{"id":2107,"date":"2025-05-16T02:30:04","date_gmt":"2025-05-16T02:30:04","guid":{"rendered":"http:\/\/www.fresnoforeclosure.com\/?p=2107"},"modified":"2025-05-16T16:51:31","modified_gmt":"2025-05-16T16:51:31","slug":"navigating-the-impact-of-trumps-new-tariffs-on-southeast-asia-a-venture-capital-perspective","status":"publish","type":"post","link":"http:\/\/www.fresnoforeclosure.com\/index.php\/2025\/05\/16\/navigating-the-impact-of-trumps-new-tariffs-on-southeast-asia-a-venture-capital-perspective\/","title":{"rendered":"Navigating the impact of Trump\u2019s new tariffs on Southeast Asia: A venture capital perspective"},"content":{"rendered":"

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The recent announcement of steep tariffs by the Trump administration has sent shockwaves through Southeast Asia, a region heavily reliant on exports and deeply integrated into global supply chains. With levies ranging from 10 per cent to as high as 49 per cent on goods exported to the United States, the economic implications for ASEAN countries are profound.<\/p>\n

As a venture capital firm with a portfolio of high-growth startups in the region, TNB Aura sees these developments as both a challenge and an opportunity to rethink strategies, adapt to shifting dynamics, and position for long-term resilience.<\/p>\n

A blow to export-driven growth<\/p>\n

Southeast Asia\u2019s economic engine has long been fuelled by exports, particularly in the tech and manufacturing sectors. Countries like Vietnam and Thailand have emerged as key players in global trade, with Vietnam exporting US$48.5 billion worth of tech goods to the US in 2024 alone. However, with US$22.3 billion of those exports now subject to tariffs, the region\u2019s competitive edge is under threat.<\/p>\n

For startups in export-driven sectors, especially those producing hardware or tech components, the immediate impact is clear: higher costs, reduced competitiveness, and therefore, a decline in potential revenue. The ripple effects could extend beyond individual companies to entire supply chains, creating operational bottlenecks and slowing regional economic growth.<\/p>\n

The China-plus-one strategy on pause?<\/p>\n

Over the past decade, Southeast Asia has benefited from the \u201cChina-plus-one\u201d strategy, as multinational corporations sought to diversify their supply chains away from China amidst rising US-China trade tensions. Countries like Vietnam and Malaysia became attractive alternatives for manufacturing and investment.<\/p>\n

However, Trump\u2019s latest tariffs have narrowed the gap between exporting from China versus Southeast Asia, Vietnamese exports now face reciprocal duties of up to 46 per cent, compared to over 65 per cent (or seemingly higher) for Chinese goods.<\/p>\n

This shift could deter future foreign direct investment (FDI) into ASEAN markets, which has been a key driver of growth for many startups in the region. For venture-backed companies that rely on partnerships with multinational corporations or foreign investors, this development raises questions about how best to position themselves in an increasingly protectionist global trade environment.<\/p>\n

Also Read:\u00a0The silver lining of Trump’s tariffs: A boom for secondhand fashion<\/a><\/strong><\/p>\n

To state the obvious, this situation remains highly fluid, with countries like Vietnam exploring potential solutions to mitigate the impact. For instance,\u00a0Vietnam has proposed reducing its tariffs on US products to 0 per cent<\/a>, in exchange for the US offering similar tariff reductions on Vietnamese goods.<\/p>\n

Such moves reflect the ongoing negotiations and shifting dynamics within global trade, highlighting the fluid nature of this environment. These potential changes could offer new opportunities for startups, especially those positioned to capitalise on evolving trade relationships and tariff adjustments.<\/p>\n

Economic headwinds and growth downgrades<\/p>\n

The broader economic impact of these tariffs cannot be overstated. Research firms have already downgraded growth forecasts across Southeast Asia: Vietnam\u2019s projected growth rate for 2025 has been revised down from 6.2 per cent to five per cent, while Thailand\u2019s has dropped from 2.8 per cent to two per cent.<\/p>\n

Notably, these reductions are less than those projected for most developed markets. Slower economic growth will likely dampen consumer spending and investment activity, creating challenges for startups in sectors like e-commerce, fintech, and logistics that depend on robust domestic markets.<\/p>\n

At a high level, we are witnessing a cascade of economic impacts stemming from the recent tariff shifts, which are not only affecting companies directly engaged in exports but also creating ripple effects throughout adjacent sectors and signalling longer-term changes in how businesses will navigate this evolving economic landscape. We have been using an \u2018orders of impact\u2019 framework to think through these implications.<\/p>\n

First-order effects are already being felt by companies that sell directly into the US market. These businesses face immediate disruptions, reduced demand, thinner margins, and increased scrutiny over cost structures, as tariffs drive up prices and dampen competitiveness. Export-oriented startups, particularly those in consumer electronics, apparel, and industrial components, are under pressure to either absorb higher costs or shift production and distribution strategies to maintain access to their most valuable markets.<\/p>\n

Second-order effects from Trump\u2019s tariffs will further alter the structure of regional supply chains, influencing both upstream and downstream segments. Upstream providers, i.e., those that furnish raw materials, components, or critical services to exporters, logistics firms, and international marketplaces, are confronting indirect disruptions as the shrinking demand from tariff-hit companies begin to reduce their order volumes.<\/p>\n

Meanwhile, downstream firms, which depend on these suppliers for the production of finished goods, experience pressure when their upstream partners encounter declining US-bound sales or are forced to absorb increased costs. While some downstream players might find new opportunities through alternative supply routes, many are grappling with greater volatility and a more fragmented trade environment that complicates their cost structures and strategic planning.<\/p>\n

Third-order effects will emerge over the medium to long term. As economic momentum slows, consumer confidence weakens, and capital becomes more cautious, startups operating primarily in domestic markets could face tighter wallets and lengthening sales cycles.<\/p>\n

Structural shifts in investor sentiment, toward capital efficiency, clear unit economics, and sustainable growth, will shape how companies are funded and scaled in this new environment. For founders and VCs alike, this period demands strategic clarity, sharper execution, and a long-term orientation toward resilience.<\/p>\n

Opportunities amidst adversity<\/p>\n

While the new tariffs undoubtedly present challenges, they also create opportunities for innovation and adaptation.<\/p>\n