The tariffs announced on 2 April by United States President Donald Trump, which ranged from 10 per cent to a staggering 49 per cent on Asean Member States (AMS), have the potential to severely disrupt food trade, domestic production in exporting AMS, and the livelihood of millions of smallholder farmers. They will cause shortages and price hikes that affect all consumers. The 90-day delay announced on 9 April in implementing the reciprocal tariffs offers a temporary reprieve but has not alleviated the uncertainty surrounding trade with the US. But this could present an opportunity to transform the future of Asean’s food trade.
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The Asean region is highly dependent on imports to meet demand for soya beans, corn, and wheat. Data from the International Trade Centre (ITC) site show that several Asean countries also have significant export volumes to the US, particularly Vietnam (seafood), Indonesia (palm oil), Thailand (rice and tropical fruits), the Philippines (coconut products), and Malaysia (palm oil and tropical fruits).
Ongoing discussions indicate that the situation remains fluid, and Asean leaders have wisely avoided kneejerk reactions, opting for negotiation over reprisal. For those AMS (like Vietnam) which have a significant export market to the US, any reduction in exports caused by the tariffs results in reduced revenue and diminished production needs.
Overall, any decrease in production potentially affects the livelihood of over 100 million smallholder farmers in Southeast Asia and thousands more employed in the agrifood value chain.
As a bloc, Asean could become a price-setter and, in the long term, benefit consumers with lower prices.
Moreover, a trading nation such as Singapore, which handles around 20 per cent of the global agri-food commodity trade, could experience decreased activity and be economically affected despite being a zero-tariff country for food imports.
The tariff “tit-for-tat” between the US and non-Asean countries further disrupts supply chains, resulting in supply shortages and price hikes in Asean for items like rice and tropical fruits.
While the US tariffs will cause short-term pain, this presents an opportunity to bring AMS closer to an agreement on collaborative action that could lead to reduced import dependency and a more integrated single Asean market. Malaysia’s proposal for a coordinated regional response in Southeast Asia to the tariffs may serve as a precursor for Asean to negotiate from a position of collective strength. As a bloc, Asean could become a price-setter and, in the long term, benefit consumers with lower prices.
A “big picture” look at the US-Asean trade relationship is needed to understand the longer-term implications of the tariffs and for Asean to take a proactive position to prevent itself from being at the mercy of supply chain disruptions caused by geopolitics.
Although the US is an important player in the region’s balance of agrifood trade, in 2022, Asean exported 89.1 per cent to countries beyond the US, while it imported 90.2 per cent from countries beyond the US (Table 1).
Table 1. ASEAN Agricultural Exports and Imports 2022
| Market | Export Value Million US$ | Share % | Market | Import Value Million US$ | Share % |
| ASEAN | 42,106 | 21.6 | ASEAN | 40,679 | 27.9 |
| China | 34,266 | 17.6 | US | 14,505 | 9.9 |
| US | 21,309 | 10.9 | China | 14,330 | 9.8 |
| EU-27 | 17,340 | 8.9 | Brazil | 11,633 | 8.0 |
| India | 12,533 | 6.4 | Australia | 11,327 | 7.8 |
| Japan | 11,963 | 6.1 | EU-27 | 10,660 | 7.3 |
| South Korea | 5,319 | 2.7 | Argentina | 9,118 | 6.3 |
| Pakistan | 4,445 | 2.3 | India | 8,473 | 5.8 |
| Australia | 3,738 | 1.9 | New Zealand | 4,355 | 3.0 |
| UK | 2,402 | 1.2 | Canada | 2,214 | 1.5 |
| Total (Top 10) | 155,421 | 79.7 | Total (Top 10) | 127,293 | 87.3 |
| Others | 39,621 | 20.3 | Others | 18,492 | 12.7 |
| Total (All markets) | 195,042 | 100.0 | Total (All markets) | 145,785 | 100.0 |
| Total (minus US) | 173,733 | 89.1 | Total (minus US) | 131,455 | 90.2 |
Soya beans, corn, and wheat are three imported commodities for which many non-US sources exist should AMS choose to move away from the US as a major supplier. American farmers may also intensify their efforts to sell to Southeast Asia what they cannot offload to China. Asean countries could likewise buy more agricultural products from each other to bolster regional food security, as Asean remains the largest market for AMS, comprising 21.6 per cent in 2022 (Table 1).
Asean should reconsider its current policies on trade in agrifood items. To enhance food security, it could shift away from the US towards more stable food trade partners. The aim is not only to diversify major sources of imports but also to expand export destinations. AMS governments typically establish policy direction for agrifood items due to food security concerns. However, industry players must identify the most effective import and export strategy deals.
Relooking policy could include increasing the production capacity of selected key import items like soya beans, corn, and wheat. However, this would require engaging dialogue partners such as South Korea, Japan, and Australia to enhance AMS R&D capacity for breeding new, locally adapted, high-yielding crop varieties. Furthermore, it would also be feasible to redirect exports and imports to increase the share of other leading non-US markets (Table 1).
However, AMS must reduce or eliminate any protectionist measures that hinder trade between them where Asean, as a bloc, has a surplus (such as rice). Yet, tariffs like Malaysia’s 40 per cent tax on imported rice hinder cross-AMS trade. There is potential for rebalancing the rice trade within Asean to protect the region from external events.
Food-importing countries like Singapore and Brunei may also find it strategic to invest in other Southeast Asian nations as future food sources, helping to make Asean a more diversified production area.
Asean should not strive for complete self-sufficiency in all food items but rather concentrate on reducing import dependency, particularly for soya beans, corn, and wheat. The region should focus on its strengths, such as producing seafood, vegetables, tropical fruits, vegetable oil, and rice, while reaching a regional agreement to compensate for insufficient production in certain AMS and steering clear of the misleading notion that individual AMS can achieve full sufficiency.
Paul Teng is a Visiting Senior Fellow in the Climate Change in Southeast Asia Programme of ISEAS – Yusof Ishak Institute. He is also Senior Consultant of NIE International, Nanyang Technological University Singapore.
This article was first published in Fulcrum, ISEAS – Yusof Ishak Institute’s blogsite.
