Laos, a country of only 8 million, has been hit with a 40 per cent tariff by the US. Photo: AFP”>WASHINGTON D.C. – The United States has implemented a series of tariffs on imports from several Southeast Asian countries, citing concerns over their continued trade with Russia following the invasion of Ukraine. The measures, announced this week, target goods originating from Laos, Myanmar, Cambodia, and Thailand, with tariff rates varying considerably between nations.
Laos and Myanmar are facing the most substantial penalties, with tariffs set at 40 percent on their exports to the US. This impacts a range of products, potentially hindering economic growth in the two nations, which have populations of approximately 7.5 million and 54.8 million respectively. The US Department of Commerce estimates that Laos’s total exports to the US in 2023 were valued at $288 million,while Myanmar’s were $344 million.
Cambodia and Thailand initially faced tariffs of 49 percent and 35 percent, respectively.However, following peace talks hosted by Malaysia in February 2024 aimed at resolving conflict within those countries, the US significantly reduced their tariffs to 19 percent. The talks, held in Kuala Lumpur, involved representatives from both nations and were facilitated by Malaysian Prime Minister Anwar Ibrahim. The reduction in tariffs is contingent on the continued adherence to the ceasefire agreement reached during the negotiations.
The US State Department has stated that the tariffs are intended to “restrict Russia’s access to goods and technologies that could support its military capabilities” by disrupting the supply chains that flow through these Southeast Asian countries. The move is part of a broader strategy by the US and its allies to exert economic pressure on Russia and compel a withdrawal from Ukraine. The tariffs are authorized under Section 232 of the Trade Expansion Act of 1962, which allows the President to impose trade restrictions based on national security concerns.
Context: Southeast Asia’s Trade Dynamics
Southeast Asian nations have historically maintained complex trade relationships with both the West and Russia.While many countries have expressed support for Ukraine’s sovereignty, maintaining economic ties with Russia presents a delicate balancing act. These nations frequently enough serve as transit points for goods, making it tough to fully isolate Russia from the global economy. The US tariffs are a direct attempt to address this challenge, but they also risk disrupting established trade routes and impacting the economies of the targeted countries.
The long-term effects of these tariffs remain to be seen. Analysts predict that Laos and Myanmar will be especially vulnerable, potentially leading to increased economic hardship and political instability. Cambodia and Thailand, with their reduced tariffs, might potentially be better positioned to mitigate the impact, but they will still face challenges in adapting to the new trade landscape. The situation underscores the growing geopolitical tensions and the increasing use of economic tools as instruments of foreign policy.
