Trump-era tariffs have failed to blunt Southeast Asia’s export dominance or narrow the US trade deficit, prompting Washington to recalibrate its strategy as it advances a new trade deal with India.
As Trump-era tariffs fail to stem the rise of Southeast Asian export leaders and the
US trade deficit continues to widen despite punitive levies, Washington is recalibrating parts of its trade strategy. Against this backdrop,
India and the US are pushing a bilateral trade agreement towards the documentation stage, with both sides expected to advance formalities this week. The move comes as the US reassesses its tariff-centred approach, which has strained multiple regions without delivering the intended trade balance gains.
Southeast Asia’s export-driven economies recorded larger trade surpluses with the US last year despite Washington’s tariffs. Figures from Malaysia, Thailand, and Vietnam, all of which were subjected to high US duties last April, showed they continued exporting more to the US than they imported. According to Nikkei, this trend was likely supported by front-loaded deliveries.
At the same time, these countries saw their trade deficits with China widen, underlining the scale of Beijing’s export capacity. Global trade conditions have remained volatile since US President Donald Trump returned to the White House last year.
US trade balance remains uncertain
The US overall trade deficit has fluctuated sharply, with no expert consensus on how Trump’s policies may shape the long-term trade balance.
Vietnam’s trade surplus with the US exceeded China’s, leading Washington to weigh diplomatic adjustments, including the appointment of a new ambassador to Vietnam. The Trump administration planned to replace the US ambassador to Vietnam with a nominee focused on addressing “imbalanced” trade relations, as Hanoi’s goods trade surplus with Washington overtook China’s in recent quarters while tariff negotiations with the US remained unresolved.
In January, current ambassador Marc Knapper ended his tenure after being abruptly recalled before Christmas along with several other career diplomats. His designated successor, career diplomat Jennifer Wicks McNamara, who is awaiting US Senate confirmation after being nominated in October, has said the trade relationship needs rectifying.
Within this evolving trade environment, India and the US have agreed to a trade deal that lowers tariffs on Indian goods from 50 per cent to 18 per cent, with Washington removing the additional penalty previously tied to India’s purchase of Russian crude oil. The agreement leaves only the revised reciprocal tariff in place and is aimed at easing trade frictions between the two largest democracies.
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