Anh Tho Andres
Until last year, I was not really paying attention to what was going on with the US-China Trade war, partially because the Biden Administration had not drawn too much interest from someone like me living outside the US sphere. But since President Trump assumed the presidency, I started to follow the implications of his new policies on trade, among others.
My work on Vietnam began in the 1990s when I was a young interpreter in Vietnamese, accompanying businessmen to explore the new Vietnam as it unfolded its economic open policy. My frequent trips to Vietnam have allowed me to follow the ongoing efforts to integrate the young post-war economy into the regional and global trade. Firstly, through its entry to ASEAN, then to the WTO; These two steps were accompanied a series of reforms that I have recorded in my doctoral thesis on the restructuring of state-owned enterprises and the development of the private sector, with the input of FDI investments mainly through Singapore, Taiwan, Hong Kong, Thailand, and Malaysia where there is a strong Chinese business community. With the increasing volume of trades between these countries, Vietnam has attracted more trading partners from East Asian economies who are keen on maintaining their long-term trade relationships with former South Vietnam and continuing with a united Vietnam post-war.
With increased international development following the normalisation of US-Vietnam relations and the lifting of the US embargo on Vietnamese products entering the US, more US residents of Vietnamese origin also contributed to Vietnam's development at a certain level. However, China was the focus of worldwide attention due to their attractiveness in many ways, as compared to Vietnam's seemingly slow growth and timid reforms. The situation has changed since US policies started to change direction with a stronger focus on our region, mainly due to geopolitical considerations.
This text provides a concise summary of the impact of the U.S.-China trade war on ASEAN trade agreements, focusing on the ASEAN Trade in Goods Agreement (ATIGA) and Vietnam’s governance restructuring, based on my previous research (April 18, 2025) and relevant web sources.
Trade War Dynamics and ASEAN Trade Agreements
- The U.S.-China trade war, escalating with U.S. tariffs of 125–145% on Chinese goods and China’s retaliatory 84% tariffs in 2025, has redirected trade flows through ASEAN, boosting intra-ASEAN trade under agreements like ATIGA.
- ATIGA, effective since 2010, eliminates tariffs on 99.65% of tariff lines for Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand, and reduces duties to 0–5% for Cambodia, Laos, Myanmar, and Vietnam, supporting a $3.8 trillion market. The trade war has increased intra-ASEAN trade by enhancing regional supply chains, with ASEAN’s share of U.S. imports rising 2.6% from 2018 to 2020, matching China’s decline.
- However, risks include transhipment (rerouting Chinese goods through ASEAN to evade tariffs), prompting scrutiny from the U.S. Trump administration’s 2025 tariffs (10% universal, 54% on China, and targeted rates on Vietnam, Thailand, Indonesia) threaten ATIGA’s benefits, with Vietnam facing 46% tariffs, potentially disrupting its $105 billion U.S. trade surplus.
- Vietnam has emerged as a key beneficiary, leveraging ATIGA and other agreements like the CPTPP, EVFTA, and U.S.-Vietnam BTA to drive $150 billion in exports and $36.6 billion in FDI. Its “China + N” supply chain strategy attracts manufacturers diversifying from China, boosting electronics and textile exports.
- The trade war has spurred Vietnam’s economy through production shifts, rising exports, and infrastructure investment, with its share of U.S. imports growing significantly post-2018. However, risks include competition from Chinese exporters flooding ASEAN markets, potentially widening trade deficits under the RCEP, which could reduce intra-ASEAN trade as members import more from China.
- In 2025, Vietnam implemented governance reforms to enhance transparency and align with global trade standards, boosting investor confidence and FDI. These reforms include anti-corruption measures, streamlined bureaucracy, and digital trade integration via the ASEAN Single Window and electronic rules of origin, aligning with ATIGA’s focus on non-tariff barriers and digital economy growth.
- Restructuring supports Vietnam’s $36.6 billion FDI inflow by improving trade policy transparency, countering U.S. tariff risks, and enhancing its role in ATIGA’s $235 billion FDI market. However, challenges persist, such as U.S. scrutiny over transhipment and domestic industry vulnerabilities to cheap Chinese imports via e-commerce, threatening local jobs.
- The trade war pressures ASEAN unity, with Vietnam’s unilateral tariff negotiations with the U.S. undermining collective bargaining under ATIGA. Malaysia’s 2025 ASEAN chairmanship calls for a united front, but diverse national interests hinder coordination.
- ASEAN faces risks of economic dependency on China, with Chinese goods flooding markets like Vietnam (4–5 million daily e-commerce orders, ~$2 billion monthly), threatening local industries like textiles (80,000 job losses in Indonesia in 2024). Neutrality in U.S.-China tensions could yield a 1% GDP gain for ASEAN, but aligning with either risks economic fallout.
Sub-Conclusion
The U.S.-China trade war has bolstered intra-ASEAN trade under ATIGA by redirecting supply chains. Vietnam is capitalising through exports and FDI, supported by 2025 governance reforms that enhance transparency and digital trade.
However, U.S. tariffs, Chinese export surges, and transhipment risks threaten ATIGA’s stability and Vietnam’s gains, while ASEAN’s lack of unity complicates responses. Vietnam’s reforms mitigate some risks, but balancing U.S. and Chinese pressures remains critical.
In my next post, I will share more findings on the current globalisation trends based on the power dynamics between Global North and Global South players.
Let's keep on exploring the world with the assistance of my new friend GROK/.
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