Chinese President Xi Jinping’s high-profile five-day tour of Southeast Asia, comes at a pivotal moment, as sweeping tariff hikes by the Trump 2.0 administration on China and key ASEAN exporters reverberate across global trade.
The new tariffs announced on April 2 — including 49 per cent on Cambodia, 46 per cent on Vietnam, and 24 per cent on Malaysia, alongside a staggering 145 per cent on Chinese goods — have cast a long shadow over Southeast Asia’s export-reliant economies.
Yet for some analysts, this disruption presents more than just economic risk — it offers a strategic opportunity.
In fact, the Southeast Asian tour was widely viewed as both a symbolic show of solidarity and a strategic recalibration of China’s regional ties.
During his state visit to Malaysia, which began last Tuesday, Xi pledged to deepen economic cooperation with ASEAN, describing ties with Malaysia as entering a “new golden era.”
The visit formed part of Xi’s three-nation Southeast Asia tour — his first official overseas engagement of the year — which included stops in Vietnam and Cambodia. He departed Malaysia on April 17 after a three-day visit, during which 31 Memoranda of Understanding (MoUs) were exchanged between Malaysia and China. These agreements span strategic sectors such as the digital economy, infrastructure, agriculture, security, and education.
For Malaysia, the agreements represent more than just bilateral progress; they reflect ASEAN’s broader effort to strengthen regional resilience amid an intensifying US-China rivalry.
TARIFF HIKE A BLESSING IN DISGUISE
Experts interviewed by Bernama described the United States (US) tariff hikes not simply as a setback but as a potential catalyst — prompting ASEAN countries to diversify export markets, reduce dependence on the US, and strengthen intra-Asian trade.
Geostrategist Prof Dr Azmi Hassan from Universiti Teknologi Malaysia called the current situation “a blessing in disguise,” particularly for ASEAN countries that had grown overly reliant on the US market.
“Malaysia now faces a 24 per cent tariff — a significant jump from the current 2.2 per cent trade-weighted average on Malaysian exports to the US,” he said.
“Although we don’t agree with the imposition of this tariff, it’s not the end of the road. We can still explore other markets,” he told Bernama recently.
He pointed to sectors such as palm oil and gloves where Malaysia still holds a competitive edge, despite the new tariffs.
“For example, in the glove industry — China now faces a 145 per cent tariff, which essentially prices them out of the US market. But Malaysia, with a 24 per cent tariff, can still compete and even gain market share,” he explained.
Asked whether the US tariffs would effectively cut trade between Malaysia and the US, Azmi disagreed.
“No, I don’t believe trade will be completely cut off. Even with a 24 per cent tariff, we can still export—gloves are a good example.
“China’s gloves are unsellable at 145 per cent. However, Malaysia can still export to the US, which remains heavily reliant on imports of such products,” he added, noting that the US is particularly dependent on Malaysia’s gloves.
Malaysia currently enjoys a trade surplus with the US, exporting primarily electronics, palm oil, and machinery. In November 2023, Malaysia was removed from the US Treasury’s currency manipulation monitoring list.
GEOPOLITICAL SIGNAL TO THE US
Azmi said the Chinese President’s decision to visit Vietnam, Malaysia, and Cambodia—while skipping traditional stops such as Singapore—was a strong geopolitical signal to the US. It reflects China’s continued strong engagement with ASEAN despite mounting pressure from Trump 2.0 administration.
He noted that ASEAN’s unified stance, particularly under Malaysia’s chairmanship this year, underscores the region’s determination to assert its foreign policy independence. This, he added, creates significant opportunities for Malaysia to diversify its trade beyond traditional markets.
“In about three weeks, we’ll be hosting the ASEAN-Gulf Cooperation Council (GCC) Summit, and China has been invited to this historic high-level event. It shows we’re playing a smart diplomatic game.
“If we succeed in tapping new markets—especially in the GCC and Africa—we can offset the trade deficit caused by the tariffs. But we must work hard. The US has long been a luxury market; now is the time to diversify,” Azmi stressed.
On April 12, Prime Minister Datuk Seri Anwar Ibrahim announced that Malaysia will create history by hosting the ASEAN-GCC Summit, which will involve all 10 ASEAN member states and six Gulf countries: Saudi Arabia, the United Arab Emirates, Bahrain, Qatar, Kuwait, and Oman. China has also been invited to participate in the summit at the end of next month.
Azmi further noted that although the current 90-day tariff freeze offers a brief window for negotiations, the outcome remains uncertain.
“The US may hold significant negotiating power, but ASEAN—with its 695 million consumers—commands strength in numbers. What happens next will depend entirely on how strategically we navigate these dynamics,” he said.
On April 9, US President Donald Trump announced a temporary 90-day reduction in tariff rates to 10 per cent for most US trade partners to facilitate trade negotiations. Meanwhile, Malaysia's Minister of Investment, Trade and Industry, Tengku Datuk Seri Zafrul Abdul Aziz, is leading a delegation to Washington for a three-day trade mission beginning today (April 22).
FUTURE GROWTH IN THE GLOBAL SOUTH
Amid sweeping tariffs by the Trump 2.0 administration that are disrupting global trade, Malaysia—like other ASEAN nations—is recalibrating its foreign policy while strengthening its longstanding ties with China.
Adviser to the Centre of Regional Strategic Studies, Dr Lee Boon Chye said ASEAN’s principles of non-interference and neutrality have long contributed to the region’s stability.
He noted that the bloc’s peaceful coexistence is rooted in a shared cultural philosophy of mutual respect, which has enabled decades of cooperation among member states.
“With regard to China-ASEAN relations, I’m not overly concerned about the so-called decoupling. The future of global growth lies in the Global South — across Asia, Africa, and South America,” he told Bernama at the recent ASEAN-China Media and Think Tank Forum.
He emphasised that the focus should now shift toward mutual prosperity and collaboration beyond the traditional Western sphere.
Dr Lee added that the US tariffs reflect a broader shift from a unipolar to a multipolar world order. However, he distinguished competing visions of this shift, noting that China advocates cooperation among equals, unlike the Western model where dominant powers often exert influence over specific regions.
Dr Lee, who also chairs Bioeconomy Corporation, acknowledged concerns over Malaysia’s export-led manufacturing sector, particularly in light of China’s robust industrial competitiveness. However, he suggested that deeper regional supply chain integration could be a viable path forward.
He cited the electric vehicle (EV) sector as a promising example of shared growth within ASEAN economies.
“The concerns are real, especially for small and medium enterprises (SMEs). But with the right model of cooperation — such as closer ASEAN integration into China’s supply chain — both sides stand to benefit,” he said.
TAPPING CHINA'S DIGITAL TRADE
As escalating US tariffs continue to pressure ASEAN economies, a Chinese economist is urging Malaysian businesses to capitalise on China’s rapidly growing digital trade landscape, which is transforming global commerce.
Former chief economist at the China Centre for International Economic Exchanges, Chen Wenling said that the shift from traditional trade to direct business-to-consumer (B2C) models presents unprecedented opportunities for Malaysian businesses, especially in SMEs.
“With the rapid growth of China’s digital economy, cross-border e-commerce has become a game-changer for Malaysian businesses,” she said as a panelist during 'Envisioning the Future: 2025 Kuala Lumpur Dialogue' organised by Institute of Strategic Analysis and Policy Research (INSAP) and Academy of Contemporary and World Studies (ACCWS) recently.
Citing successful Chinese digital platforms, Chen pointed to fashion giant SHEIN, which now leads the US market; TEMU, the global arm of Pinduoduo rapidly expanding its international presence; and Douyin E-commerce’s TikTok shop, which connects international brands to Chinese consumers through livestreaming.
"These platforms exemplify how traditional trade is being reshaped and Malaysian SMEs can now bypass traditional intermediaries and reach Chinese buyers directly through these digital channels," she said.
Chen also urged local businesses to fully capitalise on these advantages by aligning with regional supply chain networks, highlighting the Regional Comprehensive Economic Partnership (RCEP) as a strategic tool that provides Malaysian exporters with reduced tariffs and improved market access.
On the ongoing US-China trade tensions, Chen said that China’s global trade relationships remain robust, spanning 185 countries, which contributes to strong supply chain resilience.
"Malaysia is well-positioned to become a key hub linking China and ASEAN supply chains and this would enable both sides to jointly counter unilateral trade pressures and build a more resilient economic partnership.
"As digital transformation reshapes the global trade landscape, I believe Malaysia as ASEAN Chair this year can play a leading role in deepening digital trade and services collaboration with China.
"By accelerating integration with China’s e-commerce and supply chain ecosystem, Malaysia can enhance its regional economic influence and tap into new markets,” she said.
CO2 REDUCTION
Climate policy expert Dr Gary Theseira said while Trump 2.0 administration's tariff policies are primarily aimed at reducing trade imbalances, the resulting shift in global trade patterns may yield unexpected climate benefits
Theseira, who is also chair of Climate Governance Malaysia Council, said that although tariffs are often seen as protectionist tools, in this case, they may inadvertently support global decarbonisation efforts, particularly in ASEAN.
“Unlike carbon border adjustments like the European Union’s Carbon Border Adjustment Mechanism (CBAM) or the EU Regulation on Deforestation-free Products (EUDR), US tariffs are designed more to address trade imbalances.
"But ironically, they may have positive climate side effects," he told Bernama in an exclusive interview recently.
(The EU’s CBAM is the EU's tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.
While the EUDR aims to reduce the EU’s impact on global deforestation, lower greenhouse gas emissions, and protect biodiversity by promoting deforestation-free products, it also presents compliance challenges for exporters).
One such impact, he said, could be a reduction in overall emissions due to a cooling of global trade and economic activity.
"When trade slows down and economies cool off, emissions generally decline,” he said.
Theisera added that relocating production away from carbon-intensive regions, such as parts of China, to countries with cleaner energy mixes could lead to more sustainable global supply chains.
"If goods that were previously made in high-emission factories are now produced in countries with more solar or renewable energy in their grid, the net result could be fewer emissions overall.
"A particularly notable benefit could be seen in the EV sector, as high US tariffs on Chinese-made EVs could potentially limit their entry into the US market, prompting these vehicles to seek alternative markets in ASEAN countries such as Malaysia, Vietnam, Thailand, and Indonesia.
“Because of shorter shipping distances and existing trade agreements, countries like Malaysia could see an influx of more affordable Chinese EVs.
“This could accelerate EV adoption in the region — especially among middle-income consumers," he said.
He also pointed out that shorter transport routes between China and Southeast Asia would result in a lower carbon footprint, compared to trans-Pacific shipments to US.
While the tariffs may present economic challenges for exporters, Theisera stressed the importance of recognising their potential environmental silver lining.
“No country wants hyperinflation or to harm its own consumers, but in this case, the rebalancing of trade might create a greener ripple effect globally," he added.
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