When the United States slapped a universal 10% tariff on all imports earlier this year, followed by the threat of even steeper penalties for countries running trade surpluses with Washington, many across Asia thought they had seen this play before. The first act played out during Donald Trump’s first termas president with similar tariffs, retaliation against those not following the White House script, and trade diversion. But this time, the sequel has a faster pace and higher stakes.

Over the past decade the Indo-Pacific has weathered more than a few economic storms. What’s different now is the degree to which the region is being pushed - not just to hedge against the US - but to look inwards, and in many cases, towards Beijing. That pivot is happening quietly across Southeast Asia in particular but with increasing speed.

Sector-specific pain

Starting with the numbers, the US tariff hike didn’t fall evenly across the board. Some sectors were hit disproportionately, and they matter deeply to Asia’s manufacturing identity.

The automobile sector is a case in point. Japan and South Korea, both longstanding suppliers of vehicles and automotive parts to the US, have seen effective tariffs reach 25%. For Japan, the blow was particularly sharp, given its strong export dependency in this sector. Tokyo initially refused Washington’s proposal for a partial deal that excluded cars in what was a clear sign that Japan is done playing by half-measures to appease the latest occupant of the Oval Office. Instead, Japanese automakers are now looking to pivot production to ASEAN, particularly Thailand and Indonesia where the expertise and distribution networks are already established and crucially, where supply chains are already embedded. That regional demand is growing for Japanese cars is a bonus.

Then there’s steel, a politically sensitive commodity in the US like elsewhere, but a bread-and-butter export for countries like Japan, South Korea, Vietnam and India. Tariffs on Asian steel exports have shot up to 50%, with the US citing overcapacity and national security risks; the same language used to quash a Japanese deal to expand into the US. But let’s be honest: these are protectionist moves dressed in strategic language.

The solar industry has also taken a major hit. The US move to extend and expand duties on imported solar panels disproportionately affects Southeast Asian manufacturers, particularly in Vietnam, Malaysia, and Thailand. These countries had become global assembly hubs for US-bound solar components, much of it with Chinese-origin materials. With tariffs now as high as 45% on some products, and incredibly 3,521% on products from four countries in particular, firms are reconfiguring supply chains, but not necessarily in the direction Washington intended.

Re-sinification is the result with production shifting back to China in some cases, where domestic demand and subsidies offer more certainty.

The lack of export opportunities to the US has also caused some suppliers of solar products stateside to claim that prices will rise and this will in turn hurt total installation numbers causing a downturn in solar output across the country.

Meanwhile in Asia, more and more companies are looking to install solar at home which had led some to speculate that this will bring the green transition completion date forward in some areas.

ASEAN: Quiet cohesion, effective agility

One of the more underappreciated stories in this unfolding drama is the quiet strength of ASEAN. Often dismissed as a talk shop, the regional bloc has demonstrated unusual unity and diplomatic skill in recent months.

In April, ASEAN foreign ministers issued a rare joint statement denouncing the escalation of unilateral tariffs, calling instead for dialogue and a reaffirmation of multilateral rules. At the 46th ASEAN Summit in May, leaders went a step further by proposing direct trade talks with Washington while accelerating internal initiatives like the ASEAN Trade in Goods Agreement (ATIGA) upgrade and fast-tracking RCEP implementation. The latter is proving highly popular and may well draw Indian interest in the coming months and years.

What’s striking right now is how ASEAN is operating on two levels. Publicly, it champions inclusivity and dialogue. Privately, it’s hedging harder than ever. Vietnam is balancing US and Chinese interests, Malaysia is doubling down on high-tech exports, and Indonesia is positioning itself as a critical mineral hub through deals with China, Korea and Australia.

ASEAN’s real strength though lies in its flexibility. While Europe remains gridlocked by internal politics and the US seems caught in four year electoral cycles, ASEAN is busy consolidating trade frameworks that prioritise rules of origin, digital trade, and sustainable development. In this moment of global fragmentation, ASEAN’s layered architecture is proving to be an asset rather than a liability.

China: The reluctant anchor

This of course brings us to China. It would be too simplistic to say Asia is “turning to China” as a response of sorts to the Trump tariffs. Many governments remain wary of Beijing’s assertiveness, both economically and geopolitically – particularly Japan, Singapore and the Philippines. But the trade numbers speak for themselves.

China is offering what Washington no longer can: market stability, infrastructure capital, and trade. Its response to US tariffs has been both assertive and calculated.

Xi Jinping, although closer in reality to dictatorial status that truly elected president offers a calm and calculated alternative to the Twitter rants of President Trump.

Beyond retaliatory duties and WTO complaints, Beijing has accelerated trade and investment deals, particularly with the Global South and ASEAN. The conclusion of the ASEAN–China Free Trade Area 3.0 negotiations in May is emblematic of this push.

China’s message is clear: If the US won’t be a reliable buyer, we can be a reliable partner. Even India, traditionally cautious of China, has maintained parallel engagement, and while Delhi is negotiating with the US to lower its 26% tariff rate, it is simultaneously pushing Production-Linked Incentive (PLI) schemes and striking investment deals with firms that may choose to stay in China but diversify their assembly operations across South and Southeast Asia.

A moment of inflection

As such, what we are witnessing is more than a short-term adjustment. The US tariffs of 2025 may prove to be a catalyst for a longer-term economic rebalancing in Asia and one that serves to accelerate trends already in motion.

Because of this, rather than decoupling from China, many firms are deepening their multi-nodal supply chains: assembling in Vietnam, sourcing from India, designing in Japan, and shipping to wherever the tariffs are lowest.

To this end, RCEP, often misunderstood as a China-led initiative, is actually giving Asian economies the flexibility to adapt to this new norm through streamlined rules of origin and common standards.

Meanwhile, US credibility as a trade partner is being quietly reassessed. For much of Asia, Washington’s unpredictability of tariffs today, exemptions tomorrow, has introduced a level of commercial risk that is hard to price in. This has less to do with ideology and more to do with operational certainty.

Yet while the US is not being “replaced” as it remains a crucial market and a technology powerhouse, in trade, reliability matters. And right now, Asia is finding that reliability elsewhere - within itself, and to some extent, in China.