Navigating ASEAN-U.S. Tariffs: Sectors and Countries Poised for Growth Amid Trade Shifts

The U.S. imposition of tariffs on ASEAN countries, effective July 9, 2025, has reshaped trade dynamics, creating both challenges and opportunities for investors. While tariffs range from 10% to 49% across member states, certain sectors and countries have secured advantageous terms or are strategically positioned to thrive. This article explores the evolving landscape, highlighting investment opportunities in tech manufacturing, infrastructure, and defense partnerships.

Tariff Outcomes and Country-Specific Advantages

The U.S. tariffs have spurred varied responses among ASEAN nations, with some securing preferential terms through bilateral deals:
- Vietnam: A 20% average tariff rate (vs. 40% on Chinese-linked goods) makes it a prime beneficiary. Its robust electronics sector, fueled by Foxconn and Samsung investments, is a key growth driver.
- Indonesia: A proposed $34 billion trade package—including U.S. access to critical minerals like nickel—could reduce tariffs further. The country's infrastructure boom, including $5 billion in port upgrades, positions it for export efficiency gains.
- Singapore: Avoiding direct negotiations, it focuses on mitigating risks in semiconductors and pharmaceuticals via a task force led by Deputy PM Gan Kim Yong. Its tech and logistics sectors remain resilient.
- Thailand: Domestic stimulus measures (e.g., low-interest loans for SMEs) and quiet U.S. engagement keep its auto and electronics industries competitive.

Sectors to Watch: Tech, Infrastructure, and Defense

1. Tech Manufacturing:
   Vietnam's electronics exports grew 12% in 2024, driven by FDI in semiconductors and consumer electronics. Thailand's tech sector, bolstered by 5G infrastructure, is also expanding. Investors may target ETFs like the VanEck Vietnam ETF (VNM), which tracks firms in these sectors.

2. Infrastructure and Logistics:
   Indonesia's port upgrades aim to reduce export costs by 15% by 2026. The Global X FTSE Southeast Asia ETF (ASEA) offers exposure to ASEAN's infrastructure projects, including Vietnam's export zone modernization and Malaysia's smart city initiatives.

3. Defense and Cybersecurity:
   U.S.-ASEAN security ties under the “Free and Open Indo-Pacific” strategy favor firms like Singapore's ST Engineering, which supplies defense tech. The iShares MSCI Singapore ETF (EWO) includes such companies.

Geopolitical Risks and Policy Uncertainties

• U.S. Election 2024: A Harris administration may prioritize multilateral frameworks like the Indo-Pacific Economic Framework (IPEF), favoring sustainability-focused investments. A Trump re-election could bring unpredictable tariff hikes, benefiting Vietnam and Thailand's export resilience.
• China's Influence: ASEAN's reliance on Chinese supply chains and Belt and Road projects remains a risk. Countries like Cambodia and Laos, less able to negotiate tariff relief, face higher vulnerability.

Investment Recommendations

1. Sector-Specific Plays:
2. Tech/Manufacturing: Invest in Vietnam through VNM or Thailand via the Siam Commercial Bank (SCB.BK).
3. Infrastructure: Use ASEA for diversified exposure to port upgrades and energy projects.

4. Defense: Consider EWO for Singapore's cybersecurity firms or Malaysia's defense tech companies.

5. ETF Diversification:
   Pair ASEAN ETFs with broader emerging market funds (e.g., iShares MSCI Emerging Markets ETF (EEM)) to hedge against geopolitical volatility.

6. Monitor Geopolitical Triggers:
   Track U.S.-China trade developments and ASEAN's joint task force progress. A could signal shifts in ASEAN's strategic importance.

Conclusion

Despite tariff headwinds, ASEAN's multi-alignment strategy and infrastructure investments position it as a resilient manufacturing hub. Investors should prioritize sectors with tariff advantages—tech, logistics, and defense—and use ETFs for diversified exposure. While geopolitical risks persist, ASEAN's growth trajectory remains intact, offering long-term opportunities for those willing to navigate the complexities.

Invest wisely and stay attuned to shifting trade policies.