.

In fact, the Southeast Asian tour was widely viewed as both a symbolic show of solidarity and a strategic recalibration of China’s regional ties. During his state visit to Malaysia, which began last Tuesday, Xi pledged to deepen economic cooperation with ASEAN, describing ties with Malaysia as entering a ‘new golden era.’ The visit formed part of Xi’s three-nation Southeast Asia tour – his first official overseas engagement of the year – which included stops in Vietnam and Cambodia. He departed Malaysia on April 17 after a three-day visit, during which 31 Memoranda of Understanding (MoUs) were exchanged between Malaysia and China. These agreements span strategic sectors such as the digital economy, infrastructure, agriculture, security, and education.

For Malaysia, the agreements represent more than just bilateral progress; they reflect ASEAN’s broader effort to strengthen regional resilience amid an intensifying US-China rivalry.

Tariff Hike a Blessing in Disguise

Experts interviewed by Bernama described the United States (US) tariff hikes not simply as a setback but as a potential catalyst – prompting ASEAN countries to diversify export markets, reduce dependence on the US, and strengthen intra-Asian trade. Geostrategist Prof Dr Azmi Hassan from Universiti Teknologi Malaysia called the current situation ‘a blessing in disguise,’ particularly for ASEAN countries that had grown overly reliant on the US market.

Malaysia now faces a 24 percent tariff – a significant jump from the current 2.2 percent trade-weighted average on Malaysian exports to the US. Azmi noted that although this poses challenges, it is not the end of the road. Malaysia can still explore other markets, particularly in sectors like palm oil and gloves, where the country maintains a competitive edge. He explained that the 145 percent tariff on Chinese goods essentially prices them out of the US market, providing Malaysia with an opportunity to gain market share despite the new tariffs.

Asked whether the US tariffs would effectively cut trade between Malaysia and the US, Azmi disagreed, pointing out the US dependency on Malaysian products such as gloves. Malaysia currently enjoys a trade surplus with the US, exporting primarily electronics, palm oil, and machinery. In November 2023, Malaysia was removed from the US Treasury’s currency manipulation monitoring list.

Geopolitical Signal to the US

Azmi stated that the Chinese President’s decision to visit Vietnam, Malaysia, and Cambodia while skipping traditional stops such as Singapore was a strong geopolitical signal to the US. It reflects China’s continued strong engagement with ASEAN despite mounting pressure from the Trump 2.0 administration. He noted that ASEAN’s unified stance, particularly under Malaysia’s chairmanship this year, underscores the region’s determination to assert its foreign policy independence.

Prime Minister Datuk Seri Anwar Ibrahim announced that Malaysia will host the ASEAN-GCC Summit, involving all 10 ASEAN member states and six Gulf countries. China has also been invited to participate. Azmi emphasized that while the current 90-day tariff freeze offers a brief window for negotiations, the outcome remains uncertain.

Future Growth in the Global South

Amid sweeping tariffs, Malaysia and other ASEAN nations are recalibrating their foreign policy while strengthening ties with China. Adviser to the Centre of Regional Strategic Studies, Dr Lee Boon Chye, said ASEAN’s principles of non-interference and neutrality have long contributed to the region’s stability. He noted that the future of global growth lies in the Global South across Asia, Africa, and South America.

Dr Lee emphasized the shift toward mutual prosperity and collaboration beyond the traditional Western sphere. He distinguished China’s advocacy for cooperation among equals from the Western model where dominant powers exert influence. He suggested deeper regional supply chain integration, citing the electric vehicle (EV) sector as a promising example of shared growth within ASEAN economies.

Tapping China’s Digital Trade

As US tariffs pressure ASEAN economies, Chinese economist Chen Wenling urges Malaysian businesses to capitalise on China’s digital trade landscape. She highlighted the shift to direct business-to-consumer (B2C) models as an unprecedented opportunity for Malaysian SMEs. Chen pointed to successful platforms like SHEIN, TEMU, and Douyin E-commerce’s TikTok shop as examples of reshaped trade.

Chen urged local businesses to align with regional supply chain networks, highlighting the Regional Comprehensive Economic Partnership (RCEP) for reduced tariffs and improved market access. She noted that Malaysia’s position as ASEAN Chair could enhance its influence in deepening digital trade collaboration with China.

CO2 Reduction

Climate policy expert Dr Gary Theseira said the Trump 2.0 administration’s tariff policies, primarily aimed at reducing trade imbalances, may yield unexpected climate benefits. He noted that while tariffs are protectionist tools, they may inadvertently support global decarbonisation efforts, particularly in ASEAN.

Theseira explained that relocating production from carbon-intensive regions to countries with cleaner energy mixes could lead to more sustainable global supply chains. He highlighted the potential for increased EV adoption in ASEAN due to high US tariffs on Chinese-made EVs. He also pointed out that shorter transport routes between China and Southeast Asia would result in a lower carbon footprint, compared to trans-Pacific shipments to the US.

Theisera concluded by emphasizing the potential environmental benefits of the tariffs, suggesting that the rebalancing of trade could create a greener ripple effect globally.