
As global tariffs reshape supply chains, Southeast Asia’s SMEs face an uneven burden and a unique opportunity.
This article explores how Vietnam, Thailand, and Indonesia are navigating the storm, why regional collaboration matters, and what founders must know to thrive in a volatile landscape. It is a call for strategy, resilience, and shared purpose in a time of global uncertainty.
Tariffs and the uneven burden on SMEs
In today’s global climate, tariffs are doing more than reshaping trade routes. They are creating ripple effects that hit small and medium enterprises across Southeast Asia the hardest.
While large corporations can retool supply chains or lobby governments, SMEs- the backbone of Southeast Asia’s economies- face disruptions with thinner margins, fewer resources, and limited negotiating power.
As a founder based in Singapore and deeply connected to the region, I believe this moment demands more than a reaction. It calls for collaboration and smart, forward-looking solutions that help SMEs not only survive but emerge stronger.
China’s factory flight: A blessing or bypass?
The “China +1” strategy has triggered a wave of manufacturing relocations to Vietnam, Thailand, and Indonesia. While this creates enormous opportunity, it also brings risk. Without genuine local partnerships, these moves may become little more than tariff workarounds, attracting international scrutiny and undermining the promise of long-term value creation.
For Southeast Asia, this is the time to show the world that the region is not just a low-cost backup plan. It is a centre of talent, innovation, and accountability. China, too, has a responsibility. Wherever its factories go, it must engage as a true partner, investing in local ecosystems and working alongside communities to build high-quality, future-ready industries.
Singapore, with its technological leadership, can play a pivotal role by setting transparency standards and raising the bar for best practices. Meanwhile, Indonesia should leverage its demographic strength, investing in education to empower its workforce and unlock opportunity across society.
Across the region, supply chains must move upward, driven by ethical use of technology and artificial intelligence that respects privacy while boosting productivity.
Navigating the storm: Vietnam, Thailand, and Indonesia
Vietnam, often hailed as the poster child of China +1, is now confronting its vulnerabilities. Nearly 30 per cent of its exports go to the United States, leaving it highly exposed. A six per cent stock market drop in a single day revealed just how deeply global volatility can cut.
Also Read: Are Asian economies in a position to benefit from the age of Trump’s tariffs?
Thailand’s outlook is more nuanced. Although it was initially forecast to grow around 2.9 per cent in 2025, new tariff pressures risk pulling growth closer to two per cent, exposing underlying structural challenges. Indonesia, supported by a large domestic market, remains relatively insulated but still faces the potential erosion of its trade surplus if global uncertainty persists.
Figure 1: Tariff Rates and GDP Forecasts (2025) Comparing US tariff impacts on Vietnam, Thailand, and Indonesia alongside adjusted GDP forecasts. Thailand’s GDP is shown at two per cent, reflecting the moderated estimate from official and downside scenarios. (Sources: Bangkok Post, Krungsri Research, Channel News Asia, VietnamPlus)
What founders must know: Turning volatility into advantage
For founders navigating this volatile environment, success hinges on a mix of vigilance, adaptability, and relationship-building. Staying informed on tariff changes, trade deals, and regulatory shifts is no longer optional- it’s a survival skill. Compliance can no longer be treated as an afterthought; it needs to be embedded into sourcing strategies, logistics planning, and even product design.
Diversifying export markets is also essential. Relying too heavily on a single destination market leaves companies exposed to sudden shocks, while regional and emerging markets can offer critical buffers. Equally important are relationships. Strong ties with local trade bodies, chambers of commerce, and regulators provide founders with early insights and smoother navigation through potential disruptions.
Beyond these fundamentals, the true competitive edge increasingly lies in using data-driven decision support. This means not just tracking numbers, but harnessing technologies like artificial intelligence in meaningful, practical ways to anticipate shifts across policy, supply chains, and customer needs.
Figure 2: Export Exposure by Major Market Share of total exports going to the US, China, and EU for Vietnam, Thailand, and Indonesia. These export profiles highlight Vietnam’s heavy US dependence, Thailand’s balanced trade, and Indonesia’s stronger reliance on China. All of which shape their varying vulnerability to tariffs. (Sources: El País, MacroMicro, Trading Economics, China Daily Asia)
A regional call for collaboration, not competition
The intensifying trade tensions between the US and China are accelerating the shift of manufacturing out of China, and Southeast Asia stands at a pivotal moment. Yet Vietnam, Thailand, and Indonesia cannot afford to become mere way stations or passive hosts.
Also Read: Navigating tariffs and uncertainty: Why software, data, and AI startups are Asia’s path forward
Without genuine collaboration between incoming manufacturers and local production ecosystems, the region risks missing the deeper benefits of this shift-not to mention inviting scrutiny over whether these moves are simply attempts to bypass tariffs.
Singapore can help lead the region by advancing transparency, accountability, and innovation, ensuring Southeast Asia emerges as a trusted, resilient manufacturing hub. The role of AI is no longer just a future idea. It is becoming a practical tool for collaboration, from improving supply chain efficiency to supporting smarter policymaking and strengthening regional networks.
Indonesia, with its vast and youthful population, has the chance to strengthen its workforce through education and training, ensuring all communities can participate in this transformation.
For SMEs, this is not the time to retreat or work in silos. This is the time to engage, share insights, and build resilience together. For those curious about how data-driven insights and ethical AI can quietly fit into this picture, thoughtful exchanges often unlock unexpected opportunities. When founders and SMEs come together, they move not just their companies forward but entire industries and communities as well
We’ve weathered complexity before. Now, the next chapter calls for bold strategy and unshakable resilience. If you’re an SME or founder driven by data and purpose, we’d love to hear from you. Let’s connect-because some of the best breakthroughs begin with a single conversation.
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