On manufactured products imported from Malaysia and Vietnam, domestic value added has fallen over the period 2017-2020 (Chart 10). But while the domestic value added of Malaysian products remains predominant, this is not the case for manufactured products coming from Vietnam. Domestic value added for these products was just 46.8% of total value added in 2020. By contrast, China's value added was up 2.9 pp over the same period, reaching 17.9% of the value added of US imports coming from Vietnam, suggesting that Vietnam is merely a transit point for Chinese goods. But a more detailed analysis of the structure of US imports means we can add nuance to this conclusion. While Vietnam's share of domestic value added in textiles and furniture exports has actually fallen, this is not the case for high-intensity tech products, such as electrical and electronic products, where the share of domestic value added was up from 48% in 2017 to 52% in 2020. By contrast, China's share has also risen, confirming that Chinese intermediate products are increasingly present in final exports to the US.
What will be the consequences of US tariff hikes on the ASEAN-5 countries?
On April 2, the US government announced a tariff increase far beyond mere reciprocity. If these tariffs are effectively implemented, Vietnam and to a lesser extent Thailand would be heavily affected. However, ASEAN governments will do everything they can to negotiate with the US government to reduce the tariff burden.
We propose to study not only the impact of the newly announced tariffs but also other possible scenarios.
To estimate the impact of a hike in tariffs on economic growth of the ASEAN-5 countries, we based our findings on reports[4] that estimate that the elasticity across exports with respect to tariffs is 1.3.
New tariffs based on “reciprocity” announced on April 2
On 2 April, the US government announced a huge increase in tariffs on ASEAN countries that goes well beyond simple reciprocity. The US government said to have taken account of existing non-tariff barriers. Certain products such as semi-conductors are currently excluded from the scope of the application.
Vietnam seems to be the most affected country by the announced tariff increases. As of today, the weighted average tariff of the US on imports coming from Vietnam is only 3.4% whereas the US government has announced it will be raised to 46% (table 2). Even when taking into account the share of each country’s value added included in US imports from ASEAN countries, the impact of tariff hikes would be extremely significant on ASEAN economies (11.6pp for Vietnam, 4pp for Thailand and 2.1pp for Malaysia), unless ASEAN countries can redirect their exports to other countries, as China did during Trump’s first term, and/or if the US fails to find domestic or foreign substitutes for products imported from ASEAN countries.
IMPACT OF NEW US TARIFFS ON ASEAN ECONOMIC GROWTHUniversal hike in tariffs on certain products
Since March 2025, all countries have supported an increase in their tariffs on aluminium and steel. The ASEAN-5 countries will not see much of an impact from such a measure because they export relatively few of these goods to the US (between 0.2% and 1.8% of their total exports to the US for the Philippines and Indonesia).
On 3 April 2025, tariffs on cars will be increased to 25%, all destinations combined. But once again, the impact of this measure on the ASEAN-5 countries will be extremely modest because they export very few cars or spare parts to the US.
However, other products might be affected in the short-term: electronic chips, pharmaceutical products and construction wood. Raising tariffs on integrated circuits would have a marked effect on the ASEAN-5 countries. Exports of integrated circuits by Malaysia and the Philippines to the US represent the equivalent of 2.3% of GDP and 0.6% of GDP, respectively. Increasing tariffs on electronic circuits to 25% (compared to 0% today) could generate a drop in GDP of 0.1 pp in Vietnam, 0.2 pp in the Philippines and 0.7 pp in Malaysia.
Other scenarios can be envisioned
The US government could reconsider some announcements after negotiations with ASEAN governments and other scenarios can be envisioned.
Being firmly embedded in global value chains, the ASEAN-5 countries would be affected not only by a direct hike in US tariffs imposed on them, but also indirectly through trade in intermediate goods.
Several scenarios can be identified: 1/ all exports with the US as their final destination see a 25% hike in tariffs; 2/ the government applies the principle of “true” reciprocity; 3/ tariffs are increased for some specific products.
A 25% hike in tariffs on all products, all countries combined
The vulnerability of these economies to a hike in US tariffs depends on the proportion of their value added that would be affected. According to TiVA base data, for 2020, Vietnam and, to a lesser extent, Thailand and Malaysia, are the most exposed to a general hike in US tariffs. Their value added integrated in US end consumption was between 5.3% of GDP for Malaysia and 9.3% of GDP for Vietnam in 2020, according to the OECD (Chart 11).
If global tariffs are increased by 25% for all partner countries and all products, the impact on economic growth would be between: 1.7 pp and 3 pp for the ASEAN-5 countries.
Other kinds of reciprocity
We have identified three scenarios where the US government could apply reciprocity between ASEAN-5 tariffs and its own tariffs (without considering non-tariff barriers), by comparing 1/ the average of tariffs weighted by the structure of its imports, 2/ the simple average and 3/ the tariffs by sector of activity.
The further the US government would go into the detail and the more it would differentiate imports from ASEAN-5 countries, the greater the effect of new tariffs on their growth (Chart 11).
There are marked discrepancies between tariffs from one sector to another. Apart from food, the sectors in which the ASEAN-5 countries would be the most vulnerable to reciprocity of tariffs are: textiles and shoes (which represent, respectively, 29% and 25.1% of the exports from Indonesia and Vietnam to the US), furniture (6.4% and 9.6% of exports from Indonesia and Vietnam), and rubber (7.1% and 10%, respectively, of exports from Indonesia and Thailand to the US).
