Tariffs, war and broken trust: Southeast Asia’s Trump problem

The goodbye emails started arriving on a Monday. By Friday, Sheila’s inbox told the story of an organisation coming apart at the seams, one farewell at a time. Sheila* had spent nearly a decade helping run US-funded development projects in the Philippines. She had watched them grow, hire staff and take root in local communities. When Washington ordered a freeze on foreign aid in January 2025, she told herself it was just a pause – a bureaucratic blip pending a review by the new administration. Then US Secretary of State Marco Rubio issued a stop-work directive and her inbox began to fill. “Every day, you’d receive goodbye emails from people across the organisation,” Sheila said. “When we asked about our employment status and our boss had no answer, that didn’t sound good.” The lay-offs began in March. By May, most of her colleagues were gone. Sheila was kept on longest, tasked with the bleak work of winding down the very programmes she had helped build. By the time it was over, the message from Washington was clear, she said, and it was a message that travelled far beyond her office. Bargaining chips Across Southeast Asia, that kind of whiplash has become a defining feature of Donald Trump’s second term, exposing just how quickly Washington can reverse course on aid, trade, energy and diplomacy – and unsettling partners that still look to the United States as a counterweight to China. The region is not abandoning Washington or embracing Beijing, analysts say. Rather, it is trying to make itself harder to shake: diversifying trade and supply chains, widening defence ties and building more room to manoeuvre between two powers it cannot afford to ignore. For many, the past 18 months have delivered a case study in the costs of American unpredictability through a rapid-fire assault of tariff shocks, an energy crisis born of a war the region had no hand in starting and the creeping suspicion that, to Trump’s Washington, smaller partners are little more than bargaining chips. Nearly 52 per cent of opinion leaders from across the Association of Southeast Asian Nations named Trump’s leadership as the region’s top political concern, according to the State of Southeast Asia 2026 Survey by the ISEAS – Yusof Ishak Institute, which polled more than 2,000 policymakers, researchers and business figures. It was a striking finding, not least because it pushed China’s “aggressive behaviour in the South China Sea” off the top spot it had occupied the previous year, down to third place behind global scam operations. Even more striking: for the first time, China overtook the US as the power Southeast Asians would prefer to align with if forced to choose. Analysts are quick to note that this is not the same as a wholesale embrace of Beijing, but it does reflect 18 months in which US policy has felt less like a stable anchor and more like a capricious weather system: erratic, destructive and indifferent to those caught in its path. First came the “Liberation Day” tariffs, announced in early 2025, which threatened levies as high as 49 per cent on Asean member Cambodia and placed a clutch of Southeast Asian nations under investigation for “unfair trade practices”. Then came the US-Israel war on Iran in late February, which sent oil and gas prices surging across a region that imports heavily from the Middle East. Governments scrambled to cushion the blow with four-day work weeks, remote-working mandates, subsidies and price freezes. Speaking in late April, Thailand’s Foreign Minister Sihasak Phuangketkeow voiced his frustration that Washington had offered Bangkok no assistance despite the economic fallout from a war it had not started and did not want. “We don’t want to condemn the US directly,” he told The Washington Post on April 27. “But this is something that should not have started.” Trump officials, he added, knew full well there were “consequences from the war”. The remark landed with particular force because of who delivered it, said Joanne Lin, a senior fellow at the ISEAS – Yusof Ishak Institute and a visiting scholar at the MIT Centre for International Studies. Thailand, like the Philippines, is a US treaty ally. “It suggests that even close partners are increasingly worried about the downstream consequences of US decisions, whether on energy prices, shipping or wider economic instability,” she said, adding such comments “reflect a wider frustration in the region”. The unease deepened in May when Trump flew to Beijing for a two-day summit with Chinese President Xi Jinping. On the surface, the meeting looked reassuring: two rival powers choosing dialogue over confrontation. But for the smaller states watching from the sidelines, analysts say the substance offered cold comfort. Trump left Beijing with few breakthroughs on trade, no tangible progress on the Iran war and fresh tension over Taiwan. What he did not provide was any signal that Washington’s security commitments to the region remained firm and unconditional. “The big fear for Southeast Asia,” said Hunter Marston, director of the Southeast Asia programme at Sydney’s Lowy Institute, “has always been that the United States will withdraw … or some other signal of further walking back its security commitments in the region, in return for something China might give.” The nightmare scenario, in other words, is not merely that the US might pull back, but that it might do so as part of a bargain struck over Southeast Asia’s head. For a collection of states that has spent decades walking a fine line between Washington and Beijing, that possibility strikes at the heart of its Trump dilemma: the US is indispensable but increasingly unreliable. Too big to quit And yet, for all the frustration, the US is not being written off. It cannot be – not yet, and perhaps not ever, given the size of its market and the US dollar’s continued dominance of global finance. “Complete decoupling is obviously not on the table,” said Ahmed Albayrak, a research associate at the Lowy Institute’s Indo-Pacific Development Centre. “But strengthening ties with alternative trading partners will improve the region’s resilience.” Kevin Chen, of Singapore’s S. Rajaratnam School of International Studies, points to areas such as AI, semiconductors and defence supply chains where a Trump-led Washington can still offer strategic value even as its other policies grow more disruptive. But diversification is a long-term project being pursued under short-term pressure. Still, the hedging is accelerating. Asian central banks and sovereign funds have been diversifying away from the US dollar, increasing transactions in Chinese yuan and shifting reserves into gold and digital assets. Trade negotiators are courting the European Union and Mercosur, the South American bloc. “The issue is that this strategy takes time to work,” Chen said. “In the short to medium term, the US market is very hard to replace, which means that the risk of another Trump-induced economic shock is very real.” A Beijing pivot? The obvious beneficiary of American unreliability ought to be China. And in narrow terms, Beijing’s stock has risen: the ISEAS survey shows it overtaking the US on multiple measures of influence and preference. But the picture is considerably more complicated than a simple rebalancing. “China may be more consistent, but that does not mean it is more trusted,” Lin said. The memory of Beijing’s “willingness to use economic leverage punitively against countries that challenge its political and territorial interests” – from Australia’s wine and barley to the Philippines’ fishing grounds – is not easily erased, according to Sharon Seah, principal fellow at the ISEAS – Yusof Ishak Institute’s Southeast Asia programme. Neither is the steady, grinding pressure in the South China Sea, where Chinese maritime forces continue to test the limits of smaller states’ sovereignty and resolve. China may be more consistent, but that does not mean it is more trusted Joanne Lin, political-security analyst “Although Trump’s unpredictability may make China look more predictable by comparison, Southeast Asia is not simply doubling down on China,” Lin said. “The region is looking for broader options by strengthening ties with other partners. In that sense, the response is less a pro-China shift than a search for greater room to manoeuvre.” That room is being sought through a widening web of partnerships: Japan, South Korea, Australia, India, the EU. The goal is not to replace either Beijing or Washington but to reduce the cost of depending too heavily on either. Asean itself, long perceived overseas as a talking shop, is being pressed into service as an instrument of intraregional economic integration and a hedge against the kinds of vulnerabilities that outside powers can exploit. Shattered illusions Nowhere is this search for balance harder than in security. That is especially true of the Philippines, with the South China Sea to its west and the Taiwan Strait to the north. The country sat “at the fault lines of the Indo-Pacific”, said foreign policy analyst Julio Amador, a distinguished visiting fellow at Perry World House, a US-based think tank. “Its alliance commitments tie it closely to the United States, while its economic realities bind it to China.” The Beijing summit sharpened those tensions. The question obsessing Manila – and much of the region – was whether Trump might use Taiwan as a bargaining chip: scaling back diplomatic and military support to the island in exchange for economic concessions from Beijing, said Vincent Kyle Parada, a lecturer at De La Salle-College of Saint Benilde’s School of Diplomacy and Governance in Manila “By extension, between tariffs and the ongoing energy crisis, is the US willing to disadvantage and undercut long-standing partners in pursuit of its own interests?” Beijing regards Taiwan as part of China to be reunited by force if necessary. Most countries, including the US, do not recognise Taiwan as an independent state, but Washington opposes any forced takeover and is committed, officially at least, to supplying the island with weapons. Amador said leaders of major US allies understood the alliance remained a core part of their foreign and defence policies “precisely because they don’t see any substitute”. But the perceived instability of US policy could drive more minilateral cooperation among US allies and partners, “with or without US presence”, he said. Enrico Gloria, an assistant professor of political science at the University of the Philippines, said frustration with Trump did not mean alliances were being abandoned. “The alliance system is definitely not collapsing, but it is certainly being managed more by those that are actually at the forefront of challenging commonly perceived threats,” he said. That meant closer ties with countries such as Australia, New Zealand, Britain and the European states, as US partners prepared for “a future where American protection is seen as less predictable and more contingent on domestic political cycles”. Lin said Southeast Asian governments still wanted strong defence, technology, education and investment ties with the US, but to achieve this they would need to cultivate relationships beyond the White House – through Congress, federal agencies, state governments, businesses and universities. Such institutional bonds could “strengthen underlying ties that are deep enough to hold” and outlast the volatility of any single administration. For Seah, the defining lesson of the past 18 months is simpler, and in its own way more hopeful. The energy crisis, the tariff shocks, the whiplash of American policy reversals – all of it has forced the region to “see the beauty in diversification”. “Unlike Covid, which was a black swan event,” she said, “Trump-induced crises can be mitigated with proper planning and coordination.” Amador, however, saw only disillusionment. While there was “no substitute” for the US, he said, the “rose-tinted glasses that some in Southeast Asia may use to look at foreign affairs have now been shattered”. *Name and organisation withheld at source’s request

Tariffs, war and broken trust: Southeast Asia’s Trump problem

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Disillusioned by US unpredictability, the region is learning to diversify – while Trump treats allies as bargaining chips

Disillusioned by US unpredictability, the region is learning to diversify – while Trump treats allies as bargaining chips