Bullying Southeast Asia with Tariff Threats

Admin's note: This is a corrected version of the article, which originally appeared on IPS on 29 July here.

By Jomo Kwame Sundaram and Nadia Malyanah Azman

KUALA LUMPUR, Malaysia, Jul 29 2025 (IPS) - US President Trump has successfully used tariff threats to achieve economic, political and even personal goals. These threats, reminiscent of colonialism, have secured submission and concessions.

Indonesian template?

After hearing the 2024 US election results, Indonesian President Prabowo Subianto respectfully stood up in his Jakarta office to call to congratulate the winner.

Trump bragged about his tariff offer to Indonesia in mid-July 2025, profusely flattering its president. After initially hesitating, former General Prabowo agreed to join BRICS despite Trump’s clear disapproval.

“I spoke to their really great president, very popular, very strong, smart. And we made the deal. We will pay no tariffs … they are giving us access to Indonesia … the other part is they are going to pay 19% and we are going to pay nothing.”

An Indian commentator noted, “Those words say it all. This deal is clearly one-sided, and it should bother the whole world.” Americans, not Indonesians, will pay tariffs on imports from Indonesia.

The US is Indonesia’s second-largest export market, importing apparel, palm oil, footwear, and cosmetics. Initially, Trump had threatened a 32% tariff on such imports.

This has been reduced to 19%, still almost four times more than last year! In 2024, Indonesian exports to the US were taxed at 5% on average. The Indonesian president has not complained but instead seemed relieved.

Indonesia will lose not only exports, but also growth and jobs. As Trump loves to brag, he added insult to injury as he could not resist reiterating: “They will pay 19%, and we will pay nothing.”

Guaranteed sales

Indonesia will also buy $15 billion of US oil and gas, $4.5 billion of farm produce, and 50 Boeing jets. But the 2019 Lion Air plane tragedy, which the US plane manufacturer quickly blamed on Indonesian pilots, is still alive in the national memory.

Boeing’s reputation worldwide has not recovered from the investigation into the Nairobi air crash involving the same plane model, which led to its grounding.

Indonesia is among the US’s top 25 trade partners. The deal secures American access to the Indonesian market, allowing US goods to be sold tariff-free.

Last year, Indonesia shipped $28 billion worth of goods to the US. Higher tariffs are now expected to cut Indonesian exports by a quarter, GDP growth by 0.3%, and many jobs!

Other Southeast Asian lessons?

The Philippines’ Marcos II government is the most pro-US in Southeast (SE) Asia, hosting 11 American military bases.

Yet it was the only one without a US tariff offer before Secretary of State Rubio’s SE Asian visit earlier this month. The Philippines has since been offered a new US trade deal with the same 19% tariff rate despite its loyalty to Washington.

Loyal long-term support for the US, 11 military bases and serving as an additional ‘unsinkable aircraft carrier’ just south of Taiwan did not secure a better trade deal for the other archipelagic nation in SE Asia.

Trump wants trade deals even more favourable to the US than existing ones. With deadlines passing, the US is expected to announce more trade deals.

The tariff threats have been more effective for Trump, thanks to decades of trade liberalisation forced on the Global South, undermining earlier import-substituting industrialisation and food security measures.

Washington has already revised earlier demands, sometimes not just once, but typically to the chagrin of US trade partners. Vietnam’s Communist Party leader was initially thought to have negotiated a better deal than other SE Asian governments.

Lessons for others?

Will the US offer to Indonesia become a template for others? Or even for countries of comparable significance in the world economy? Nobody knows Trump’s strategy, let alone how it may still change.

Perhaps it begins with the threat of high tariffs, shock and awe. Then, a less painful deal is offered, dressed up as a concession.

This may be worse than the status quo ante, but it still seems preferable to the original threat. Nations will also be required to buy US goods that may not be needed or offer the best value for money.

Thus, US offers to SE Asia are being studied worldwide for lessons on better negotiating with Washington. Meanwhile, the US refuses to negotiate collectively except with the European Union.

All over the world, policymakers will continue to debate Trump’s tariff war strategy after Monday’s agreement in Scotland, which included a 15% baseline tariff on most EU exports to the US.

The US-EU deal makes clear the West, including Europe, has never really been committed to a rules-based international order, including multilateral trade liberalisation.

As American buyers pay the tariffs, imported goods become more expensive. US trading partners will lose exports, related growth and jobs. This will mean less expansion, employment and exports worldwide, deepening stagnation.

Meanwhile, most SE Asian governments believe they have little choice but to continue negotiating with the US, which is driving them to others willing to engage them on more favourable, if not fairer, terms.

Related IPS Articles

·                   Trump Undresses Rival Trade Myths

·                   Trump Accord Sows Discord in US Empire

·                   Trump’s ‘Shock and Awe’ Tariffs

·                   Weaponizing Free Trade Agreements

·                   Trade, Currency War Weapons Double-Edged

·                   What’s different about Trump’s tariffs?

·                   Trump’s Trade War in Perspective

Original available here: Bullying Southeast Asia with Tariff Threats

Trump Tech Big Bro: Monopoly Is Best

By Jomo Kwame Sundaram

KUALA LUMPUR, Malaysia, Jul 15 2025 (IPS) - Trump’s billionaire cronies want more monopoly profits, not competition. With more policies crafted for them, wealth concentration is set to become greater than ever.

Neoliberalism?

There is no clear consensus on what neoliberal economics stands for now. Many who claim to be liberal economists have different, even contradictory views.

Some demand market competition and oppose monopolies and oligopolies. For others, property rights are crucial, typically strengthening monopoly rights.

Many avowed neoliberals deemphasise competition and hesitate to insist on antitrust action or opposition to abuses of market power.

Property rights confer monopoly or exclusive ownership rights to an asset, typically denying access to others except for payment. Many such rights are recent.

While UK Prime Minister from 1979, Margaret Thatcher triggered a worldwide neoliberal economic counter-revolution, especially in the Anglosphere.

With generally more limited public ownership, the US economy has long been more ‘private’, offering little scope for privatisation.

Tech Big Bro

PayPal and Palantir founder Peter Thiel is the most influential of the so-called ‘tech bros’ supporting re-elected US President Donald Trump.

Thiel was the two-term president’s biggest funder for his unexpectedly successful 2016 campaign. As former boss, funder and mentor, he is now Vice President JD Vance’s godfather.

In 2014, Thiel’s ‘Competition is for Losers’ established him as the lead apologist for lucrative rentier monopolies, especially those invoking intellectual property rights (IPRs).

Thiel noted ‘perfect competition’ is “both the ideal and the default state in Economics 101”. In textbooks, firms in competitive markets are presumed to be similar, selling the same goods.

Hence, they have no ‘market power’ and must sell at market-determined prices. When demand rises, firms invest to increase supply, reducing prices and profits.

In mainstream economics, there can be no economic rent under perfect competition. But prices can be raised more easily in cornered markets.

Buyers will then have no other source to buy from. Without competition, monopolies can maximise profits by controlling market supplies and prices.

Hence, profit maximisation involves capturing more rents in monopolistic conditions. To become richer, firms eschew competition in favour of monopoly.

Government role contradictory

Tech ‘Big Brother’ Thiel notes, “To an economist, every monopoly looks the same, whether it deviously eliminates rivals, secures a license from the state or innovates its way to the top.”

The state’s role is contradictory as government “works hard to create monopolies (by granting patents to new inventions)” while enforcing antitrust law to undermine them.

Thiel claims to be uninterested in “illegal bullies or government favorites”, but surely knows governments create and sustain the monopolies he so cherishes.

He notes that “Americans mythologize competition and credit it with saving us from socialist bread lines”. But for him, “capitalism and competition are opposites”.

“Capitalism is premised on the accumulation of capital, but under perfect competition, all profits get competed away.”

The advocate of monopoly claims monopolists are “incentivized to bend the truth” and to “lie to protect themselves … [from] … being audited, scrutinized and attacked”.

Thiel unabashedly acknowledges that rentiers have every incentive to protect, disguise and “conceal their monopoly” and incomes.

Instead, the billionaire rentier wants monopoly powers and profits to grow faster without being taxed or having to share.

Monopoly best for capitalism?

Thiel acknowledges that monopolists accumulate rents in a static world.

But he insists they “invent new and better things … Creative monopolies aren’t just good for the rest of society; they’re powerful engines for making it better.”

He insists a monopoly is “so good at what it does that no other firm can offer a close substitute”. For him, “the history of progress is a history of better monopoly businesses replacing incumbents”.

The tech billionaire insists decades of monopoly profits provide a powerful incentive to innovate. Thus, monopolies continue to drive progress.

He denounces mainstream neoliberal economists as “obsessed with competition as an ideal state? It is a relic of history … Their theories describe … perfect competition because that is what’s easy to model.”

“In the real world outside economic theory, every business is successful exactly to the extent that it does something others cannot … Monopoly is the condition of every successful business.”

Monopolies thrive under Trump

Unsurprisingly, many supposed neoliberals today stress property rights while ignoring liberal economics’ claim to promote competition.

Competition is dismissed as 19th-century economic liberalism. Meanwhile, contemporary monopoly capitalism accelerates wealth and income concentration.

But Thiel exaggerates monopolies’ contribution to human progress, capitalist dynamism and innovation, while understating their considerable harms.

With the tech bros increasingly supporting the president, Trump 2.0 promises to further enrich rentiers, especially those of their ilk.

His selective Liberation Day tariffs and other policies, especially his new ‘big beautiful bill’, will significantly increase, not reduce, US government debt while deepening American fiscal inequities.

As US tariffs, wars and other distractions preoccupy the world, unwitting MAGA loyalists remain loyal to Trump and his billionaire rentiers’ ‘counter-revolution’.

Trump Undresses Rival Trade Myths

By Jomo Kwame Sundaram

KUALA LUMPUR, Malaysia, Jul 1 2025 (IPS) - President Trump’s tariffs have exposed neoliberal trade ideology and undermined corporate lobbying in the name of free trade. But his rhetoric has also exposed the fallacies of his own economic strategy.

Ideological shift?

To be sure, there has never really been an era of truly free trade in centuries. International trade has typically been partially and unevenly free and, more often than not, regulated.

Most supposed neoliberals have never consistently promoted free trade regardless of circumstances, but only when it seemed to serve their national and corporate interests well, e.g., via unequal exchange.

Trump’s tariffs claim to revive manufacturing jobs, which the US has lost to cheaper imports. But employment lost to automation will be almost impossible to regain. Worse, his tariffs will regressively tax US consumers.

Free trade does not help selective investment and technology promotion. Biden sought to promote new industries, often at high cost, with his Inflation Reduction Act, CHIPS and Science Act, and other industrial policy measures.

However, these have been undermined by Trump’s insistence on repudiating earlier administrations’ initiatives and cutting non-military government spending even when they serve his ostensible strategic ends.

With tariffs, his main policy weapon in his bullying transactional approach to exclusively bilateral bargaining, Trump’s reindustrialisation ambitions may only partially succeed.

His refusal to bargain collectively enhances the US advantage in such asymmetric negotiations. Others anxious to curry favour have already conceded excessive concessions, even exceeding Washington’s expectations!

The fates of the worst-off thus only worsen, generating widespread resentment and antagonism. But few tangible gains are likely from the weakest, except for mineral concessions.

Bretton Woods over

In the 1960s, French President Charles de Gaulle complained the 1944 Bretton Woods agreement (BWA) had given the US an ‘exorbitant privilege’. The price of an ounce of gold was set at $35.

This peg allowed the US to borrow cheaply from those who needed US dollars. Selling US Treasury bonds to the world thus closed both its current account (trade) and fiscal deficits.

Pressure on the greenback rose over the 1960s, especially with sharply rising Vietnam War spending. France then led others to demand gold instead of holding dollars.

In August 1971, President Nixon unilaterally repudiated the US’s BW obligation to redeem gold at the promised dollar price. But this did not end the US’s exorbitant privilege.

The US allowed the Saudi-led OPEC to raise the oil price if payments were in dollars. The petroleum price hike also set back its emerging European and Japanese industrial rivals.

Since 1971, US dollar acceptance has relied on the belief that it will continue as the international reserve currency.

Thus, exorbitant privilege has become a matter of faith.

Ironically, while Eurodollars had undermined the BWA, petrodollars saved the dollar’s reserve currency status and exorbitant privilege, with oil becoming the ‘new gold’.

Neoliberal trade myths

Half a century of neoliberal trade rhetoric has claimed ‘trade liberalisation’ benefits all, e.g., free trade lifts all boats, its leading myth.

Although this has not even been true of the Global North, it has not deterred economic policy pundits from advocating free trade agreements with the US as the solution to Trump’s tariffs!

But even trade mahaguru Jagdish Bhagwati insists that only an equitable multilateral trade agreement can lift all boats. He denounced bilateral, regional, and other plurilateral agreements as termites detracting from it.

The most popular computable general equilibrium (CGE)-based trade simulations assume unchanging full employment, trade, and fiscal balances.

Such estimates of free trade gains are misleading, as their methodologies typically ignore trade liberalisation’s significant problematic effects, such as output and job losses and trade and fiscal imbalances.

Unsurprisingly, cost-benefit studies by the World Bank and others projected net losses for most of the Global South from the 2001 Doha Round of World Trade Organization (WTO) negotiations.

False narratives

Trump’s ‘shock and awe’ Liberation Day announcement brought much of the world to heel in one fell swoop. As the president bragged, scores of governments rushed to “kiss his arse”.

However, Trump’s priorities, especially his proposed tax cuts, the changing world political economy, and the diverse nature of US interests, will erode public support for his agenda.

Trump’s policy narrative is unashamedly incoherent and self-contradictory. The Financial Times noted, “The US president wants both to protect domestic manufacturing and hold the dollar as the reserve currency.”

Self-servingly dismissive of received conventional wisdom, his jingoistic rhetoric and self-congratulatory style successfully target his faithful with cherry-picked evidence and half-truths.

Even if Trump’s tariffs fail on his own terms, he can still claim to have tried to make America great again. He will continue to blame opposition within and without to secure his jingoist MAGA base.

Related IPS Articles:

• Trump Accord Sows Discord in US Empire

• Trump’s ‘Shock and Awe’ Tariffs

• New Geopolitics Worse for Global South

• The Global South in the New Cold War

• Weaponizing Free Trade Agreements

• TNCs Reviving TPP Frankenstein

• Trade, Currency War Weapons Double-Edged

• What’s different about Trump’s tariffs?

• Trump’s Trade War in Perspective

Available online here: Trump Undresses Rival Trade Myths