The Trump Administration’s 32% import tariff policy on Indonesian export goods, which is a high tariff policy, will increase the price of export products and force producers to adjust industrial capacity, which is quite crucial. After the new US tariff policy was implemented, exports from Singapore to the US jumped sharply, not because of the explosion in production or as the leading producer of these export goods. This surge arose because ASEAN countries such as Indonesia and Vietnam chose to divert export routes through Singapore, which is only subject to a 10% tariff, compared to 32–49% for their own countries. Singapore becomes a trade intermediary without adding value, only as a diversion route to avoid the burden of tariffs.
Through Singapore, which is only subject to a 10% tariff. Being able to act as a trade intermediary without production processes or added value, Singapore can be analogised as ASEAN’s “official broker” in the global trading system. Trade routes also become rotary: goods from producing countries such as Indonesia, Vietnam, or Thailand must go through expensive routes to avoid high tariffs. Transiting to Singapore can be considered inefficient, but instead, it becomes a burden to increase logistics costs, extend delivery times, and reduce supply chain efficiency. So, it can be said that it is not a trade strategy, but instead, it can be said to cause economic distortion and regional inequality. This phenomenon exposes a massive gap in the design of tariffs and confirms the need to reconstruct a fairer and more efficient trading system.
Based on data from the US Census Bureau, in January 2025, US imports from Singapore will reach $4.37 billion. Meanwhile, a report from Reuters showed that in February 2025, Singapore’s manufacturing output declined by 1.3% compared to the previous year’s period. The data indicates that the export increase from Singapore to the US is most likely due to diverting export routes from other ASEAN countries through Singapore, not due to increased domestic production.
In the dynamics of international trade, large countries tend to have stronger bargaining power to negotiate more favourable tariff treatment. On the other hand, developing countries often only play a role on the margins of the negotiation process, so not all get equal benefits from the global trading system; unfortunately, in this complexity, ASEAN countries often choose the trade negotiation route individually because flexibility is more obtainable, but regional economic integration becomes questionable if ASEAN member states prefer to conduct individual trade negotiations with external partners such as China, the United States, or the European Union. This kind of bilateral practice weakens ASEAN’s overall bargaining position. It can erode the essence of establishing the ASEAN Economic Community (AEC) to strengthen intra-regional economic cooperation and realise the ASEAN region as an integrated and competitive single market and production base.
When individual countries negotiate independently, global trade governance can create inequality and policy fragmentation among member countries. On the other hand, if the negotiation approach can be carried out collectively, it can provide greater strength, especially for ASEAN countries. In this case, the European Union can be used as a parameter, where trade policy is carried out in a coordinated manner and based on a binding legal framework. Although the ASEAN integration model is different, the principles and strengths of negotiations collectively are still relevant in adapting. In the increasingly competitive geopolitical and global economic dynamics, strengthening regional integration is a strategic need, not just normative.
In the context of globalisation, efficiency is often positioned as the main principle that drives the flow of goods, services, and capital across countries. However, this efficiency logic is frequently used to take advantage of loophole strategies in the tariff system and international trade regulations. Certain countries or business actors choose longer trade routes solely to avoid the burden of tariffs.
The issue is questionable: is the current global trading system geared towards creating justice and efficiency? When the structure of tariffs and trade agreements is used asymmetrically, what happens is not healthy competition but distortions that harm developing countries and deepen global inequality. Without reconstruction and solid policy synergy, ASEAN will only have a symbolic impact on international economic dynamics in today’s increasingly competitive and fragmented world.
Therefore, the policy is reviewed and reconstructed by emphasising the principles of transparency, justice, and sustainability. Tariff structures and logistics lines between countries must be immediately reviewed so as not to hurt the integration spirit. This system allows the switching of lanes only to avoid tariffs, not for production or efficiency reasons. This reconstruction is essential so that international trade benefits a few and becomes an inclusive and systemically efficient development instrument.
