HANOI (Bloomberg): South-East Asian nations are pledging to increase purchases of a swathe of US goods to strengthen their case for lower tariffs, as the International Monetary Fund warned of significant economic fallout for the trade-reliant region.
Indonesia offered to buy more soybeans and wheat from the US, while Thailand could import more corn and the Philippines frozen meat, their respective governments announced this week.
Vietnam, Thailand and Indonesia could also step up imports of natural gas and purchase new commercial or military aircraft to balance out their trade surpluses with the US.
The deal-making rush from Southeast Asian nations comes after US President Donald Trump announced a 90-day pause on his so-called reciprocal tariffs, instead imposing a 10% levy on goods from the region.
But it’s unclear how definitive any deals may be – trade agreements can take years to hammer out, and Trump could change his mind, as he has over trade accords reached with Canada and Mexico in his first term.
“Uncertainty is at a very high level – in fact it’s off the charts,” IMF Director of the Asia and Pacific Department Krishna Srinivasan told Bloomberg Television’s Haslinda Amin on Friday.
Indonesia aired optimism over its “early mover advantage” after sending a team as early as April 16. Southeast Asia’s largest economy aims to finish all technical discussions within 60 days and present a package for Trump’s approval, Coordinating Economic Minister Airlangga Hartarto said in a briefing late Thursday from the US.
Vietnam also kicked off talks after a phone call between trade minister Nguyen Hong Dien and US Trade Representative Jamieson Greer set out the “principles, scope and roadmap of negotiations” on Wednesday. The Philippines is sending its delegation to the US on April 28.
The urgency is because Asia, which manufactures most of the world’s goods, is poised to be among the hardest hit in the global trade war. The IMF lowered its forecasts for Asia’s economic growth to just 3.9% this year and 4% in 2026 – its sharpest adjustment since the pandemic.
Beyond Washington, the region’s fate is also dependent on whether there’s any resolution in the far more severe trade dispute between the US and China, which are key trading partners and sources of investment.
In a positive sign, China is weighing tariff exemptions on some US goods, people familiar said earlier. It subsequently announced it will “fully prepare” emergency plans to ward off external shocks.
There’s also a growing sense in Southeast Asia that the trade talks cannot simply be a one-way street. Indonesia’s Hartarto emphasized that the government will also look after domestic interests as the US asks for more market access, investment deregulation, as well as cooperation in critical mineral supply chains.
Thailand, which agreed to postpone its negotiations with the US, aired similar cautions.
“We’ll approach the talks with the mindset that we’ll give them something if they’re also willing to give us something,” Prime Minister Paetongtarn Shinawatra said on Thursday.
Among the issues the US has raised are its supposed currency manipulation and loose regulations that allow other countries to divert their goods through Thailand to escape higher tariffs.
With a lot more negotiation on the cards and little clarity of what the outcomes would mean for Asia’s economies, the IMF’s Srinivasan warned that there could be even more downside risks to the region’s growth.
On the plus side, he said Asia’s fundamentals are “much, much better” than during the 1997-1998 Asian financial crisis, when the IMF bailed out Indonesia, South Korea and Thailand. Differences include credible policy frameworks, independent central banks and less currency mismatch in their balance sheets, Srinivasan said.
“What we are advising countries is to let the exchange rate be the shock absorber, and let monetary policy provide you space you need to adjust” to the tariff shock, Srinivasan said.
–With assistance from Suttinee Yuvejwattana, Neil Jerome Morales, Francesca Stevens and Anand Menon.
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