PETALING JAYA: US reciprocal tariffs on Asean economies are losing their bite despite the risks being present as there have been favourable outcomes from the recent Asean summit that balances out the impact to trade.
CGS International (CGSI) Research said the agreements signed with Malaysia, Thailand, Vietnam and Cambodia might not be as severe as the markets fear because, as designated “aligned partners”, selected manufactured goods from these countries would receive extra exemptions from the US reciprocal tariffs even as US goods get preferential market access or tariff reductions.
“Malaysia secured a major win with 63% share of export products exempted while Thailand and Vietnam had 43% and 44% respectively,” it said, adding that despite the exemptions, Vietnam remains highly exposed because of its reliance on the US market.
It noted that the agreement had reduced the Malaysian and Thai economies’ exposure to the single-digits while direct exposure for Indonesia and Singapore, which did not sign any agreement, remains low.
“On the other hand, the deal includes provisions for access for more US goods and services as well as a large reduction in tariff,” it said.
Asean members would reduce their tariffs in stages while US tariffs would be gradually raised, providing governments the time to readjust their strategies and minimise supply chain disruption.
“Domestically, new growth strategies are being implemented to promote higher domestic-driven growth,” it said.
