When Donald Trump announced reciprocal tariffs of up to 49 per cent on south-east Asia’s major manufacturing economies last April, the outlook for the export-driven region looked bleak. There were fears that companies pursuing “China plus one” strategies — using the region as a secondary base to reduce exposure to punitive duties on Beijing — might relocate. The US president’s aggressive protectionism also came as leaders from Hanoi to Kuala Lumpur were bracing for intense competition in domestic and international markets from cheap Chinese goods that were previously bound for America.
But south-east Asia has confounded the pessimism and displayed an impressive resilience. Sales to the US continued to rise last year. The region’s total global goods exports were 15 per cent higher in October 2025 compared with the previous year, equivalent to roughly $300bn in additional exports when annualised, according to a recent analysis by the Lowy Institute. Foreign direct investment into the region’s main industrial economies has also increased, driven by multinationals’ efforts to diversify supply chains. Vietnam registered 8 per cent economic growth in 2025, and is targeting double digits this year.
Much of this strength reflects nimble responses by both businesses and policymakers. The private sector reacted to tariff threats by frontloading shipments and rapidly reconfiguring supply chains. While some of the export strength reflects the rerouting of Chinese goods, Asean sales to non-US markets have also grown robustly. Regional producers have further protected margins by importing lower-cost intermediate inputs from China.