Rachel Mealey: US President Donald Trump touches down in Malaysia this weekend to attend the ASEAN summit. It's his first visit to the region since wreaking havoc on South East Asian economies by introducing his disruptive trade tariff system. Indonesia correspondent Tim Swanston filed this report from West Java.
Tim Swanston: David Leonardi's textile factory is constantly humming with the activity of dyeing machines and looms. It's located south of Bandung in West Java, the beating heart of Indonesia's textile industry. Mr Leonardi says there's never been a more challenging moment for the business than now, with manufacturers squeezed by US tariffs and Chinese imports. He's worried if the tariffs continue, he'll be forced to lay off workers.
David Leonardi: It's going to be a big, major problem with Indonesia. Why? Because this is one sector of the industry which can absorb people with primary graduates, secondary, high school graduates.
Tim Swanston: US President Donald Trump's so-called Liberation Day tariffs have been in effect for almost three months now in the region, with most South East Asian nations slugged with a 19 or 20 per cent tariff on their exports to the United States market. A report by the United Nations Development Programme says the region will be hit hard, predicting about a 10 per cent decline in exports from South East Asia to the US as a result of tariff-induced price hikes. Deputy Minister for Indonesia's Coordinating Ministry for Economic Affairs, Edi Pambudi, says Indonesia, much like other South East Asian nations, is trying to negotiate carve-outs for certain products in a bid to reduce the damage to the economy.
Edi Pambudi: We understand in the US now is trying to implement the US National Emergency Act because they face the trade deficit. But again, trade is not zero-sum game. I win, you lose. No. Because the principle of trade is win-win solution.
Tim Swanston: The tariffs have had another consequence in South East Asia, dramatically increasing exports from China to the region. During Trump's first term, Chinese exporters increasingly moved their goods through South East Asia in a bid to avoid tariffs, a practice known as transshipment. Those transshipments are now subject to even higher tariffs. So to avoid the headache and taxes of the US market, Chinese exporters have changed tack and are selling into South East Asia, threatening local manufacturers like Mr Leonardi.
David Leonardi: We cannot survive. These imported goods, the price is, for example, three times, four times cheaper compared to the local ones. Which one do you think you will buy?
Tim Swanston: The upending of global trade will likely be a key point of discussion at this weekend's Association of South East Asian Nations, or ASEAN, summit in Malaysia. US President Donald Trump will attend to oversee a ceasefire and peace ceremony between Thailand and Cambodia. ASEAN economies will be eager to use the face time with the President to talk trade and tariffs, or improve their bilateral relations to bolster their negotiations.