KUALA LUMPUR – A new wave of economic disruption is sweeping across Southeast Asia, driven by an influx of cheap Chinese goods flooding regional markets. From wardrobes in Johor to garments in Jakarta, Chinese manufacturers—displaced by renewed US tariffs—are saturating ASEAN economies with aggressively priced products, leaving local industries struggling to stay afloat.

In north-western Johor, Malaysia’s largest hub for furniture production, a tense atmosphere hangs over the bustling factories. Many manufacturers are scrambling to fulfill orders destined for the United States before the next round of steep “reciprocal tariffs,” reintroduced under former President Donald Trump’s latest trade strategy, come into effect. While some orders have already been canceled, others are being rushed to ship before the July deadline.

Unable to compete with China’s scale and pricing

New data and insights reported by regional and international media reveal how the resurgence of Trump-era tariffs—first introduced in 2019 and now revived—has once again pushed Chinese exporters to redirect unsold inventory to alternative markets like Malaysia, Indonesia, and Vietnam. This pivot is severely undercutting local producers who are unable to compete with China’s scale and pricing.

In Malaysia alone, wooden furniture exports reached RM9.89 billion (S$2.99 billion) in 2024, with nearly half of that volume previously destined for the US. With that key market increasingly difficult to access, local manufacturers now face dual pressures: declining US demand and aggressive Chinese competition at home.

The pattern is repeating across ASEAN. In Indonesia, textile producers face growing challenges as Chinese apparel floods the market. In Vietnam, electronics and machinery sectors are being squeezed by low-cost alternatives made in China.

Policymakers across the region are under pressure

Economists warn that the situation could worsen if a second Trump administration continues with its hardline trade approach. At the same time, ASEAN countries face the additional burden of managing retaliatory tariffs imposed by the US on their own exports.

As the geopolitical trade war between Washington and Beijing reshapes global supply chains, Southeast Asia finds itself caught in the middle. Policymakers across the region are now under pressure to craft strategies that protect domestic industries while staying competitive on the international stage.

Businesses must adapt quickly

With the return of aggressive tariff policies and a flood of redirected Chinese exports, Southeast Asia’s economic resilience faces a serious test. For now, businesses must adapt quickly—or risk being swept aside in the intensifying battle for market survival.