ASEAN must unite economically to counter US tariffs, says Malaysian SME leader

William Ng urges ASEAN countries to form a stronger single market amid trade challenges.

A police official stands among national flags during the 44th and 45th Association of Southeast Asian Nations (ASEAN) Summits in Vientiane on October 9, 2024. Photo by Tang Chhin Sothy/AFP

By Anna Fadiah and Hayu Andini

ASEAN must unite economically to counter US tariffs, warned William Ng, president of the Malaysian Small and Medium Enterprises (SME) Association. As the United States increases tariffs on a wide range of global imports, Southeast Asia’s regional bloc faces mounting pressure to shield its economies, industries, and small businesses from the ripple effects of this major trade disruption.

Ng made his remarks in response to Washington’s latest round of protectionist trade policies, which many fear could hinder exports, increase operational costs, and trigger regional economic instability. The call for ASEAN unity is not just a diplomatic gesture—it is a pressing economic strategy.

“The imposition of tariffs by the United States will significantly impact Malaysia’s exports, particularly in sectors like electrical and electronic products, palm oil derivatives, rubber-based goods, and textiles,” Ng told China’s Xinhua News Agency. These industries represent some of Malaysia’s largest trade volumes with the US and are heavily populated by SMEs.

SMEs at the frontline of impact

Ng emphasized that the consequences of US tariffs are likely to be most deeply felt by SMEs, which form the backbone of the Malaysian economy. “Higher tariffs will increase costs for both importers and exporters, reduce our competitiveness—not only in the US market but also in other markets globally—and potentially affect jobs and investment among SMEs,” he said.

The rising costs from these tariffs could hit manufacturing and export-oriented firms particularly hard. Reduced competitiveness might force SMEs to slash prices, take on additional expenses, or cut jobs just to survive. The broader implications of such moves may slow economic momentum across Southeast Asia, unless a unified regional response is put in place.

To mitigate the risks, Ng advised both governments and businesses to diversify their operations. “Businesses should learn to diversify their sources of raw materials and customers. This will help ensure their supply chain risks are mitigated. It’s a good practice, even outside the context of tariffs,” he said.

Ng’s remarks point to a larger trend of strategic adaptation among ASEAN economies. By reducing over-reliance on single countries or suppliers, regional businesses can better withstand trade shocks and market volatility. More importantly, such diversification can serve as a stepping stone toward long-term sustainability.

The role of ASEAN integration

More than just a short-term strategy, Ng sees ASEAN economic integration as the ultimate solution. “This is a wake-up call for ASEAN,” he said. “Malaysia, as ASEAN chair this year, should push for the resumption of negotiations on the ASEAN single market.”

Such a market, he argued, would help establish a customs union—reducing or eliminating non-tariff barriers within the region and enhancing intra-regional trade. In doing so, ASEAN member countries could offer each other economic insulation from external shocks like US-imposed tariffs.

“Intra-regional cohesion is critical, given the relatively small size of each market. Collectively, ASEAN is a significant economic force. But separately, each country is far more vulnerable,” Ng noted.

A unified ASEAN economic bloc would be better positioned to negotiate trade terms with global powers, defend its market interests, and respond decisively to new challenges.

A test of leadership for Malaysia

Malaysia’s role as this year’s ASEAN chair is pivotal. Ng’s remarks come at a time when the region’s political leadership is being tested. The push for a stronger ASEAN economic identity aligns with other regional efforts, such as the Regional Comprehensive Economic Partnership (RCEP), which aims to deepen trade ties across Asia-Pacific.

As chair, Malaysia can take the lead in reviving stalled talks and guiding member states toward greater integration. The benefits of a customs union are many—from streamlined customs processes to unified standards, making it easier for businesses to operate across borders.

Ng acknowledged that the short-term outlook may be filled with uncertainty. “We can expect a brief period of instability as economies across the region readjust their strategies,” he said. “Domestically, the impact will range from minimal to moderate, with US imports likely to become more expensive in the medium term.”

Still, ASEAN’s economic resilience depends on its ability to act quickly and collectively. With global supply chains already strained due to past trade wars and the lingering effects of the COVID-19 pandemic, this new wave of tariffs could further test the limits of regional cooperation.

Time for a strategic pivot

While the situation presents many challenges, it also offers an opportunity for ASEAN to pivot strategically. For decades, the region has spoken about closer integration, yet progress has been slow and uneven. The current trade disruption caused by the US could finally provide the push needed for ASEAN to get serious about forming a real economic bloc.

Ng’s message is clear: instead of reacting individually and defensively, ASEAN must think bigger. By uniting economically, the region can turn vulnerability into strength.

ASEAN has the potential to become a formidable economic union, rivaling the influence of much larger economies. But doing so will require political will, coordinated policy-making, and a shared sense of urgency.

For now, businesses across Malaysia and other ASEAN countries will continue to brace for the fallout from US tariffs. But if leaders take Ng’s advice to heart, this moment of challenge could mark the beginning of a stronger, more integrated Southeast Asia.

As ASEAN must unite economically to counter US tariffs, the bloc faces both danger and opportunity. The key lies in swift regional cooperation, a renewed commitment to integration, and smarter business strategies. Whether the region rises to the occasion will shape its economic destiny for years to come.