Trump’s second term impacts regional trade and sci-tech activities

Koh Eng Meng, deputy director, Investment & Asset Management at Boustead & KTG Industrial Management (BKIM)

Koh Eng Meng, deputy director of Investment and Asset Management at Boustead & KTG Industrial Management

With Trump's recent victory, stricter trade tariffs are expected. Yet, regardless of a Trump or Harris win, tariff relief for Chinese enterprises seems unlikely. Currently, Chinese companies are focused on developing responsive strategies and creating a secure “backdoor” to mitigate risks. Under present conditions, one effective solution is to diversify the manufacturing value chain. Rather than fragmented production, this involves establishing critical hubs worldwide to address the specific needs of each region.

The tech and electronics industries have consistently faced intense scrutiny, partly due to the political sensitivities surrounding certain technologies. While Biden adopted a “small yard, high fence” approach, it's conceivable that the more narrowly defined this “small yard” (technology and research sectors directly tied to national security) becomes, the higher the protective “fence” will be.

Although relatively small, Southeast Asia has not been spared from the impact of trade tariffs, and each country's ability to adapt vary. Vietnam has been fortunate, facing only minor trade deficits with the United States and avoiding the harshest tariffs. This advantageous position places Vietnam at the forefront of Southeast Asia as a key destination for foreign investment.

The agility and resilience of Chinese entrepreneurs serve as essential drivers of success, enabling Vietnam to overcome obstacles and navigate towards favourable outcomes in challenging conditions.

Sreenivas Tirumala from RMIT University Vietnam

Sreenivas Tirumala, senior lecturer of IT at RMIT University Vietnam

Due to the huge capabilities and influence the US boasts in these domains, the US's cooperation is necessary for developing most countries, including Vietnam, to advance in science and technology. However, recent reports indicate that President-elect Donald Trump is developing sentient technology export policies that might impact Vietnam's technological advances, particularly in AI and cybersecurity.

Although the likelihood of continuing the technological cooperation agreements signed by businesses from both countries in September 2024 is high, the new policies around 'America First' – emphasising design, development, and manufacturing in America – may impact technology transfer through offshore economic and services industries that are planning to invest in Vietnam.

Due to its strategic location, Vietnam is an important partner for the US. This implies that Vietnam will not have to be “self-reliant” when it comes to cybersecurity, which is one of the country's biggest problems.

The US can provide the necessary technologies to help Vietnam tackle this threat, which can help the US monitor various common threat actors. As decentralised cyber resilience networks are emerging, the US may consider investing in cooperation with Vietnam.

Digital transformation is progressing at a good pace in Vietnam, including in e-government development. However, several areas still need automation, particularly in service industries, which US tech giants like Microsoft would be interested in pursuing.

While key fields like agriculture, manufacturing, and oil and gas could be improved through digital transformation, cooperation in these areas seems unlikely due to the in-country manufacturing and 'Drill, baby, drill' policies of Donald Trump, which encourages American companies to move back to the US or start new manufacturing domestically. Therefore, minimal, if any, support is expected in these areas in terms of technology transfers.

The US has been a world leader in technological advancements, particularly AI. As Vietnam is an emerging nation in AI, technological cooperation and transfer are very important. There is no specific mention of AI-based implementations or support in Donald Trump's policies. However, recent developments in other technological cooperation suggest that the US may be interested in investing (and testing) their AI-based technologies for disaster management and natural calamities in Vietnam.

Seeking support in areas like air pollution and weather forecasting will be a win-win for both the US and Vietnam. The US would have the opportunity to test their new equipment and AI-based models in Vietnam before implementing them on a large scale back home.

However, given Donald Trump's stance on climate change, cooperation's implications remain uncertain.

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