The United States has signed several important trade agreements with four Southeast Asian nations in a bid to improve trade relations and diversify supply chains. This move comes as China tightens its grip on the export of rare earth minerals, which are crucial for many industries, including technology and defense.
During a summit of the Association of Southeast Asian Nations in Kuala Lumpur, President Donald Trump finalized reciprocal trade deals with Malaysia and Cambodia. Additionally, a framework agreement was established with Thailand to tackle trade barriers related to tariffs and regulations. Vietnam also joined in with a similar framework deal, despite facing a 20% tariff on its exports to the U.S.
The U.S. plans to keep a 19% tariff rate on exports from Malaysia, Cambodia, and Thailand, with some goods potentially exempt from these tariffs. Vietnam, which had a trade surplus of $123 billion with the U.S. last year, has committed to increasing its purchases of American goods to help balance the trade deficit.
In a significant move, Malaysia agreed not to impose bans or quotas on exports of critical minerals to the United States. However, it remains unclear if this applies to raw or processed materials. Malaysia has substantial rare earth deposits, estimated at 16.1 million tonnes, but has previously restricted raw exports to develop its processing capabilities.
The agreements also included commitments to enhance cooperation in digital trade, services, and investments. The Southeast Asian countries pledged to protect labor rights and improve environmental standards. Thailand and Malaysia specifically agreed to accept vehicles that meet U.S. safety and emissions standards.
Moreover, Malaysia secured tariff exemptions for various products, including aerospace equipment and pharmaceuticals. Thailand announced plans to eliminate tariffs on nearly all goods and ease restrictions on foreign ownership in its telecommunications sector. Both nations are looking forward to significant commercial deals, including Thailand’s commitment to purchase U.S. agricultural products worth around $2.6 billion annually and 80 aircraft valued at $18.8 billion.
This series of agreements marks a strategic effort by the U.S. to strengthen ties with Southeast Asia while reducing reliance on Chinese supplies of critical minerals. As global competition for these resources intensifies, the U.S. aims to ensure a stable and secure supply chain for its industries.
