By: Shay Wester and Kaewkamol Pitakdumrongkit

The Stakes of U.S.-ASEAN Economic Relations 

As the United States and the Association of Southeast Asian Nations (ASEAN) deepen their economic ties, the stakes for both sides are rising. Comprising 10 Southeast Asian nations, ASEAN stands as the fourth-largest trading partner of the United States, with bilateral trade approaching $500 billion in 2023.  The region maintains a $200 billion trade surplus with the United States, mainly from high-tech electronics and manufactured goods.

Southeast Asia's economic importance to the United States is substantial and growing. By early 2024, the United States had overtaken China as ASEAN's largest export market, with 15% of ASEAN's exports destined for the United States, up nearly 4% since 2018.  The United States is also the largest source of cumulative foreign direct investment (FDI) in ASEAN, with total stock reaching nearly $480 billion in 2023 — almost double the combined U.S. investments in China, Japan, South Korea, and Taiwan.

The region's potential for future growth is impressive: with nearly 700 million people and a GDP of $3.6 trillion, Southeast Asia is projected to be the world's fastest-growing trade area, driven by its young population and economic diversity. The region’s digital economy alone is expected to reach $1 trillion by 2030.

These dynamics position Southeast Asia as not only an economic hub but also as a linchpin in the U.S. Indo-Pacific Strategy. Recognizing this, the U.S. and ASEAN governments have advanced their economic cooperation across multiple fronts. Bilateral ties with key Southeast Asian partners have strengthened, including upgraded partnerships with Indonesia and Vietnam, a new dialogue with Singapore on critical technologies, and an infrastructure initiative in the Philippines.

At the regional level, ASEAN plays a key role in facilitating dialogue and shaping economic policies among its member states and external partners. Through mechanisms such as the ASEAN Economic Community (AEC), the organization aligns national priorities with broader regional objectives. In 2022, the U.S.-ASEAN relationship was elevated to a Comprehensive Strategic Partnership, with President Biden hosting a Special Summit in Washington. The Biden administration has intensified regional cooperation by launching new ministerial dialogues, establishing a U.S.-ASEAN Center in Washington, and increasing investments in areas such as infrastructure, digital economy, and clean energy.

However, challenges remain in U.S.-ASEAN engagement. While the Indo-Pacific Economic Framework (IPEF) emerged as a key cooperation platform with seven ASEAN member states, its scope remains limited and progress on trade-related aspects has stalled due to congressional opposition over digital trade, labor, and environmental standards. Concerns about U.S. commitment to the region persist, particularly due to fluctuating policies and strategic competition with China. Many ASEAN nations feel that U.S. initiatives often focus more on countering China than on addressing their economic priorities. As they navigate challenges like economic instability, climate vulnerabilities, and widening socio-economic gaps, ASEAN countries seek more tangible benefits from their engagement with the United States, including improved market access and new investments.

Southeast Asia’s Economic Priorities and U.S. Engagement

Southeast Asian nations are eager to expand ties with the United States in trade, investment, technology, and infrastructure. They seek sustained, long-term engagement and new trade and investment agreements to boost sectors like electronics, textiles, agriculture, and the digital economy. ASEAN countries are particularly keen to see a renewal of the Generalized System of Preferences (GSP), which expired at the end of 2020. GSP renewal would reinstate duty-free treatment for exports from developing Southeast Asian economies, enhancing their competitiveness in the U.S. market.

Southeast Asia also positions itself as an alternative to China for manufacturing, benefiting from global supply chain diversification. However, countries are cautious about being seen as part of a U.S.-led "friend-shoring" strategy, maintaining a balanced approach with both the United States and China.  As Malaysian Prime Minister Anwar Ibrahim stated, they aim to be a "neutral and nonaligned location" for industries including semiconductor manufacturing. This balancing act reflects the region's desire to maintain its strategic autonomy while benefiting from economic partnerships with both powers.

Technology partnerships are a high priority for Southeast Asian countries. They seek collaboration on digital infrastructure, cybersecurity, AI, and e-commerce, aiming to foster innovation crucial for digital transformation and global competitiveness. This aligns with the region's ambition to become a leading player in the digital economy.

Sustainable development is another shared priority, especially given the region's vulnerability to climate change. ASEAN countries actively seek U.S. engagement in financing and developing sustainable infrastructure projects.

ASEAN countries value U.S. support for the principle of “ASEAN centrality,” which emphasizes that ASEAN should lead in crafting the region's economic and political architectures. This recognition strengthens ASEAN's role as the primary driver of regional integration and cooperation, enhancing its relevance in shaping the region's future.

While ASEAN countries share common goals of economic growth and regional stability, their specific priorities in relations with the U.S. reflect diverse national interests. Vietnam focuses on expanding manufacturing and export sectors, particularly in electronics and textiles. Indonesia seeks investment in infrastructure and energy, including electric vehicle battery production. Singapore prioritizes partnerships in digital innovation and biotechnology. The Philippines emphasizes cooperation in business process outsourcing, critical minerals development, and securing investments in infrastructure and agriculture to reduce reliance on China.

The 2024 U.S. Elections: A Watershed Moment for Southeast Asia

The 2024 U.S. elections present ASEAN with two divergent paths for economic engagement, each carrying implications for the region’s ability to achieve its goals. Beyond shaping U.S. policy in Southeast Asia, the election outcome will impact U.S.-China dynamics, a critical consideration for ASEAN given its deep trade and investment links with both powers.

Either a Harris or a Trump administration would be expected to maintain a strong focus on outcompeting China and bolstering U.S. domestic production capacity, though their strategies would have significant differences. Southeast Asia should anticipate intensified pressure on China's tech sector and more restrictive trade measures from Washington. The growing bipartisan embrace of tariffs as a tool to protect American interests and counter Chinese influence also signals that ASEAN countries will face a United States more inclined to use such measures as an economic lever.  Additionally, the rise in Chinese investment in ASEAN, particularly in advanced manufacturing, critical minerals processing, and digital infrastructure, may complicate these dynamics further, with both administrations likely to scrutinize Chinese involvement in the region.

A Harris administration would likely continue the Biden administration's multilateral approach, emphasizing partnerships and regional cooperation through initiatives like the IPEF.  In contrast, a second Trump presidency would be expected to return to more unilateral policies, focusing on bilateral deals and rebalancing trade deficits through aggressive tariffs.  ASEAN member states must remain agile and ready to navigate either scenario while continuing to advance their strategic economic objectives.

Prospects under a Harris Presidency

Policy Continuity and Evolution of U.S. Initiatives

A Harris administration would likely build upon the Biden administration's strategies, while introducing some shifts. The overall predictability would be welcomed by Southeast Asian nations, which have invested considerable time engaging with U.S. initiatives. Key policies such as IPEF, the Partnership for Global Infrastructure and Investment (PGII), and the Just Energy Transition Partnership (JET-P) are expected to be sustained and potentially expanded. These initiatives, focusing on resilient supply chains, digital infrastructure, and sustainable development, align with U.S. strategic goals in the Indo-Pacific and ASEAN’s own priorities.

In short, U.S.-ASEAN relations under a Harris presidency could be expected to continue growing, without the disruption that might come from a major policy shift, providing an opportunity for ASEAN countries to deepen economic ties with the United States and advance long-term regional goals.

New Priorities: Technology and Climate Change

In technology and innovation, a Harris administration would likely prioritize areas such as artificial intelligence (AI), cybersecurity, and digital infrastructure development. Harris's leadership in AI policy under Biden suggests that responsible AI — with a focus on privacy and security — will remain a key focus. Southeast Asian countries would welcome deeper U.S. partnerships on initiatives to foster innovation, data privacy, and secure digital ecosystems.

Harris’s strong commitment to environmental sustainability could bolster U.S. support for Southeast Asia's clean energy transition and infrastructure development. The scale of U.S. support remains uncertain, but Southeast Asian nations are likely to seek engagement with Washington in financing green energy projects and developing sustainable infrastructure.

Trade Policy

On trade, Harris is expected to take a progressive stance, particularly around environmental and labor standards. Her past opposition to agreements, including the United States-Mexico-Canada Agreement (USMCA) and the Trans-Pacific Partnership (TPP), suggests she would push for stronger protections in these areas. This could complicate negotiations on the stalled IPEF trade pillar, where diverse economies may struggle to align with U.S. demands on issues like labor standards and digital rules. Nonetheless, efforts to advance IPEF’s trade pillar would likely continue under a Harris administration. The pace and robustness of these efforts would be an early indicator of her administration's approach to economic engagement in Southeast Asia and the broader Indo-Pacific region. Similar challenges could impact the renewal of GSP, as congressional debates over labor and environmental standards have already contributed to delays in its reauthorization.

While comprehensive trade agreements are unlikely in the near term, Harris might pursue targeted sectoral or bilateral deals that align with strategic priorities. Notably, her trade policy is not expected to focus on reducing U.S. trade deficits as a primary objective, a difference from Trump’s approach that is likely to be viewed positively by countries in Southeast Asia.

Geopolitical and Industrial Policy

Regarding China, Harris would likely continue Biden's "de-risking" approach, selectively reducing dependence in critical sectors while maintaining economic engagement. Her policies would address concerns about China's trade practices through targeted tariffs and regulatory measures on critical sectors like technology, while also working with partners and allies through multilateral efforts. In Southeast Asia, Harris would likely seek to counter China’s growing investments by promoting alternatives such as the PGII while highlighting strategic and environmental risks of Chinese projects.

This shift could also accelerate the relocation of manufacturing from China to Southeast Asia, benefiting ASEAN economies that are positioned as alternative production hubs. However, Harris’s focus on reshoring U.S. industries, as exemplified by the CHIPS Act and Inflation Reduction Act (IRA), could also shorten supply chains and reduce future U.S. investment flows into Southeast Asia. ASEAN countries may need to reassess their strategies to remain competitive as U.S. industrial policy drives more localized supply chains.

Engagement with ASEAN and Multilateralism

Harris’s track record of engagement with Southeast Asia, including multiple visits to the region as vice president and meetings with key leaders, indicates that her administration would prioritize cooperation with ASEAN. She would likely continue supporting ASEAN centrality, helping ensure the bloc remains a driver of regional integration and cooperation. Harris’s multilateral approach — building on ASEAN-led initiatives such as the East Asia Summit (EAS) and ASEAN Regional Forum (ARF) — would be seen as a positive signal by ASEAN member states eager for sustained U.S. engagement in the region.

Her administration would likely also pursue bilateral relationships and targeted mini-lateral efforts, such as supply chain cooperation with countries like Vietnam and Singapore. Southeast Asian countries would look to leverage U.S. support for digital infrastructure, green energy, and regional security to advance their own economic and geopolitical goals.

Challenges and Opportunities for Southeast Asia

A Harris presidency offers Southeast Asia a path of continuity, predictability, and cooperation. Her focus on technology, sustainability, and multilateralism aligns with ASEAN’s goals, but stricter labor and environmental standards could complicate trade negotiations and strain regional competitiveness. Additionally, U.S. reshoring policies could lead to more localized supply chains, potentially limiting U.S. investment in Southeast Asia and requiring ASEAN countries to adapt their economic strategies. Ultimately, the impact of a Harris presidency on Southeast Asia will depend on her administration’s ability to navigate complex regional dynamics, deliver tangible economic benefits, and balance competing interests.

Prospects under a Trump Comeback

A second Trump term would revive "America First" policies, emphasizing balanced trade and economic nationalism. Trump favors direct, bilateral negotiations over multilateral frameworks such as IPEF, as evidenced by his withdrawal from the TPP and prioritizing deals including the USMCA, the revised U.S.-Korea Free Trade Agreement (KORUS FTA), and the U.S.-Japan Trade Agreement (USJTA). He has threatened to "knock out" IPEF if reelected, pledging that “TPP Two will be dead on day one.”

Trump’s return would likely reintroduce the volatility seen during his first term, characterized by sudden policy shifts and unpredictability, especially around tariffs and trade agreements. Trump’s comments welcoming Chinese auto investment in the United States, while at the same time threatening high tariffs on Chinese goods, are a case in point.

This unpredictability is likely to be less welcomed by Southeast Asian countries, as it risks creating market instability. Investors in the region may delay decisions, potentially slowing trade and investment flows.

Tariffs and Rebalancing Trade

A cornerstone of Trump's economic policy is the aggressive use of tariffs, likely more severe and widespread than in his first term. He has proposed tariffs of 10 to 20% on all imports and a 60% tariff on Chinese goods. Trump views tariffs as both economically beneficial and a powerful negotiating tool, stating, "Tariffs do two things. Economically, they're phenomenal ... And man, is it good for negotiation."

These measures aim to slash trade deficits, rejuvenate American manufacturing, and counter perceived market distortions by foreign governments. Trump views trade deficits as indicators of unfair practices and would likely push for balanced trade with ASEAN nations through bilateral negotiations. While disrupting regional supply chains, this might also accelerate diversification, offering potential benefits for some Southeast Asian nations as they position themselves as alternatives to China. Yet economic costs could be substantial, especially if countries with large U.S. trade surpluses like Vietnam ($105 billion) and Thailand ($41 billion) are pressured to reduce imbalances or face punitive tariffs. Other ASEAN countries with significant surpluses, such as Malaysia and Indonesia, could also come under scrutiny, potentially complicating trade talks and heightening tensions.

The effectiveness of Trump's tariff strategy in reducing trade deficits and creating a fairer landscape for U.S. industries could also be undermined by several factors, including currency movements, circumvention tactics, and negative impacts on U.S. manufacturers reliant on imported components. Additionally, this approach risks retaliation and could escalate trade tensions globally.

Strategic Decoupling and Supply Chain Shifts

A key focus would likely be "strategic decoupling" from China, aiming to reshape the economic relationship in America's favor. This could involve imposing higher tariffs to achieve more balanced trade or even withdrawing China's most favored nation status. Trump's policies aim to reduce U.S. reliance on Chinese manufacturing, enhancing America's economic security and bargaining power with China. A second Trump term might also take a more confrontational stance toward Chinese investments in ASEAN, using tariffs or bilateral deals to pressure Southeast Asian nations to limit Chinese influence in strategic sectors like manufacturing and digital infrastructure.

The Trump administration could also be expected to impose strict rules on U.S. technology exports and investment, particularly in sensitive sectors. These policies could reshape the tech landscape in Southeast Asia, presenting both risks and opportunities for ASEAN countries to position themselves as trusted alternatives to China in high-tech supply chains. As Chinese manufacturing relocates to the region, ASEAN countries could benefit from increased investment and technological know-how.

However, heightened U.S.-China tensions could destabilize the region, pressuring ASEAN countries to align more explicitly with either Washington or Beijing. Such a competitive environment could threaten economic growth and increase the risk of misunderstandings leading to broader conflicts.

Industrial and Energy Policy

Trump’s second term would likely emphasize traditional energy sectors; he has vowed to rescind unspent funds allocated under the Inflation Reduction Act and hinted that he would slash funding to climate-focused agencies. Trump would likely reduce U.S. support for Southeast Asia’s renewable energy transition, slowing the region’s sustainability efforts. Additionally, his industrial reshoring policies could shorten supply chains and potentially limit future U.S. investment in Southeast Asia’s technology and energy sectors. This shift would require ASEAN countries to adapt to a global landscape shaped more by short-term economic nationalism.

Bilateral Shift and Regional Implications

Trump’s preference for bilateral over multilateral frameworks could erode U.S. leadership in ASEAN-centric initiatives, potentially diminishing ASEAN's role in shaping regional affairs. ASEAN member states value multilateralism and are likely to view Trump’s approach as marginalizing ASEAN's influence. This could raise concerns about ASEAN's future relevance in regional diplomacy and economic integration, particularly if key partners begin to bypass the organization in favor of bilateral engagements.

At the same time, some Southeast Asian leaders may welcome Trump's focus on quick, tangible deals, aligning with their preference for clear economic outcomes over complex policy dialogues. His transactional approach would likely appeal to those seeking pragmatic, deal-oriented interactions, especially those looking to leverage ongoing U.S.-China trade tensions.

While Trump may be unable to immediately exit some parts of the current IPEF due to legal restrictions, he could use security reasons to sidestep U.S. commitments in areas such as supply chain cooperation.  

ASEAN, as a bloc, would likely work to maintain its centrality by balancing bilateral opportunities with broader regional frameworks, though its members could face pressure to accept “balanced trade” arrangements preferred by Washington.

Challenges and Opportunities for Southeast Asia

Trump's emphasis on reshoring U.S. manufacturing and reducing reliance on Chinese supply chains could significantly disrupt regional trade dynamics in Southeast Asia. Countries like Vietnam, Thailand, Malaysia, and Indonesia may see increased trade and investment as companies diversify away from China. However, these gains may be tempered by Trump's unpredictable, transactional approach, which could create uncertainty about the U.S.'s long-term economic commitment to the region.

While some ASEAN countries could benefit from this shift, others may struggle to adapt, especially if U.S. engagement remains narrowly focused on trade imbalances and tariffs rather than addressing broader regional challenges. Southeast Asian nations will need to remain flexible in navigating these policy shifts, balancing opportunities with the potential risks posed by a more transactional U.S. economic strategy.

Policy Recommendations for ASEAN

To navigate the complex landscape of U.S.-ASEAN economic relations in light of potential election outcomes, we propose the following recommendations for ASEAN policymakers:

1. Strengthen Regional Economic Integration: Accelerate efforts to deepen economic ties within ASEAN, particularly through the ASEAN Economic Community (AEC) post-2025 agenda currently under development. Reduce intra-ASEAN trade barriers, harmonize regulations, and enhance regional supply chains. A more integrated ASEAN economy would be more resilient to varying U.S. policy directions and would have greater bargaining power in trade negotiations.
2. Diversify and Strategically Align Trade Relationships: Actively seek new bilateral and regional trade agreements, especially high-standard ones such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Engage proactively with dialogue partners such as the EU, Japan, and India. Expand trade relationships by fast-tracking free trade agreement (FTA) negotiations with Canada, deepening ties with U.S. FTA partners including South Korea and Australia, and leveraging Singapore's unique position as an ASEAN member state with a U.S. FTA. These relationships could serve as valuable bridges to U.S. markets and supply chains, helping mitigate potential disruptions from U.S. trade actions. Additionally, ASEAN should consider the long-term implications of U.S. tariffs on global supply chains and seek to attract high-value manufacturing from companies relocating due to these trade measures.
3. Accelerate Innovation and Sustainable Development: Foster regional innovation ecosystems and accelerate digital transformation to reduce external dependencies. Invest in key domestic industries to enhance competitiveness and reduce vulnerability to external economic shocks. Prioritize both green and digital economies, emphasizing digital transformation as outlined in the ongoing ASEAN Digital Economy Framework Agreement (DEFA) negotiations. 
4. Strengthen Economic Resilience and Balance Trade Relations: Assess vulnerability to potential new tariffs and trade restrictions, focusing on high-risk sectors. Develop strategies to diversify export markets and consider actions to reduce trade surpluses with the United States. Consider gradual, strategic tariff reductions on select products, particularly items with significant tariff differentials compared to U.S. rates. Simultaneously, explore opportunities to increase imports from the United States to create more balanced trade relationships. Improve transparency in trade policies and regulations to pro-actively address concerns about unfair practices. 
5. Enhance Strategic Engagement and Promote Dialogue: Cultivate bipartisan relationships at various levels of the U.S. government, including key members of Congress, governors, and local officials, while also strengthening ties with the U.S. business community. Increase communication with U.S. officials to address concerns and underscore the importance of U.S.-ASEAN relations. Identify incentives to promote positive engagement with the new administration and collaborate on shared challenges such as supply chain resilience. Propose a U.S.-ASEAN Special Summit in the new administration's first year to reinforce the partnership's significance.

By implementing these recommendations, ASEAN can prepare for potential policy shifts under either a Harris or a Trump administration, positioning itself as a strong, unified economic bloc capable of engaging productively with the United States while safeguarding its own interests.

Shay Wester is the Director of Asian Economic Affairs and Outreach Director at the Asia Society Policy Institute

Kaewkamol “Karen” Pitakdumrongkit is Senior Fellow and Head of Centre for Multilateralism Studies at the S. Rajaratnam School of International Studies (RSIS) of Nanyang Technological University, Singapore.