On June 26, the 12 members of the CPTPP, a major Pacific trade group, agreed to begin early talks with the Philippines, Indonesia, and the UAE about possible membership. While this does not guarantee entry, it reflects a broader strategy across Southeast Asia: diversifying trade relationships instead of choosing between Washington and Beijing.
The pressure behind this strategy is significant. Indonesia and the Philippines both faced new US tariffs this year, while their domestic markets are also dealing with increasing competition from inexpensive Chinese goods.
Southeast Asian countries are increasingly trying to avoid becoming dependent on a single major economic power.
Their strategy includes:Although China remains a major economic partner, trade and investment relationships aligned with the US collectively represent a larger role across much of Southeast Asia.
This means diversification can create a third or even fourth option, rather than forcing countries to choose between two competing powers.
This approach also gives Southeast Asian governments greater room to respond to sudden changes in global trade. If tariffs rise in one market or demand weakens in another, businesses can redirect exports and investment toward alternative destinations.
For companies, the growing number of trade connections can also encourage investment in Southeast Asia. Manufacturers looking to reduce exposure to China-US tensions may expand production in countries such as Indonesia, the Philippines, Vietnam, and Malaysia, strengthening the region's role in global supply chains.
Indonesia's 2025 agreement with Washington illustrates the difficulty of maintaining this balance.
The deal established a lower tariff ceiling through 2029, but Indonesia also agreed to purchase billions of dollars in US energy, agricultural products, and Boeing aircraft.
Some economists argue that such agreements can gradually pull countries closer toward one side and weaken the neutrality they are trying to preserve.
This is why multilateral agreements such as CPTPP can be more attractive.
Joining a large trade bloc allows countries to spread economic exposure across multiple partners rather than replacing dependence on one country with dependence on another.
So far, the strategy shows promising results.
Southeast Asian exports to the United States have continued to grow as regional producers replace some Chinese goods. At the same time, exports to other international markets are increasing.
This suggests that diversification is becoming more than a political slogan. It is increasingly functioning as a form of economic resilience, giving Southeast Asian countries more flexibility when global trade tensions rise.
Southeast Asia is diversifying its trade partnerships to reduce dependence on both the US and China while building greater economic resilience.