KUALA LUMPUR, Malaysia – U.S. President Donald Trump has been in and out of meetings of Southeast Asian leaders, but many questions remain about how the region will fare under his ever-changing trade policies.
President Trump flew to Malaysia on Monday to attend the 47th Association of Southeast Asian Nations (ASEAN) Summit. His highlight event there was overseeing the signing of a cease-fire agreement between Thailand and Cambodia.
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On the sidelines of the Kuala Lumpur summit, he also met with ASEAN leaders to discuss U.S. tariff rates ranging from 10% in Singapore to 40% in Myanmar and Laos.
Amid the flurry of activity, the White House announced reciprocal trade agreements with Malaysia and Cambodia, as well as framework agreements for future trade agreements with Thailand and Vietnam.
Malaysia received tariff exemptions on some key exports in the trade deal, but President Trump’s latest deal leaves many big questions unanswered.
It remains to be determined whether President Trump will follow through on his threats to impose 100% tariffs on semiconductors and 40% tariffs on “transshipments” (primarily referring to Chinese exports that transit through third countries to avoid existing tariffs).
It’s also unclear how the U.S. will define the “country of origin” for goods that cross the border dozens of times before they are completed, if President Trump pursues measures targeting transshipments.
The agreement signed on Sunday did not mention semiconductors, Malaysia’s main export, or specific country-of-origin rules, even though widespread tariffs on goods with multiple origins could impact Southeast Asia’s highly integrated supply chains.
There were also no announcements about trade negotiations involving some of the region’s biggest economies, such as Indonesia and the Philippines.
In the deals with Malaysia, Thailand, Cambodia and Vietnam, all four countries made a number of concessions but agreed to 19% or 20% tariffs, the same as the U.S. tariffs previously announced by the White House.
These include commitments by all four countries to reduce non-tariff barriers to U.S. trade, with Cambodia and Thailand pledging to eliminate tariffs on 100 percent and 99 percent of U.S. imports, respectively.
Malaysia, Thailand and Vietnam also agreed to buy billions of dollars worth of U.S. export agricultural products and American-made aircraft and offer concessions on digital services, and Kuala Lumpur pledged an additional $70 billion in capital investment to the United States.
Thailand and Malaysia have signed separate memorandums of understanding to cooperate in supply chains for rare earths and critical minerals such as nickel and cobalt, while fostering increased U.S. investment.
The terms of the agreement appear to primarily favor the United States, but do offer some concessions to the region.
The Malaysian agreement is the most comprehensive agreement reached at the summit, providing for zero percent tariffs on some key exports such as palm oil, rubber and cocoa.
Jaideep Singh, an analyst at the Kuala Lumpur Center for Strategic and International Studies, said much of Malaysia’s language on eliminating trade barriers also reinstates existing trade policies.
“Many of the non-tariff barrier reduction commitments set out in the agreement do not impose any additional regulatory burden on the Malaysian government,” Singh told Al Jazeera.
Priyanka Kishore, director and chief economist at Asia Decode in Singapore, said Malaysia also has “peace of mind” when it comes to tariffs.
In April’s “Emancipation Day” announcement, President Trump threatened to impose the world’s highest tariffs on Southeast Asia, then cut tax rates on most countries to below 20%.
Kishore said other ASEAN countries may also look to the Malaysia-U.S. deal as they vie for tariff cuts and exemptions on certain items in negotiations with the Trump administration.
“Malaysia could very well be an example for Vietnam, Thailand and other countries in terms of what they can expect in the future,” Kishore told Al Jazeera.
President Trump’s shake-up in the region also did not touch on industry-specific tariffs on autos, aluminum, steel, pharmaceuticals and other industries.
Jayant Menon, a senior fellow at Singapore’s ISEAS-Yusof Ishak Institute, said the most important unresolved question after Trump’s visit is how the agreement will be enforced.
Menon pointed out that while Congress has the power to regulate foreign trade through free trade agreements and other means, President Trump has used emergency powers to impose tariffs.
“The legal status and enforceability of both the trade agreements and framework agreements that are in place are unclear, as these are not free trade agreements in the traditional sense,” he told Al Jazeera.
“If countries do not implement what has been agreed in these agreements and framework agreements, they will be forced to do so through the threat of further punitive tariffs.”
