Why Asean must stay nimble to survive US-China trade squeeze

Asean faces a challenge to remain relevant in light of an increasingly transactional United States under the Donald Trump administration, observers warn, even as they hail the bloc’s large inflows of trade from global superpowers. At the South China Morning Post’s China Conference: Southeast Asia 2026 in Jakarta on Tuesday, chairman of Malaysian Investment Development Authority Tengku Zafrul Aziz said that Association of Southeast Asian Nations members presented a united front in handling Trump’s “Liberation Day” tariffs last May, calling it a “test of Asean centrality”. Zafrul, who was Malaysia’s trade and investment minister at the time, recalled how Asean economic ministers discussed how they would respond and agreed they would state they were not in support of the unilateral decision, that they would support multilateralism and that they would engage the US. “That shows that sometimes it is difficult … but still, we address by engaging,” he said, adding that the success of Asean as a result of the economic spillover of the bloc being united should also not be taken for granted. In a separate panel, Bernardino Moningka Vega, vice-chairman of foreign affairs at the Indonesia Chamber of Commerce and Industry (Kadin Indonesia), said that amid a turbulent geopolitical landscape last year, the US remained Asean’s top investor while China came in second. “Asean remains a bright spot among all the other regions in growth. Its cumulative growth is 5 per cent. So when you say, is Asean relevant, the investment statistics say yes, it’s still relevant. The superpowers are still investing in Asean,” said Bernardino, who is also chief executive of financial institution AdaKami. Fellow panellist and chairman of Amersi Foundation Mohamed Amersi, however, countered that it was questionable how long Asean would continue to stay relevant. “Whether in the next 12 to 24 months, the US administration will allow participation in a bloc which they do not totally control or are not the dominant partner of power, is a big question mark that everybody will have to face,” Amersi said. He called Trump “very transactional” and polarising, summing up the US leader’s style as “his way or the highway”. “With this trend in the US, are we going to see the emergence of a sole unipolar hegemon, or are we going to see a multipolar world developing?” Bernardino pointed out that trade dynamics were still strong in Asean and that the US would always be a big part of the bloc’s story both in investment and trade. Noting that 90 per cent of the rest of the world traded with each other, he said the reality on the ground was that Asean’s economic development remained a very bright spot. “I happen to be of the view that it is a multipolar world, and as a relevant middle power like Indonesia and among Asean countries, we value a rules-based order. We value international collaboration and value our collaboration and friendships around the world,” he said. Balancing interests Last month, Indonesia joined Trump’s “Board of Peace”, a move that raised eyebrows domestically, with critics zeroing in on how it deviated from Jakarta’s values by serving the interests of only the US and Israel instead of Palestine. Commenting on the issue, Amersi said diversity was very important amid great power competition, so as not to be beholden to any one power. “Once you start to become overdependent on anyone, then they start to call the shots and so how do you very definitely balance your interests in a way that suits you the best.” Calling the US an important partner in Indonesia’s international relations, Bernardino pointed out that Indonesia’s involvement in regional blocs such as Brics did not mean that it was anti-West. “This ‘Board for Peace’ is something that we value and is important for Indonesia to be part of the solution to some of the world’s challenges and issues,” he said. He said that the country also needed to ensure that supply chains remained strong in a world in which everything could be weaponised. As to whether Indonesia was too reliant on China, its largest trading partner for 12 consecutive years, Bernardino argued that the country would always follow its own interests and was open to partners regardless of who they were. Bilateral trade with China reached over US$135 billion in 2024. Beijing is also the third top foreign investor in the country and a key partner to Indonesia’s nickel, infrastructure and green energy sectors through the Belt and Road Initiative (BRI). “In the context of Indonesian development, we see things from what we think would be beneficial for us, whether it’s investment from Europe, the US, China,” said Bernandino. For collaboration outside the BRI zone, Asean could look at other opportunities with China as well as a third country in Africa or in Europe, Zafrul said. Kadin Indonesia Chairman Anindya Novyan Bakrie said that while he was hopeful a framework for a deal with the US was already in place, Indonesian enterprises needed to open up other trade channels, such as the European Union. “It is a good way to hedge and, if both things work, to expand capacity,” he said. The world had rarely seen a superpower asserting itself in such a transactional and polarising way as the US was currently doing, according to Amersi. For middle power countries to thrive, he said, they would have to reassess what they had been doing and a lot of the rule book they relied on was no longer applicable. “Only those countries that have got the nimbleness, that have got the strategic mindset to be able to be flexible and to be able to redo themselves, are going to succeed,” he said.

Why Asean must stay nimble to survive US-China trade squeeze

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The US and China are the top two trading partners for Asean but it is questionable how long that status quo will last, observers say

The US and China are the top two trading partners for Asean but it is questionable how long that status quo will last, observers say