Economic growth in Southeast Asian countries may be affected by tariffs

According to the latest data released by the Vietnam National Statistics Office on April 6, Vietnam’s gross domestic product (GDP) grew by 6.93% year-on-year in the first quarter of this year, slowing down from 7.55% in the previous quarter.

Manufacturing exports and foreign investment are the main drivers of Vietnam’s economy, but the US tariff policy is expected to put Vietnam’s economic model under pressure and challenges.

A senior analyst at research firm BMI pointed out that US tariffs could seriously damage Vietnam’s current growth model that is highly dependent on exports to the United States. In the worst case, Vietnam’s economic growth this year could suffer a 3% blow.

However, Vietnamese Prime Minister Pham Minh Chinh said after the US announced tariffs that Vietnam’s goal of at least 8% economic growth this year remains unchanged. According to estimates by the Vietnam Statistics Office, to achieve this goal, economic growth in the next three quarters must be between 8.2% and 8.4%, but if the US tariffs on Vietnamese goods cause Vietnam’s exports to the United States to fall by 10%, Vietnam’s GDP growth rate will fall by 0.84 percentage points.

Vietnam’s General Secretary Tou Lin has spoken with US President Trump on the phone, expressing his willingness to reduce import tariffs on US goods to zero to avoid the US imposing reciprocal tariffs on Vietnam. The two are expected to meet in the near future to negotiate on the matter. Tou Lin also asked Trump to postpone the tariff measures originally scheduled to take effect on April 9 for at least 45 days to avoid a lose-lose situation.

Malaysian Prime Minister Anwar released a video on April 6 saying that the cabinet has held a special meeting to discuss countermeasures; the Ministry of Investment, Trade and Industry will submit a research report on the impact of US tariffs on multiple export industries this week. If a 24% tariff is imposed, from an economic perspective, it is necessary to re-examine Malaysia’s target of 4.5% to 5.5% economic growth this year.

Although Singapore is only subject to the lowest tariff of 10%, Malayan Banking in its latest report lowered its full-year GDP growth forecast for Singapore from the original 2.6% to 2.1%, the second largest reduction among the six ASEAN countries after Vietnam and Malaysia, because Singapore’s economy is highly dependent on trade. If global trade tensions further expand and escalate, such as plans by the EU and China to impose retaliatory tariffs, the economic outlook may deteriorate further.

The United States will impose a 36% reciprocal tariff on Thailand. This will have a significant impact on Thailand’s exports, especially electronic products, processed foods and agricultural products. Thai Prime Minister Petunthan said that the Thai government has set up a special task force to continue formal and informal consultations with private enterprises and US representatives.