By Sherine Chen    Photo： CANVA

As global trade tensions escalate with the anticipated return of Trump-era tariffs in 2025, the world is once again watching how international supply chains will shift. This shift could present a golden opportunity for Southeast Asian countries, particularly Indonesia, Malaysia, and Thailand.

Long before 2025, multinational corporations had begun diversifying their supply chains. Rising labor costs in China, combined with U.S.-China trade tensions, accelerated the “China+1” strategy, where companies move parts of their manufacturing bases to Southeast Asia. 

Tariffs or Not, Southeast Asia Is Hard to Ignore

Even if a Trump administration extends tariffs to Southeast Asian nations, it’s unlikely to fully reverse the momentum. Here’s why:

1. Strategic Location & Demographics
Southeast Asia lies at the heart of key global shipping lanes and boasts a combined population of over 650 million. The region is not just a factory of the world, but also a fast-growing consumer market. Rising middle classes in Indonesia and Thailand are increasingly attractive for companies looking to produce and sell locally.

2. Competitive Manufacturing Costs
Even with a moderate tariff say, 10% goods from Indonesia or Malaysia may still undercut Chinese or Western alternatives due to significantly lower labor costs and government incentives for manufacturers.

3. Stronger Regional Ties
Through ASEAN and partnerships like the Regional Comprehensive Economic Partnership (RCEP), Southeast Asian countries are strengthening intra-Asian trade. While U.S. tariffs may affect exports to America, these nations are simultaneously building alternative markets in Asia and the Middle East.

Trump’s tariffs that are imposed toward Southeast Asia will certainly create friction. But these countries are not just short-term alternatives to China, they are becoming indispensable nodes in the future of global trade. In fact, the very tariffs meant to slow their rise might just force them to innovate faster, deepen regional alliances, and accelerate their transition from low-cost production hubs to value-added economies. In the battle of trade policy versus global supply chain logic, Southeast Asia may still come out ahead.

Appreciate if you could share TGL Blog among your friends who are interested in first-hand market information of supply chain and updated economic incidents.