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Most of the ASEAN-6 countries were a part of the first tranche of tariff letters issued by the US administration this week. In a ‘April redux’ (see our Weekly note), Malaysia is set to face 25% US tariff rate, Indonesia at 32%, Thailand and Cambodia at 36%, and Laos and Myanmar at 40%. These rates are a shade higher than April’s levels for Malaysia, while that for Cambodia, Myanmar, and Laos are lower than before. Vietnam was an exception as a trade deal was announced with the US last week, which lowered its headline US tariff rate to 20% from the previously threatened 46%. However, uncertainty remains regarding the interpretation of transshipment goods that will face 40% US tariffs. White House trade advisor Peter Navarro said in April 2025 that approximately one-third of Vietnam’s exports are re-routed from China, while a Harvard study found ~2% to 16.5% of Vietnamese exports to the US being re-routed in 2021, depending on the measure. Singapore, Philippines, and India are yet to receive the official notification, with the latter reportedly close to concluding a deal with the US (see note), delayed by few lingering contentious issues. On other duties, sector-specific tariffs further compound the problems, with indications that copper and pharma might be the next under the umbrella. We had previously assessed that ASEAN-6 is not a major source of imports for the US for copper. Singapore is the most exposed in ASEAN-6 to US pharma tariffs, but is engaging Washington for potential concessions on these products (see note). Countries aligned with the BRICS group might also face an addition 10% US tariffs. Vietnam, Thailand, and Malaysia are amongst the most reliant on exports to the US as a % of GDP. On the other hand, exports to the US comprise ~2% of GDP for India, Indonesia, and Philippines.
With no explanation of what drove this adjustment in rates, most national governments are expected to expedite negotiations with the US ahead of the August 1 implementation deadline. Three trade deals/frameworks have been announced with the UK, China, and Vietnam thus far. What were their telling parts? Firstly, a baseline US tariff rate stays, ranging from 10% to 30%. Details on the exact concessions and product-wise relaxations are scant. Secondly, an implicit acknowledgement that partners will buy more from the US has been built in, aimed at reducing the trade gap and addressing few non-trade measures. Next, efforts have been made to rein in transshipment flows, likely targeted at China’s move to channel trade through the region to tap the tariff differential. Add to this, calls on regional countries to tolerate currency appreciation vs the US dollar might also have been in the mix, even if not explicitly mentioned. Lastly, assurances of an increase in investments into the US. Against a challenging external landscape, regional central banks are likely to be cautious in 2H25, with attention on Bank Negara Malaysia’s policy rate decision today, where expectations are for a 25bps cut to 2.75%. Washington may continue to negotiate with countries in the coming weeks, which could see further finetuning of the bilateral rates. In terms of market impact, investors are likely to keep their ears close to the ground, but not aggressively shed risk positions.
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