ASEAN safe haven against tariffs

Some Asian economies such as Malaysia, Singapore, and Vietnam are positioning themselves to be winners in a possible new trade war

Several problems, but also some opportunities. As threatened on the campaign trail, U.S. President Donald Trump began his second term by introducing tariffs to address a wide range of issues, from immigration to national security to over-reliance on imports for manufacturing. But Trump's trade barriers are much more targeted than feared on the campaign trail, points out Trinh Nguyen, economist at Natixis Corporate & Investment Banking, in an editorial in the Financial Times. Instead of worrying about tariffs, investors should look for opportunities in countries that can benefit from the likely changes, Nguyen argues. Asian emerging market economies outside of China should be on the list, because as during Trump's first term they could benefit. Vietnam is the big example, the Financial Times reports. From 2017 to 2023, the country increased its share of exports to the United States in all product categories, making it a winner among Asia's emerging economies. This growth is not simply the result of China redirecting exports under the guise of Vietnamese products, but is the result of Vietnam's greatly expanded international trade relations. According to Nguyen, Malaysia and Singapore have also benefited from a push for investment diversification. Kuala Lumpur has focused on high-tech sectors such as semiconductors and data centers, while Singapore has expanded into financial services and attracted corporate headquarters. This year, the two countries also collaborated to establish the Johor-Singapore Special Economic Zone to boost investment and jobs in strategic sectors. ASEAN has now become the largest recipient of foreign direct investment in Asia. For some economies, the new shock to global trade represents “an opportunity to strengthen resilience, liberalize trade access and improve competitiveness,” according to the economist. Some Asian economies, such as Malaysia, Singapore, Vietnam, and increasingly India, are positioning themselves to be winners in the trade war.”