Key Takeaways
President Trump signed trade deals or framework agreements with four Southeast Asian countries, agreeing to 19% tariffs with Malaysia, Thailand, and Cambodia, and 20% with Vietnam.
The agreements diversify critical mineral supply chains, particularly for rare earths, in which China has a stronghold.
Trump also signed a separate framework agreement with Japan on critical minerals and rare earth metals, having already signed a trade deal this summer with a 15% tariff rate.
The United States and several Southeast Asian nations have finalized a series of trade agreements or a framework of deals. These agreements, signed during President Trump’s visit to Asia, focus on trade and critical minerals. The deals address trade imbalances and secure supply chains amid growing concerns over China’s export policies, particularly with rare earth minerals. The agreements with Malaysia, Thailand, and Cambodia maintain a 19% tariff rate on most exports from the three Southeast Asian countries, while the agreement with Vietnam maintains a 20% tariff.
According to Reuters, China — the world’s leading producer and processor of rare earth elements — has tightened export restrictions on its refining technologies, prompting global manufacturers to seek alternative sources of critical minerals essential for semiconductor chips, electric vehicles, and defense applications. Recently, China held talks with Malaysia on rare earths processing, with Malaysian sovereign wealth fund Khazanah Nasional expected to partner with a Chinese firm to build a refinery in Malaysia.
Malaysia
Besides a 19% tariff, President Trump signed a deal with Malaysia to diversify critical mineral supply chains. Via Reuters, Malaysia agreed to refrain from banning or imposing quotas on exports to the United States of critical minerals or rare earth elements and ensured that no restrictions are imposed on the sale of rare earth magnets to U.S. companies. However, the agreement did not specify whether Malaysia’s pledge applied to raw or processed rare earths.
Under the deal, Malaysia also agreed to provide preferential market access for industrial goods and agricultural exports from the United States, including chemicals, machinery, and passenger vehicles, as well as products such as dairy and poultry. Malaysia also agreed to streamline requirements for U.S. products such as cosmetics and pharmaceuticals. It will invest $70 billion in the United States over the next 10 years.
As reported by Reuters, Malaysia has an estimated 16.1 million metric tons of rare earths. It has banned companies from exporting raw rare earths to prevent the loss of resources as it develops its downstream sector. The United States receives 13% of its rare earths imports from Malaysia.
The United States currently runs its 14th-largest goods trade deficit with Malaysia, which totaled $24.9 billion in 2024.
Thailand
The United States and Thailand signed a separate commitment to facilitate the development of critical mineral exports to the United States. Besides agreeing to a 19% tariff, Thailand agreed to eliminate tariff barriers on approximately 99% of American goods, covering a full range of U.S. industrial, food, and agricultural products.
According to the Office of the U.S. Trade Representative, the agreement sets forth commercial deals between U.S. and Thai companies in the agriculture, energy, and aviation sectors, including: (1) the purchase of agriculture products, including feed corn, soybean meal, and dried distiller grains, with an estimated value of $2.6 billion per year; (2) purchases of energy products, including liquefied natural gas, crude oil, and ethane, with an estimated value of $5.4 billion per year, and (3) the procurement of 80 U.S. aircraft, totaling $18.8 billion.
The United States currently runs its 11th-largest goods trade deficit with Thailand, which totaled $45 billion in 2024.
Cambodia
Besides the 19% tariff, the White House announced that Cambodia agreed to allow and facilitate U.S. investment in its territory to explore, mine, extract, refine, process, transport, distribute, and export critical minerals and energy resources and to supply power, telecommunication, transportation, and infrastructure services on terms no less favorable than it accords to its own investors in like circumstances.
The United States currently runs its 18th-largest goods deficit with Cambodia, which totaled $12.3 billion in 2024.
Vietnam
Tariffs on Vietnam will remain at 20% with some goods eligible for duty-free access. According to the joint statement, the United States and Vietnam will take note of recent commercial deals between U.S. and Vietnamese companies in the areas of agriculture, aerospace, and energy. Vietnamese companies have signed 20 memorandums of understanding with U.S. companies to purchase U.S. agricultural commodities, with a total estimated value of over $2.9 billion. Vietnam Airlines has agreed to purchase 50 aircraft from Boeing, which is worth over $8 billion.
The United States currently runs a trade deficit with Vietnam, which totaled $121.8 billion in 2024. According to the U.S. Geological Survey, Vietnam has 3.5 million tons of rare earth reserves.
Japan
Trump and Sanae Takaichi, the new prime minister of Japan, signed two documents: one promising to cooperate on expanding their supply chains for rare earth metals and another that pertained to the initial framework deal the Trump administration announced in July. The deal continues 15% tariffs on imported Japanese goods and Japan’s pledge to invest $550 billion in U.S. industry and to open its market to American rice, cars, and defense equipment.
As reported by CBS News, Japan is the United States’ fifth-largest trading partner. It bought $79.7 billion worth of American goods last year, and the U.S. imported $148.2 billion worth of Japanese goods. More than one-third of U.S. imports from Japan last year — or $52.3 billion — were cars and car parts.
Analysis
Although the continuation of tariffs by the Trump administration is concerning, even at a lower level, it’s a positive sign that the administration is looking to facilitate trade relations with friendly Southeast Asian countries. These relationships could prove critical, as China’s rare-earth export controls were only suspended for one year, putting the U.S. in a potentially vulnerable position. It would be better if trade relationships between the U.S. and these countries were determined by the economic conditions, but it’s fair to say that trade deals are superior to animosity.
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