The United States solidified trade agreements with four Southeast Asian nations—Malaysia, Cambodia, Thailand, and Vietnam—during a summit in Kuala Lumpur. These deals aim to address trade imbalances and diversify supply chains, particularly in light of China's increasing restrictions on rare earth exports.
U.S. President Donald Trump signed reciprocal trade agreements with Malaysia and Cambodia, along with a framework pact with Thailand to tackle tariff and non-tariff barriers. Under these agreements, the U.S. will retain a 19% tariff on exports from these nations, while some goods may see this levy reduced to zero. Vietnam, facing a 20% tariff on its exports to the U.S., has also committed to increasing its purchases of American products in an effort to mitigate a significant trade surplus of $123 billion it recorded last year.
Additionally, the U.S. and Malaysia signed agreements focused on cooperation in critical minerals supply chains. China, the leading global processor of rare earths, has implemented stricter export controls, prompting countries to seek alternative sources. Malaysia, which holds around 16.1 million tonnes of rare earth deposits, has agreed not to impose bans or quotas on exports of these minerals to the U.S., although it has previously restricted the export of raw materials to develop its domestic processing capabilities.
The agreements encompass various sectors, including digital trade, services, and investments, alongside commitments to enhance labor rights and environmental protections. Thailand has pledged to eliminate tariffs on approximately 99% of goods and to ease foreign ownership restrictions in telecommunications. Notably, the countries are also set to engage in significant commercial transactions, including the sale of U.S. agricultural products and aircraft.