Why ASEAN -Landen often perform trade surpluses

When US President Donald Trump unveiled his tariff plan to the world a few weeks ago, Southeast -Asian countries were mostly hit hard, ranging ranging from 18 percent in the Philippines to almost 50 percent on Cambodia. Malaysia, Indonesia, Thailand, Vietnam and Laos looked at rates between 24 and 48 percent.

ASEAN was apparently treated harder than other regions because many of its Member States of trade surpluses (in goods) with the United States Leiden and Trump is obsessed with bilateral trading balance. Although the US returned within a few daysTrump’s Want Rit raises an interesting question: why do so many countries in Southeast -Asia have large trade surpluses, and is this actually a bad thing?

The simple answer is that countries in Southeast -Asia have large trade surpluses, because many have followed a model of economic development, called export -oriented industrialization. One of the more reliable ways for an emerging market to speed up economic growth is to produce things like textiles and electronics and then export them to foreign markets. Emerging markets can incur these goods at lower costs, because production -input, such as labor, are generally lower than in the US or Europe.

This model of economic development is supported by and benefits from the US for decades and is defended by Stewards of the Liberal International Order such as the World Bank. This type of development has been particularly effective in Asia, with the World Bank the famous East -Asian miracle In the nineties.

In Southeast Asia, Thailand used this model to transform itself into an export power patient. The phenomenal recent growth of Vietnam has followed the same process, in which large foreign companies such as LG and Nike invest billions of dollars to build production facilities in the country. The explicit goal of finding production in Vietnam and Thailand is to produce goods at lower costs, so that they can be exported to foreign markets.

If you follow the logic of this strategy, you will have noticed that running a large trade surplus with the rest of the world is the entire point of this kind of economic development. And because the US is a huge market with a hunger for affordable goods, it is not surprising that such a worldwide economic system produces net exporting countries that have significant trade surpluses.

Trump believes that this is unfair and also bad for the United States. Is he right to think? Export -guided industrialization often includes state intervention in markets to make export more competitive. Net excess countries often manipulate their currencies (an undervalued currency -boosts export), suppress wages and subsidize or protect certain industries so that they can gain an advantage in the worldwide markets. You could call this unfair.

And there is some truth in the claim that global trade has become unbalanced, especially in view of the geopolitical context of an emerging China that stimulates growth by exporting the surplus production to the rest of the world, many of which are indeed absorbed by the United States. But what would a more sustainable balance look like? The idea of ​​Biden was to make the US a more attractive location for production and investments of high -quality value by pursuing an American version of industrial policy. Trump’s idea has been to draw rates on every country in the world based on a poor understanding of world trade.

The result is that the US has built and defended a system of global trade for decades, where emerging markets could industrialize by exporting the production from surplus to the rest of the world. In fact, they were encouraged to do this, and many countries in Southeast Asia successfully followed that model. Now the US dismantles this system in a spectacular way because it no longer suits them. But I wonder if the system actually still worked for the net exporting countries.

It became clear during the COVID-19 Pandemie that was dependent on export as a engine of economic growth an important liability for emerging markets. It places them at the mercy of external forces about which they have little control. Thailand, the most export-dependent nation in Southeast Asia, is still not fully recovered from disturbances to global trade and journeys that started in 2020, and things will probably only get worse in the coming years.

Although it ran back the rates, the US makes it clear how risky this style of economic development is and how vulnerable it is for external shocks. Although it will undoubtedly take place in some form, the global economic order led by the US undergoes a fundamental transformation. Exporting surplus production to foreign markets such as the US is no longer a reliable model of economic development, especially in the current geopolitical environment.

What comes after is everyone’s gamble. But there are other models of economic development, which require less dependence on the US and do not force developing countries to lead continuous trade surpluses. We can see that regional trade within ASEAN is becoming more important, or a greater role for states or domestic markets in stimulating growth. Whatever comes, the countries that can adapt the fastest to this new reality and develop alternative models of economic growth and development will have a considerable advantage if we continue in an opaque and uncertain future.