Southeast Asia, a region home to some of the world’s fastest-growing economies and crucial manufacturing hubs, has long been heavily reliant on the U.S. market. But in the last few weeks, the sweeping tariffs introduced by the Trump administration have created significant challenges for countries in the region, leaving businesses in trouble and governments facing growing economic instability.
Amid this backdrop, President Xi Jinping arrived in Vietnam on Monday, marking the beginning of a diplomatic tour through Southeast Asia that will also take him to Malaysia and Cambodia. Chinese officials have marked the visit as being of major importance, reflecting Beijing’s desire to cement its influence in the region.
Although China may not have the capacity to fully replace the U.S. in business, it is positioning itself as a more stable and reliable economic partner. Xi’s visit aims to reinforce this perception, portraying China as a dependable force aligned with the region’s development priorities. While ASEAN nations (the Association of Southeast Asian Nations) deepen ties with Beijing, they continue to seek business relations with the U.S. and are open to compromise by fostering more dialogue and addressing trade imbalances, making the diplomatic talks in the region particularly interesting to watch.
China: A Stable Partner
Vietnam, a manufacturing hub, and Cambodia, where the garment and footwear industries are vital to the economy, were hit hard by U.S. tariffs—set at 46% and 49%, respectively—chosen by Xi for his visit. Washington’s approach has raised concerns in these countries. During Xi Jinping’s visit, China is expected to position itself as a stable and reliable partner, deliberately contrasting itself with the U.S., which has imposed—and then suspended—punitive tariffs. On Monday, China is likely to sign numerous agreements with Vietnam, including potential investments and cooperation on developing the country’s railway infrastructure, emphasizing a partnership built on worth and trust.
Throughout Xi’s tour, China will likely present itself as the responsible guardian of a rules-based trade system, portraying the United States as an unpredictable force undermining established trade ties. While the meetings may not result in significant, tangible agreements, their symbolic weight is expected to be substantial
Troubles with China
Many experts argue that Southeast Asia’s businesses need to diversify and expand their trade relations with major economies like China, Europe, and India, as a way to mitigate the effects of U.S. trade policies from the Trump era. While these economies may not fully replace the U.S. market, the shift is vital for businesses that are heavily reliant on exports and have small, vulnerable domestic markets. Gaining access to larger economies provides a necessary lifeline for sustaining growth.
However, turning toward China and other major economies presents its own set of challenges. Southeast Asian nations find themselves not only competing with China for market access and production opportunities but also grappling with complex geopolitical tensions. The South China Sea, in particular, remains a flashpoint, with several ASEAN countries embroiled in territorial disputes with China. For nations like Vietnam, which have been outspoken in their opposition to China’s actions in the region, balancing the pursuit of economic ties with the need to safeguard national interests adds a layer of diplomatic complexity.
While confusion persists about U.S. trade policies, there are growing concerns in Southeast Asia that the 145% U.S. tariff on Chinese goods could lead to a flood of inexpensive Chinese exports into neighboring countries, jeopardizing local industries. According to Chinese customs data, ASEAN countries were the largest recipients of Chinese exports last year. Vietnam, which competes with and often mirrors China in various industries, could struggle if Chinese products flood the market. With U.S. exports accounting for 30% of Vietnam’s GDP, Hanoi needs them and is keen to avoid antagonizing Washington by aligning with China, particularly as it seeks relief from a new 46% tariff. As a result, the likelihood of Vietnam aligning closely with China following Xi Jinping’s visit has diminished.
In a bid to mend relations and eliminate tariffs, Vietnam sent Deputy Prime Minister Ho Duc Phoc to Washington, offered to remove tariffs on U.S. imports, and pledged to purchase more American goods, including in defense. Simultaneously, Vietnam is tightening export controls, cracking down on Chinese goods funneled through its territory, and limiting sensitive exports to China, particularly dual-use items like semiconductors. Vietnam remains hopeful that the U.S. will respond positively.
What happens next?
For most ASEAN nations, preserving strong economic ties with the United States remains a central priority, prompting many to actively pursue relief from mounting tariff pressures. In this context, Xi Jinping’s regional tour marks a calculated bid by Beijing to blunt Washington’s expanding influence—particularly through arms deals and trade negotiations aimed at easing tariff penalties tied to trade imbalances.
Xi is expected to extend offers of strategic partnerships, backed by infrastructure investments and deeper political engagement, presenting China as a stable and dependable counterweight to the U.S. In return, Beijing seeks to safeguard its access to Southeast Asian markets and cultivate diplomatic goodwill that could translate into increased backing in international forums. At its core, China’s strategy is to prevent ASEAN states from becoming strategic adversaries—and ideally, to draw them more firmly into its geopolitical orbit.