July 22, 2025

In a strategic pivot aimed at reinforcing ties with Southeast Asia and cushioning the economic shock of looming U.S. tariffs, the Biden administration has finalized three major trade agreements in recent days. The deals with Indonesia, the Philippines, and Vietnam signal a shift toward partnership over protectionism, but significant challenges remain.

Indonesia announced a sweeping tariff accord in which it will eliminate duties on more than 99% of U.S. goods, while Washington has slashed proposed levies from 32% to 19%. The agreement also includes ambitious energy and aviation cooperation, including a Boeing purchase, and paves the way for an $8 billion modular refinery tie-up. Indonesia’s stock market responded positively, rising nearly 0.7%.

Just days earlier, the Philippines and the U.S. announced they were “very close” to finalizing a trade agreement, culminating in about 19% tariffs on Philippine exports, while U.S. goods entered the Philippines duty-free. The deal emerged from President Marcos Jr.’s first in-person White House trip since Trump took office, highlighting Manila’s strategic balancing act amid rising tensions with China.

These bilateral deals follow a U.S.–Vietnam trade arrangement reached in early July, where tariffs were set at a new 20%, significantly below the initially threatened 46%.

Though markets have stayed calm, reflecting some “blasé” investor sentiment, Southeast Asian economies remain sensitive. ASEAN nations are effectively forced to respond following Trump’s tariff threats to several member countries over transshipment concerns. Australia, Cambodia, Thailand, and others are scrambling to negotiate favorable terms before the August 1 deadline.

Taken together, these deals demonstrate that trade diplomacy can yield significant economic relief, even in a tense U.S. policy environment. But the handshake deals only go so far. Thailand, for instance, is negotiating aggressively to match Vietnam’s tariff deal, balancing U.S. demands with its deep ties to China.

For Southeast Asian exporters, these frameworks offer temporary protection, but only if implemented swiftly and holistically. With the August 1 tariff deadline looming, nations must act fast or face steep economic penalties. The big question now is whether these bilateral deals mark a long-term recalibration of U.S.–ASEAN trade relations, or remain short-term fixes in a fracturing geopolitical landscape.

Indonesia and the United States sign trade deal (Reuters). (2025, July 22). Indonesia to cut tariffs, non-tariff barriers in US trade deal. https://www.reuters.com/world/asia-pacific/indonesia-cut-tariffs-non-tariff-barriers-us-trade-deal-2025-07-22/

Trade pact with Indonesia includes major U.S. energy and aviation deals (Reuters). (2025, July 22). Indonesia plans $8 bln refineries contract with US firm amid tariffs deal, sources say. https://www.reuters.com/business/energy/indonesia-plans-8-bln-refineries-contract-with-us-firm-amid-tariffs-deal-sources-2025-07-22/

U.S.–Philippines trade agreement nears completion (Reuters). (2025, July 22). Trump says US, Philippines ‘very close’ to finalizing trade deal. https://www.reuters.com/world/china/trump-says-us-philippines-very-close-finalizing-trade-deal-2025-07-22/

Trump, Marcos agreement including tariff and military pledges (AP News). (2025, July 22). Trump says Philippines will pay 19% tariff while U.S. pays no tariffs under deal with leader Marcos. https://www.apnews.com/article/3138d1d7f8368c022ab9242bebb4a2e2

Vietnam deal reduces U.S. tariffs to 20% (Reuters). (2025, July 3). Trump says he will put 20% tariff on Vietnam’s exports. https://www.reuters.com/world/asia-pacific/trump-says-he-has-struck-trade-deal-with-vietnam-2025-07-02/

U.S. targets transshipment, ASEAN responds (DW). (2025, July 17). Trump tariffs: SE Asia worried as US targets transshipments. https://p.dw.com/p/4xbHB

Southeast Asia ramps up trade negotiations (Reuters). (2025, July 8). Southeast Asia spooked by Trump tariffs, presses for more talks. https://www.reuters.com/world/asia-pacific/southeast-asia-spooked-by-trump-tariffs-presses-more-talks-2025-07-08

Thailand’s last-minute push for tariff deal (Thai Examiner). (2025, July 23). Thailand makes last‑ditch effort to get a winning tariff deal with the U.S. https://www.thaiexaminer.com/thai-news-foreigners/2025/07/23/thailand-makes-last-ditch-effort-to-get-a-winning-tariff-deal-with-the-u-s-final-counter-offer-to-go-in/