The United States has entered a new phase of economic protectionism under its “America First” trade policy. Over the past two months, new tariffs and trade restrictions have been placed on many countries, including both rivals and allies. The US government argues that these measures are necessary to protect American industries, but they have caused tension in global trade relationships.
Countries that have traditionally been strong US partners, such as Canada and Europe, have found themselves on the receiving end of these tariffs. At the same time, Asian and Gulf countries, which rely heavily on exports, are being forced to rethink their trade strategies. Malaysia, for example, has warned that US tariffs on its key exports, like semiconductors, could reduce trade growth by half in 2025. Other Southeast Asian countries, such as Vietnam and Indonesia, also worry about the economic impact of US protectionist policies.
As a result, these nations are seeking new economic partners to counterbalance the losses caused by US tariffs. With China actively looking to expand its influence, many Asian and Gulf countries are strengthening their trade ties with Beijing.
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ASEAN and the Gulf Look for New Partners
The Association of Southeast Asian Nations (ASEAN) is a group of ten countries that depend heavily on exports. The recent US tariffs have put these nations in a tough spot, forcing them to seek out alternative markets. At the same time, the Gulf Cooperation Council (GCC), which includes oil-rich nations like Saudi Arabia and the UAE, is also looking for reliable trade partners.
With the US adopting a more confrontational trade stance, ASEAN and the GCC are turning to China. Malaysia, which will chair ASEAN in 2025, has invited China to a major economic summit in May. The goal of the meeting is to strengthen trade between ASEAN and the Gulf, while also deepening ties with China.
Several Gulf nations have already started investing in Southeast Asia. For example, Saudi Arabia’s Public Investment Fund recently invested $100 million in Malaysia’s AirAsia to help boost tourism under Saudi Arabia’s Vision 2030 plan. Indonesia has also been in talks with Saudi officials to increase trade, taking advantage of an existing free trade agreement with the Gulf region.
Meanwhile, China has positioned itself as a strong economic partner for both ASEAN and the GCC. Despite territorial disputes with some Southeast Asian nations, China remains ASEAN’s biggest trading partner. In 2023, trade between China and ASEAN reached $911 billion. China is also working with Gulf countries to develop new industries, such as artificial intelligence and renewable energy.
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China Gains from US Trade Wars
As US relations with China worsen, Beijing has been quick to present itself as a stable and reliable trade partner. While the US and Europe accuse China of taking advantage of global trade rules, Beijing insists that it supports open markets. A Chinese foreign ministry spokesperson recently stated that “tariff wars and trade wars have no winners,” and called for the US and EU to respect global trade rules.
For many Asian and Gulf countries, these words are appealing. The US has shown it is willing to use economic pressure on its allies, so nations that once relied on Washington are now diversifying their trade relationships. Instead of depending on the US, they are focusing on regional partnerships and expanding their economic links with China.
This shift is already evident. Vietnam and the UAE recently upgraded their diplomatic ties, while Indonesia is strengthening its exports to Saudi Arabia. China, for its part, is deepening cooperation with both ASEAN and the GCC by providing infrastructure investments, technological expertise, and market access.
With the US focusing on tariffs and economic nationalism, many countries are looking elsewhere for stability. For now, China appears to be the biggest beneficiary of these changing trade dynamics, as Asian and Gulf nations seek new partnerships to secure their economic future.
