Business
Rising US Trade Growth Amid Expanding China Deficit
Despite US President Donald Trump’s imposition of tariffs in 2025 to reduce America’s trade deficit, key Southeast Asian manufacturing hubs—Malaysia, Thailand, and Vietnam—paradoxically expanded their trade surplus with the United States.
Malaysia’s US trade surplus rose 45 percent to US$23.2 billion , driven by resilient exports of electronics, machinery, and processed food, benefiting from US tariff cuts and exemptions on critical items. Vietnam recorded the largest US surplus among regional nations, reaching a record US$133.8 billion , a 28 percent increase. Thailand also saw its US surplus climb 44 percent to US$51.3 billion , largely due to strong electronics exports. This unexpected growth followed initial tariff hits and subsequent negotiations, where countries like Malaysia secured reduced rates and exemptions, while also pledging not to impose export bans on critical minerals.
Widening China Deficits and Transshipment Risks
Concurrently with their expanded US surpluses, Malaysia, Thailand, and Vietnam experienced a significant widening of their trade deficits with China in 2025. This trend suggests that Chinese goods, seeking to circumvent higher US tariffs, increasingly flowed into these Southeast Asian markets. Malaysia’s deficit with China jumped 62 percent to US$38.4 billion , while Thailand’s rose 50 percent to US$67.8 billion. Vietnam’s China deficit increased by 40 percent, reaching US$115 billion.
This dynamic has raised concerns among experts regarding potential transshipment risks , where Chinese firms might be routing products through these neighboring countries before re-exporting them to the US, effectively bypassing American tariffs and distorting trade flows.
2026 Outlook: Projected Export Slowdown and Tariff Headwinds
Looking ahead, the trade landscape for Southeast Asia in 2026 is clouded by persistent uncertainty surrounding US tariff policies, with analysts forecasting a slowdown in exports . Trump’s continued protectionist rhetoric, including new tariffs on South Korean cars and threats against European nations, underscores the volatile environment.
Both the Thai Commerce Ministry and DBS for Malaysia have warned of expected slowdowns in exports as the clearer impacts of existing and newly introduced US tariffs manifest throughout the year. Experts like Archanun Kohpaiboon suggest the 2025 trend of widening US surpluses is unlikely to continue, anticipating that new US trade agreements will lead to increased imports from the US by partner countries, consequently reducing their trade surpluses and posing a significant risk to the overall ASEAN economy this year.