“I think the feature that stands out from these four trade deals is something we’ve seen in many US trade agreements. They are vague, opaque, and don’t reveal much about the exact commitments the US has entered into with these countries,” Palit said.
Trump, who is on a three-country Asia tour, has touted the trade pacts as part of his broader strategy to strengthen American influence in the region. The White House said the deals would cut tariffs on a range of US exports, open access to critical minerals, and offer certain tariff exemptions under Washington’s reciprocal trade policy.Palit, however, believes the benefits for Southeast Asian economies may be limited. “These are largely symbolic as far as the US is concerned,” he said, adding that Washington has used the heavy export dependence of regional economies to its advantage. “Most of these economies are significantly dependent on the American market for their exports, and that dependence is a vulnerability the US has leveraged.”
He also cautioned that the future of the so-called reciprocal tariff regime remains uncertain. “There’s a strong possibility that these reciprocal tariffs might get thrown out by the US Supreme Court in another five to six weeks,” Palit warned. “If that happens, the entire negotiating effort behind these deals — including for a country like India — would have gone to waste.”
On the strategic front, Palit said the United States appears to be moving pre-emptively to secure access to rare earth and critical minerals amid concerns about China’s dominance in global supply chains. He noted that countries like Malaysia and Thailand are not yet proven exporters of rare earths but could emerge as important players. “If Southeast Asia develops reserves of rare earths that make them influential in critical mineral supply chains, the US would want to stay ahead in that game and secure access to those resources before China does,” he explained.
While Trump and US Treasury Secretary Scott Bessent have framed these deals as part of a robust trade policy ahead of an expected agreement with China, experts like Palit suggest that the impact on the ground may be limited, at least in the near term.
Below is the verbatim transcript of the interview.
Q: Give us a sense of how these four trade agreements, including two trade frameworks, will benefit these Southeast Asian countries and how they would impact India.Palit: I think the feature that stands out from these four trade deals is something we’ve seen in many US trade agreements. They are vague, opaque, and don’t reveal much about the exact commitments the US has entered into with these countries.
In terms of the more specific ones available to us, particularly those with Malaysia and Cambodia, we see them broadly ending with similar levels of reciprocal tariffs. There are a couple of interesting commitments in both deals. One is that both countries have committed not to impose digital sales taxes—an important point for US tech companies and their businesses in these countries. Both have also committed not to take measures on exports of critical materials in ways inconsistent with the policies and rules announced by the United States.
We expect to see something similar in the critical minerals agreements that the US is negotiating with Thailand and Vietnam. At the end of the day, I have two thoughts on this. First, I think these are largely symbolic as far as the US is concerned. With respect to Southeast Asia, it brings a sense of relief. Most of these economies are significantly dependent on the American market for their exports, and that dependence is a vulnerability the US has leveraged.
Q: Do you feel that India has to take a cue from some of these trade agreements? If we look at an average tariff rate, it may not be 15%; it may be something in the range of 19–20% that we finally get.
Palit: I’m sure we can get somewhere there. But there’s a point I’d like to raise here. There’s a strong possibility that these reciprocal tariffs might get thrown out by the US Supreme Court in another five to six weeks, as the final judgement is expected soon. If that happens, the entire negotiating effort behind these deals—including for a country like India—would have gone to waste.
In that case, we’d return to a situation where Section 232 product tariffs and Section 301 tariffs remain prominent, without any country-specific tariffs. Within those, there will be various mechanisms the US will employ. So, the question that comes back now is— for a country like India and most others, what exactly is the benefit they hope to obtain from these deals? On the surface, there might appear to be a level playing field in terms of reciprocal tariffs. But if reciprocal tariffs don’t exist in the first place, then what exactly would the parity be about?
Q: My question is also on critical minerals. With the deals signed with nations like Thailand and Malaysia, do you think the US will be able to safeguard its supply chain?
Palit: Malaysia and Thailand are countries that are not yet proven to be major exporters of rare earths in the global market. They might have certain endowments, but there’s one trajectory that you and I are both aware of—there’s a race among developing countries to highlight to the United States that they possess rare earths and, therefore, are valuable partners with whom the US should sign deals.
I think the US is being very pre-emptive in this regard, wanting to safeguard itself from possible responses from China. If China were to enter into similar kinds of agreements with these countries—which it doesn’t really need to, given the dominance it already holds in global supply chains—then this would act as a pre-emptive safeguard for the United States.
So, in a sense, this is being done in anticipation. If Southeast Asia develops reserves of rare earths that make them influential in critical mineral supply chains, the US would want to stay ahead in that game and secure access to those resources before China does.
