Policy Backgrounders

Asian Summits and Tariff Agreements: Finality or a Pause?

October 31, 2025

The President’s visit to Asia featured new trade agreements with four Southeast Asian countries and South Korea and a framework agreement with China reducing tariffs and pausing some contentious trade issues. But US businesses still face significant tariffs on many goods imported from the region and thorny questions as to location of supply chains that involve China or Southeast Asian countries.

• The US signed agreements with four Southeast Asian countries (Cambodia, Malaysia, Thailand, and Vietnam). Each keeps the “headline” tariff rate the same; the focus now shifts to the extent of exemptions for Southeast Asian goods under the tariffs.
• A trade agreement with South Korea lowers US tariffs on autos and auto parts and promises greater Korean investment in the US, including defense cooperation.
• The framework with China lowers tariffs and pauses some trade disputes on critical minerals and export controls but leaves the possibility of a resumption of trade tensions.
• The regional summits this week highlight not only continued US-China competition but some countries’ desire to broaden trade relations to lessen potential dependence on the US, even as they may expand bilateral trade in the short term.

A Pageantry of Summits

In the past week, Malaysia, which holds the current Chairmanship of the Association of Southeast Asian Nations (ASEAN) hosted a series of summits that form an important part of the annual global summitry that takes place in late Fall, continuing with the Asia-Pacific Economic Cooperation (APEC) Summit, which takes place this year in Gyeongju, South Korea, and the G-20 meeting which will take place in South Africa later in November. ASEAN invites its dialogue partners (including the US) and other countries to take part in various summits that are separate from the ASEAN Summit but closely related to it.

Technically, the President visited Kuala Lumpur to participate in one of seven “ASEAN Plus One” Summits with its dialogue partners (Australia, China, India, Japan, South Korea, Russia, and the US). Canada also attended as a guest of Malaysian Prime Minister Dato’ Seri Anwar Ibrahim, as did the European Union, Brazil (as head of the BRICS grouping), and South Africa (as current head of the G-20). The US also participated in the 20^th East Asia Summit which includes all ASEAN Member States and dialogue partners. The US was represented at the East Asia Summit by an Assistant Secretary of State, while most nations other than Russia were represented at head of state or head of government level. The President also witnessed the signing of an expanded ceasefire between Thailand and Cambodia building on a ceasefire negotiated after fighting earlier this year. Malaysia, as Chair of ASEAN, has taken the lead in negotiations between Cambodia and Thailand, culminating in the new agreement.

The highlight of the actual ASEAN Summit was the admission of Timor-Leste as ASEAN’s 11^th member, culminating a process beginning with its independence from Indonesia in 2002. Other summits this week included an “ASEAN Plus Three” Summit involving China, Japan, and South Korea; and, separately, a summit of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade zone, consisting of ASEAN, Japan, South Korea, Australia, and New Zealand and comprising about 30% of world GDP.

The complicated arrangements underscore the importance of these gatherings of world leaders and the increasing importance of ASEAN, and several of its Member States, on the world stage. Typically, much of the important action took place on the margins of the summits, in bilateral meetings between leaders.

US Trade Agreements with Southeast Asia

The US signed trade agreements with Cambodia, Malaysia, Thailand, and Vietnam, updates of the framework agreements announced in late Summer. None lowers the headline tariff rate for any country—which still remains 19% (Cambodia, Malaysia, and Thailand), and 20% for Vietnam—but left open the likelihood, of exemptions from tariffs for certain goods.

For instance, the Malaysia-US agreement keeps, the US’ tariff rate at 19% as in the provisional deal but grants exceptions for 1,711 products, notably for important sectors such as electronics, rubber, and palm oil derivatives—each significant for Malaysia’s economy. Critical minerals and rare earth elements are a major part of the agreement; Malaysia, which has reserves of about 16 million metric tons of rare earths and supplies about 12% of the global market for critical minerals, agreed not to place any restrictions on exports of rare earth elements or other critical minerals to the US. This also raises the prospect that Malaysia could move towards becoming a processing hub for rare earth minerals, reducing global dependance on China for processing.

But as with other agreements negotiated since the “Liberation Day” tariffs, rather than a move towards freer trade, this is best seen as a continuation of the Administration’s policies. The US produces neither rubber nor palm oil, and Malaysian electronics components are often linked to US companies, and the US continues to seek to reshore semiconductor production. The list is broadly consistent with the September 5 Executive Order giving lists of goods likely to be exempt from tariffs upon conclusion of a formal deal. Nor do the deals cover services.

One clause in the agreement has caused controversy in Malaysia’s Parliament—a provision concerning the imposition of economic sanctions against third countries. The government defended the agreement as “the best possible outcome. . . . this is the geopolitical reality we face as a freely trading nation engaging with the world’s largest economic power, which is also our biggest trading partner.” It also emphasized that the contested provision is limited only to issues of “shared economic concern” and hedged by other provisions relating to consultations with the US and operating within Malaysian law. Critics responded that the provision could force Malaysia to impose sanctions on Russia or China, which could harm their relations with those countries. A select committee of Parliament will hold a hearing on November 12 to analyze the agreement as a whole. It remains likely to come into force given the government’s majority, but some members of Prime Minister Anwar’s Parti Keadilan Rakyat expressed concerns that the deal could still permit the US to impose additional tariffs on Malaysia and did not promise “finality,” with one government MP calling it a “transfer of wealth from poor Malaysia to the rich US.” Indeed, the agreement is not a formal treaty, permitting either side to impose new restrictions. Malaysia has 60 days in which to propose changes to the agreement.

Agreement with South Korea

During the President’s visit to South Korea in advance of the APEC Summit scheduled for October 31 and November 1, the US and South Korea signed a trade agreement building on the earlier framework agreement; notably, US tariffs on South Korean autos and auto parts will be lowered to 15%. South Korea promised $350 billion of investment in the US.

Part of that investment may include a nuclear-powered submarine for the South Korean Navy, to be built in Philadelphia at a shipyard now owned by the Hanwha Group, a Korean company. But building the submarine would require transfer of nuclear technology and likely South Korea receiving permission to reprocess spent nuclear fuel. South Korea argues that having the submarine would bolster its defenses, lessening reliance on the US, particularly as North Korea may be constructing a nuclear-powered submarine as well.

Framework Agreement with China

The most significant development of the trip, however, was a framework agreement with China to lower tariffs between the countries and reduce trade tensions. Absent the agreement, the President had threatened to impose 100% tariffs on China in retaliation for China’s restrictions on the export of rare earth minerals.

In the framework, China agreed to resume purchases of US soybeans and suspended for one year (but not removed) restrictions on rare earth minerals announced earlier in October (which had been imposed as retaliation for a US effort to expand export controls to additional Chinese companies), while the US reduced tariffs, suspended (but not removed) port fees on Chinese ships docking at US ports, and delayed export controls affecting certain Chinese companies. The President also announced he would lower the fentanyl-related tariffs on China from 20% to 10%, reducing the overall effective tariff rate on Chinese goods from 57% to 47%. Both sides also agreed to extend for a year a pause on imposing additional tariffs.

After the meeting, President Xi Jinping said that “[b]oth sides should consider the bigger picture and focus on the long-term benefits of cooperation, rather than falling into a vicious cycle of mutual retaliation.” While the atmospherics of the meeting appeared positive, with the President calling the meeting a “12” out of “10,” the framework agreement leaves many questions unanswered—and permits the possibility of the resumption of trade disputes, even on issues addressed in the framework. Notably, while China’s Ministry of Commerce has suspended the rare earth export controls announced in October, it has not done so for an earlier set of restrictions from April, leaving their status unclear. And while China has purchased at least two cargoes of US soybeans as part of what the President characterized as “tremendous” purchases, it made significant purchases from Argentina, and has a longer-term trend towards increased purchases of soybeans from Brazil rather than the US, a legacy of the trade disputes in the first Trump Administration. As to fentanyl, President Xi said he would “work very hard” to stop the flow of fentanyl, leading to the tariff cut, but it is unclear what new action this entails.

More broadly, China appears to be continuing to construct an export control system parallel to that of the US. This includes items such as some rare earths (subject to controls rather than a ban), lithium batteries, and other goods, notably including machines for rare earth mining and processing. This would give China leverage with the US and other countries and help preserve China’s dominance of rare earth processing despite the new agreement. In addition, all exports of rare-earth magnets or semiconductors containing at or over 0.1% of minerals from China, from any country in the world, are subject to Chinese export controls as of December 1. It is unclear whether this new system would be subject to negotiation with the US or whether it is part of a broader effort to institute an export control regulation system such as the US has maintained for decades and has served as an important key to US economic power.

Also unanswered is whether specific geopolitical concerns played a role in the discussions and the agreement. President Xi described the framework as a “fundamental consensus on addressing each other’s primary concerns”—language that would normally encompass the status of Taiwan—and said “I am willing to continue working with President Trump to lay a solid foundation for China-US relations.” Implementing the framework, as well as resolving other significant issues, will require considerably more work for US and Chinese negotiators, with the possibility that trade tensions could resume.

An Era of Bilateralism

After a meeting with Brazilian President Luiz Inácio (Lula) da Silva, the President said that the US would “do some pretty good deals” with Brazil. The President also sat near Canadian Prime Minister Mark Carney at a dinner in South Korea; the US imposed an additional 10% punitive tariff on Canada in retaliation for Ontario not immediately pulling an advertisement against tariffs, just as Carney began a trip to Asia focused on deepening trade and economic ties and Foreign Minister Anita Anand said Canada has a “strategic partnership” with China.

As the guest list in Kuala Lumpur showed, in a world in which bilateralism is increasingly replacing multilateralism, trade tensions rise and nations’ options are shifting. Because ASEAN is not as united as the EU, this permitted the US to “dictate” to ASEAN members “to negotiate separately,” according to a member of Malaysia’s government. This perhaps permits short-term gains for the US; Bloomberg Economics estimated that exemptions to US tariffs would cover only a small volume of products from Southeast Asia under the new agreements. But it raises the likelihood that countries will seek broader trade partnerships to avoid dependence on the US. Prime Minister Anwar echoed the point, noting that his country wants to “engage with the US and China and the rest. Malaysia is a trading nation, but we cannot be compelled to follow any particular interest.”

China, for its part, is using the opportunity to press for further deepening and expansion of the RCEP, an agreement centered on China. While Japan responded that China “tr[ies] to make use of these US tariff issues in order to pretend as if they are the guardian or champion of the free trade system,” the fact remains that the US withdrew from the alternative regional framework, the Trans-Pacific Partnership, which excluded China, in 2017, and the dominant regional framework now includes China but excludes the US. While welcome, the recent trade agreements likely represent a pause in trade tensions rather than a resolution of them.