The US–China Trade Board’s First Tariff Lists Mostly Leave Southeast Asia Alone

On 27 September, the US Trade Representative announced that the new US–China Board of Trade had recommended lower tariffs on about US$30 billion of “non-sensitive” goods from each country. The White House published both lists that day. The American list covers 77 product lines, including tableware, bed and table linen, small kitchen appliances, microwave ovens, Christmas-tree lamps, infant seats, toys, sports balls and fish hooks. China’s commerce ministry said that, for more than 90% of the listed products, the two countries would remove “all additional tariffs imposed on each other” and return to normal most-favoured-nation rates. The timing and final rates will depend on each country’s legal process.

This looks like a modest agreement between Washington and Beijing. The goods are worth about US$60 billion in total, compared with two-way trade of US$495 billion last year. But the details also matter to Southeast Asia, which is now a major trading partner of both countries.

US Trade Representative Jamieson Greer described the Chinese products as “household goods, toys, and other products that the United States generally does not import from other countries.” That is broadly what the list contains. It largely avoids the products whose manufacturing shifted to Southeast Asia after 2018. General furniture is absent: Vietnam now supplies 42% of US furniture imports, worth US$9.5 billion last year, while China supplies 16%. Laptops, monitors and game consoles are also missing. China’s share of US imports in these categories has fallen by more than 70 percentage points since 2018, while Vietnam has become an important supplier. Footwear, where Indonesia, Cambodia and Thailand have gained ground, is missing too. The list is mostly a catalogue of Chinese household goods. So far, the products that moved most decisively to Southeast Asia have been left alone. The question is whether later reviews keep it that way.

Where it does overlap with Southeast Asian production, the result is less comfortable. Many of the listed products, including toys, were spared from the tariffs Washington imposed on Chinese imports in 2018 and 2019. Chinese and Vietnamese toys therefore already face the same 12.5% charge at the US border, under the forced-labour tariff Washington imposed on 60 trading partners in July. Indonesian toys face 10%. Southeast Asian producers have no tariff advantage on these goods today. If the new agreement also removes that charge from Chinese toys, Vietnamese and Indonesian manufacturers could end up paying more than their Chinese competitors in a category where China already supplies most US imports.

This may not be the final list. Both governments describe the board as a standing channel. Its terms of reference allow officials to track trade in the listed goods, propose changes no more than once a year and discuss adding products. The documents do not say that the list will definitely grow, but they create a process through which it can.

For now, the agreement barely touches Southeast Asia’s main exports. But it opens a way for the region’s tariff position to narrow, one product at a time. For the region’s manufacturers, part of the terms they compete on will now be reviewed each year in talks between Washington and Beijing.