On April 2, President Donald Trump's so-called "Liberation Day" quickly morphed into "Solidarity Day" for all 10 members of Association of Southeast Asian Nations (Asean).
Within 72 hours, the bloc's chair, Malaysian Prime Minister Anwar Ibrahim, had held a conference call with his Asean colleagues to discuss and coordinate a potential collective response to the president's signature move. Over the past three weeks, there has been a flurry of activity among members and across continents with dialogue partners to respond to the worldwide tariffs.
It must be said that after the Asean Economic Ministers convened a follow-up virtual meeting on April 10, the bloc displayed its magnanimity and resilience by proposing the bloc's stance. Given the current high-volume two-way trade between Asean and the US, the bloc unanimously agreed not to act with bravado and not to impose retaliatory tariffs in response to Mr Trump's unilateral actions. At the meeting, the ministers also stressed the importance of maintaining open communication and collaboration to ensure balanced and sustainable economic ties with the US.
Furthermore, the bloc also wants to engage in "frank and constructive dialogue" with Washington. At the same time, Asean reaffirmed its support for the World Trade Organization (WTO) as the platform for resolving trade disputes and fostering global economic growth. The bloc is categorically urging the WTO to serve as a forum for dialogue to reduce trade tensions.
With the new tariff rates, the Asean economy will be greatly impacted, as members have been hit hard, ranging from 10% to 49% depending on the country. Over the weeks, the members have responded in various ways and with subtle nuances due to the different nature of their relationships with the US. Altogether, they have been cautious and pragmatic to not upset stability and ongoing engagement with the US.
Given the high volume of Asean-US trade of US$326.5 billion last year, out of which Asean enjoyed a trade surplus of $171 billion, the bloc must be more innovative and strategic in engaging the US. Any disruption would hurt their economies. In 2023, US direct investment in Asean hit $75 billion, mainly in finance, professional services, and high-tech manufacturing. The US is Asean's largest investor. Since February, the Asean Secretariat and High-level Task Force for Asean Economic Integration have been working together to find solutions and action plans to strengthen collaboration among members in high-value sectors such as professional services and high-tech sectors. The goal is to make the supply chain resilient and engage with trade partners, including the US.
The meeting in February led to the formation of a flexible framework known as the Asean-US Strategic Trade and Investment Partnership (STIP). This mechanism will promote collaboration on agricultural trade, digital services, professional mobility, and mutual recognition of standards.
Another strategy is a dual-track supply chain. The first track will focus on upgrading logistics and customs and prioritising high-value sectors such as semiconductors and pharmaceuticals. The second is to develop Asean into a "tariff-free assembly zone" via existing regional free trade agreements, allowing US firms to invest.
At the upcoming Asean-related summits in late May, the leaders will vet these recommendations for further action. For the time being, each Asean member has already pursued its negotiations with Washington. Despite each country having individual options for the US, their responses to US tariff challenges share common traits -- being cautious, pragmatic and conciliatory.
Several countries, including Singapore, Vietnam, Indonesia and the Philippines, have been in touch with the Trump administration for further negotiations. Thailand has already dispatched "Team Thailand", led by Deputy Prime Minister and Minister of Finance, Pichai Chunhavajira, and Minister of Commerce, Pichai Naripthaphan, to Washington. The government's task force has already prepared a list of must-dos aimed at cutting the 36% tariff.
Thailand has a $46-billion trade surplus with the US. Since the first Trump administration, the burgeoning trade surplus has been the central issue. The Paetongtarn government has already pledged to the US to expand market access and reduce the surplus over 10 years with increased imports of automobiles, arms, agricultural products, electronics, and LNG energy.
In addition, Thailand will encourage the private sector to invest in the US manufacturing sector, creating more jobs and utilising local input to create production bases for global distribution. Finally, the negotiating team hopes that its visit to Seattle-based Boeing, ahead of its arrival in Washington, will increase the country's leverage, as the revitalised Thai International has already ordered 45 Boeing 727-9 Dreamliner jets, which will dramatically reduce the trade surplus within Ms Paetongtarn's stated timeframe.
Lest we forget, Thailand was the first Asian country to establish ties with the US in 1818. The countries signed their first trade treaty in 1833, which granted the US numerous privileges that continue to the present day.
In the treaty, there is a particularly poetic phrase in Article 1 that reads: "The sincere friendship which exists between the two sovereigns shall be perpetual, as long as heaven and earth endure." Sooner rather than later, Thailand and its citizens will discover if their ancestral sincerity is deeply rooted and respected in these extraordinary ties. Lastly, the US has always reiterated that Thailand is its "truly oldest friend in the region". We will see soon whether Thailand is an old friend or just another trade partner.