ASEAN fears tariff hike in wake of U.S. election

The election of Donald Trump as the 47th U.S. president has raised concerns in export-oriented Southeast Asia, given the regional economies must contend with Trump's campaign promise to raise tariffs on imported goods, analysts said.

But analysts are hoping Trump will use his second tenure as president to engage more with the members of the Association of Southeast Asian Nations. There are also expectations that ASEAN will continue to use diplomatic hedging as it navigates new geopolitical challenges arising from Trump's return to the White House.

Oh Ei Sun, a senior fellow at the Singapore Institute of International Affairs, said the planned tariff hike is "undoubtedly bad news" as ASEAN's exports to the U.S. "will encounter strong headwinds".

"Larger manufacturers in these countries would probably have to contemplate setting up factories in the U.S. to satisfy Trump's demand to 'make America great again'," Oh said, referencing Trump's slogan.

Maybank said in a research note that more protectionist U.S. policies could dampen ASEAN exports, reduce investment inflows to the region, and produce a "major deflationary shock".

The Kuala Lumpur-based lender said the blanket tariffs will increase the incentive for U.S. companies to "onshore" their manufacturing and could therefore dampen foreign direct investment to ASEAN.

Abdul Majid Ahmad Khan, president of the Malaysia-China Friendship Association and former Malaysian ambassador to China, said most ASEAN countries are "highly exposed" to international trade. As such, Trump's proposal for tariffs of 10 percent on all imports "could impact (ASEAN's) economic growth" and affect currency valuations in the region, he said.

Muhammad Habib Abiyan Dzakwan, a researcher at the Department of International Relations at the Center for Strategic and International Studies, Indonesia, is concerned that Trump skipped the annual ASEAN Summit where leaders discuss critical global issues.

"We need the United States' participation in these dialogues," Muhammad Habib said.

Lucio Blanco Pitlo III, a research fellow at the Manila-based Asia-Pacific Pathways to Progress Foundation, sees a "possible volatility" in U.S. foreign relations under a second Trump administration. He said such concerns might push ASEAN countries "to do more hedging" and keep their options open as much as possible.

Pitlo said any move that will promote decoupling "will disrupt supply chains and affect ambitions of regional countries to upgrade their industries".