With New Geoeconomics, ASEAN Fires Back at Trump
For Southeast Asia, this is about far more than tariffs
As global economic disorder spreads, governments are taking bold action to shore up stability and security. Japan and South Korea are joining hands with China, America’s chief adversary. The EU is eyeing a reopening with China to offset friction with the US whilst also building a brand new security landscape, countering what has existed in Europe since World War II.
Now, the Association of Southeast Asian Nations (ASEAN) has taken a drastic move, one that reveals how deep and long-term governments are approaching Trump’s new moves.
At a recent meeting of ASEAN states, the Thai commerce minister, Pichai Naripthaphan, spearheaded the creation of a “Geoeconomics Task Force.” It will be the new tip of the spear when it comes to Southeast Asia’s response to Trump’s economic plays.
This is a profound move.
For ASEAN, Trump is not just raising levies or pushing for new US manufacturing. Rather, Washington is taking steps that will reposition geopolitics as the new core of economic thinking and behavior. This is what I call “Geopolitics First,” a concept I coined several years ago, and the driving theme of my 2025 Forecast.
Geopolitics First is also the focus of an opinion piece I penned at the end of 2023.
In one move, ASEAN has put geoeconomics on the map of governments in a way that has not happened so far. A large chunk of Asia is now approaching Trump’s economic moves from the standpoint of geopolitics (and vice-versa).
Geoeconomic Thinking
This means several things at once.
First, ASEAN does not believe the old status quo will return in the global economy or broader geopolitical landscape. Trump’s decisions are permanent structural changes in how the world works, requiring a new approach and playbook. Governments in Asia have accepted two things: i) even if Trump makes new trade deals across Eurasia it will not bring back normalcy or stability, and ii) Trump’s tariff plays are only the very beginning of America First 2.0. There are many more disruptive moves on the horizon.
Second, ASEAN will respond to America, not just by signing a new trade agreement or pouring billions into the US (investment), but by redesigning its economy from the ground up. For example, before Liberation Day, Malaysia had unveiled plans to pay Arm, the British chip giant, $250 million (over 10 years) to acquire chip designs that local Malaysian (and foreign firms operating domestically) could use to build chips. This is part of Kuala Lumpur’s long-term plan of establishing a major chip sector and shifting the economy from cheap manufacturing to high-tech, moving in the same direction as China. This entire strategy is now up in the air as the US prepares new chip tariffs, along with embarking on a “national security review” into China’s chip economy, which is likely to spill over into Malaysia, as Chinese technology firms have established chip supply chains within the country.
There is no clarity as to how Malaysia can export chips, and to whom, as Trump seeks to rebuild America’s semiconductor leadership.
For Malaysia, there are only two options. Abandon its chip strategy, or respond in a new way - like geoeconomics. For example, Malaysia might follow China’s lead (again), and force companies to use Malaysia-made chips, echoing Beijing’s rules, like requiring its auto sector to use local chips or replacing foreign chips in large telecom infrastructure.
Third, ASEAN is seeking a new kind of regional connectivity and integration. Already, the bloc has called for more “intra-ASEAN” trade and is preparing to invite Arab states to its upcoming summit next month. With geoeconomics, ASEAN will depend more on its member states, and their regional interconnectivity, more than ever. Could ASEAN, through geoeconomics, become a chip bloc, a counter to “Chip 4,” a chip grouping proposed during Biden’s tenure?
Geoeconomics will push states in Southeast Asia to link themselves closer together, economically and geopolitically. This means, not just new economic tie-ups, but also ASEAN acting as “one” when it comes to geopolitical responses, whether to the US, China, or another major power.
All of this creates a new headache for Trump.
Instead of bending the knee, nations are devising strategies that will unleash even more change in the world, and create new headaches for America. Trump never intended for his tariff play to open the door to nations playing geoeconomics in serious ways. This is now on the table. Of course, there is the possibility that ASEAN’s moves with geoeconomics could complement what Trump wants (i.e. Malaysia having its chip ecosystem, while chip activity moves back to America). But long-term, geoeconomics represents an obstacle for Trump’s global plans, as it will take nations further away from what America wants.
With geoeconomics, ASEAN is also establishing a new trajectory and fault line for Asia as a whole.
ASEAN is preparing to boost its own “regional sovereignty” at a moment when others in the region are refusing to clash with America, from Japan to Australia. This divides Asia in a new way, as some states employ geoeconomics to create a new future while others hold Washington’s hand more tightly. Put differently, some nations will be using geoeconomics to combat Trump, while others use geoeconomics to align themselves closer with Trump.
Conclusion
At the core of what ASEAN is preparing with geoeconomics is a message to the world.
To truly deal with the new shifts and shocks, in particular the US-China economic war, governments are rethinking everything. They are aware of how historic what is occurring is, and how they will fall short if they employ the same tactics and policies of the past. The only direction is to rethink the fundamentals and take the lead with convergences (geoeconomics) that were dormant just a short time ago.
Trump has opened the door to geopolitics and economics converging like never before. ASEAN is leaping through it. It will not be the last. As more states move to “wield” geopolitics, the end result is a world where every economic decision has geopolitics built-in, and where national and regional interests overpower everything else.
-ABISHUR/MR. GEOPOLITICS
Mr. Geopolitics is the property of Abishur Prakash/The Geopolitical Business, Inc., and is protected under Canadian Copyright Law. This includes, but is not limited to: ideas, perspectives, expressions, concepts, etc. Any use of the insights, including sharing or interpretation, partly or wholly, requires explicit written permission.
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