Donald Trump’s prepping his second term with a vengeance, and this time, it’s not just China he’s eyeing for new tariffs—the whole world could get a taste.
Asia’s economic players—India, Vietnam, Indonesia, Malaysia—could already be sweating bullets. Will they become collateral damage?
Trade wars aren’t exactly breaking news; Trump’s 2017 tenure practically wrote the book. Now, as the 78-year-old heads back to the White House, the region’s winners and losers are dusting off their old playbooks, wondering what surprises “The Donald” has in store.
Trump’s tariffs on China have already sent companies scurrying to set up shop elsewhere in Asia—a trend cutely named “friendshoring,” which began after he slapped tariffs of up to 25% on $360 billion worth of Chinese goods.
Trump’s rumored 60% tariff on Chinese goods (and possibly 20% on others) could ramp that up, making India, Vietnam and Malaysia the new hotspots for global manufacturing.
Delhi wins big?
India’s looking like the prom queen of the “friendshoring” party. Nomura says India’s massive domestic market and manufacturing push could speed up this trend, especially as Southeast Asia attracts mostly Chinese firms.
Meanwhile, India’s rolling out the welcome mat for giants from the US, Europe, and beyond. Microsoft, Walmart, and JPMorgan? They’re already employing thousands in India, and Amazon, Microsoft, and Alphabet are dropping $15 billion to build data centers. It is also a massive market for companies like Meta and its multiple social products.
That “American” depth in India’s economy could help New Delhi if Trump decides to retaliate against “third countries” that China is tapping to bypass tariffs.
But is it all that rosy? Not so fast. India could still get caught in the tariff crossfire as Trump seeks to give American manufacturing a hand.
A 20% tariff on key exports—automobiles, textiles, and pharma—could be a gut punch, according to Neha K Mehra from the Federation of Indian Exports. And Trump’s not exactly hot for renewables, putting India’s solar and wind exports on thin ice.
Next in line?
With Trump gearing up for round two, Vietnam’s got a lot to lose. Sharing a border with China has drawn Chinese investors by the boatload over the last decade, and that might just put Vietnam smack in Trump’s crosshairs.
On paper, Vietnam’s sitting pretty as the US’s third-largest trade partner after China and Mexico, riding a $90 billion surplus. But that same surplus could also make it Trump’s next trade war victim.
And it’s not just textiles or electronics—Vietnam is the world’s top producer of solar panels outside of China, supplying a solid 45% of America’s solar imports this year alone.
With retroactive tariffs on the table, its solar exports could be facing a very cloudy future. While the US solar industry has pressured Biden to slap duties on these imports, under Trump, the stakes might be even higher.
Local manufacturers are also bracing for higher production costs if Trump goes after Vietnamese exports. Country experts like Leif Schneider at Luther’s Vietnam office warn that tariffs could gut demand for Vietnamese goods in the US.
But others like Michael Kokalari, chief economist at Vina Capital, point out that the high cost of American labor and a shortage of qualified workers could mean that Vietnam continues making the stuff Americans want but can’t afford to produce at home.
Not good enough?
With multinational companies looking at China with raised eyebrows, Indonesia might just have a shot at being the next supply-chain darling.
Shinta Kamdani, head of Indonesia’s Employers Association, told MONIIFY that friendshoring could boost sectors like textiles, electronics, and manufacturing—already Indonesia’s biggest exports to the US, hitting nearly $12 billion in 2023.
But here’s the catch: while Indonesia has potential, Kamdani says it needs a serious leg-up when it comes to competitiveness.
Right now, the nation’s big domestic market isn’t enough to attract serious investment thanks to unpredictable policies and flip-flopping regulations that send investors running for the hills.
And what if Trump decides to throw tariffs across the whole of Asia? Indonesian exporters might need to cut prices just to stay relevant, which means smaller margins and less incentive for growth.
Indonesia’s shot at supply-chain stardom has potential, but it’s still a work in progress.
A mixed bag
Trump’s return might hit differently for Malaysia. While the country’s long-standing trade surplus with the US could make it a target, some sectors might thrive in the incoming chaos.
Carmelo Ferlito, an economist from the Centre for Market Education, points out that Malaysia’s labor shortages could push business toward Indonesia and Vietnam.
And with Trump’s tariff talk, textile exports could feel the heat—though Malaysia might get some cover thanks to China rerouting supply chains.
Malaysia might be more prepared for Trump 2.0 though, having already set the stage with big-ticket infrastructure projects like the $2.2 billion Rapid Transit System linking it to Singapore and a serious dive into AI and tech.
Amazon, Google, and Microsoft have pledged over $10 billion in Malaysian investments —could this give it cover a la India?
For real?
At a recent conference, Koen Soenens, marketing director for Vietnam’s DEEP C Industrial Parks, summed it up: the wider Asian industry doesn’t want “uncertainty, instability, and unpredictability” from the new White House tenant.
Spoiler: Trump is known for delivering all three in spades.
But not everyone’s buying into the tariff threats. Vina Capital’s Kokalari says Trump’s tariff bluster would actually push up the dollar, doing zilch to bring back US jobs.
So, are we looking at a whole lot of noise or the next chapter in Trump’s tariff tirades? Only time—and tariffs—will tell.
