As US ramps up trade probes in push for ‘tariff wall’, how should Southeast Asia countries respond?
analysis Asia
As US ramps up trade probes in push for ‘tariff wall’, how should Southeast Asia countries respond?
Washington’s latest probes are seen as more potent than last April’s reciprocal tariffs, offering greater legal certainty and wider scope for action, say experts.
KUALA LUMPUR/JOHOR BAHRU: The United States’ latest trade probes into key partners over alleged unfair trade practices have cast a shadow over Southeast Asia’s export-driven economies, with analysts warning that the region is being targeted for its deep integration with China-linked supply chains.
Trade experts say the investigations - more formal and legally grounded than earlier reciprocal tariffs that were eventually struck down by the US Supreme Court - are likely to focus on countries running large and growing trade surpluses with Washington, including Vietnam, Thailand and Malaysia.
Still, observers urge Southeast Asian governments to use the probe hearings to defend their positions and to use bilateral trade talks with the Trump administration to seek clarity and possible deals.
The US Trade Representative’s Office (USTR) on Mar 11 dropped a bombshell when it announced a trade investigation into alleged excess industrial capacity against 16 of its most important trade partners.
The list includes China, the European Union (EU), Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.
The probe is done under Section 301 of the US Trade Act of 1974, which analysts say is a legal tool Washington uses to investigate and penalise countries it believes are treating American businesses unfairly.
A day later, it opened a new Section 301 investigation which takes aim at 60 countries on alleged failures to stop exports made with forced labour. The 60 countries listed include all 16 countries named in the first case, and also the likes of Canada and Brazil.
Analysts told CNA that these investigations are clearly a move by US President Donald Trump to restore the “Liberation Day” tariffs that were struck down by the US Supreme Court in February.
Trump had moved swiftly to announce a new 10 per cent global import duty under a separate legal justification, but that was an interim measure that will expire in July 2026.
Previously, most Southeast Asian countries faced tariffs of at least 19 per cent under the earlier regime, with Singapore the only exception, retaining the baseline 10 per cent rate.
Economic researcher Jaideep Singh of the Institute of Strategic and International Studies Malaysia told CNA: “Trump is attempting to rebuild his tariff wall using other instruments of American legislation. Unlike the ‘reciprocal’ tariffs … the invocation of Section 301 involves a period of investigation and a public hearing.
“Washington is therefore mainly focusing on the US’ largest trading partners and the countries with which it runs the biggest bilateral deficits. This is why the list of countries covered in the probe on excess capacity largely mirrors that of the US’ largest bilateral deficits by trade value,” he said.
US ACTS AS “JUDGE, JURY AND EXECUTIONER”
Trade experts have warned that the Section 301 probes are potentially more disruptive than reciprocal tariffs for many Southeast Asian countries given their deep integration with China-linked supply chains.
They outlined that Section 301, unlike reciprocal tariffs, are discretionary and broad, making it unpredictable for Southeast Asian exporters to make investment planning decisions.
Reciprocal tariffs can be justified within the framework of the World Trade Organization, while Section 301 is unilateral - the US can act first and deal with disputes later.
Trade and economic policy expert Deborah Elms - in an article published on the Asia-based philanthropic organisation Hinrich Foundation website - said that Section 301 is a much more powerful tool than the reciprocal tariffs as they come with “greater legal certainty for the executive branch”.
“In the hands of an administration determined to stretch regulatory authority, Section 301 now contains worrisome provisions that allow repeated expansion and revision once a case has been opened. Even lapsed cases can be resurrected,” Elms wrote.
She added that if trade negotiations with partners were unsucessful, Washington is authorised to impose duties or import restrictions, withdraw or suspend trade agreement concessions or compensate the US with trade benefits.
“The level of action in retaliation may be an amount deemed equivalent in value to the burden or restriction on US commerce … Under Section 301, the US effectively acts as judge, jury, and executioner,” said Elms.
She added that these investigations are likely to be “rushed affairs”, noting that while previous investigation periods last for months or years, recent cases are “extraordinarily short”.
Hearings for the probes on forced labour will be held from Apr 28 to May 1 while the ones on excess capacity are from May 5 to May 8. After a seven-day period to allow post-hearing rebuttals, USTR could issue determinations at any time, Elms said.
She also cited how tariffs under Section 301 were imposed on a wide array of Chinese exports in 2018 at rates of between 7.5 per cent and 25 per cent. These impacted US imports from China worth about US$370 billion.
China countered with tariffs on US$110 billion worth of US exports. Both sides have since granted some exceptions, but most tariffs remain in effect.
VIETNAM, THAILAND, MALAYSIA UNDER SCRUTINY
For observers, the Trump administration’s main objective is the same as when he imposed reciprocal tariffs - to narrow major trade deficit gaps with partner countries.
They added that Section 301 is explicitly geopolitical and can be used by the US to counter strategic concerns with China’s industrial policies.
China and the US are two global economic superpowers in a tense trade war.
Many Southeast Asian countries are caught in the middle as they bene