New Zealand and Southeast Asia's shared dilemmas 

U.S. Secretary of War Pete Hegseth speaks during a group event at the 12th ASEAN Defence Ministers’ Meeting-Plus in Kuala Lumpur, Malaysia, November 2025

2025 has brought into sharp relief the vulnerabilities facing small and medium-sized countries in a world where great powers, particularly the United States, are increasingly willing to ignore multilateral rules and commitments.  

 New Zealand and the countries of Southeast Asia share some similar challenges and dilemmas. Together, we face increasing uncertainties associated with power shifts at both the global and regional level.

Globally, the United States has signalled its reduced commitment to multilateral institutions and international legal frameworks. It has hobbled the dispute settlement system in the World Trade Organization (WTO), raised questions about its ongoing commitment to allies and drastically reduced its international development funding. Most dramatically, it has shown that it is no longer willing to abide by international trade rules.

Since announcing drastic tariff rates on almost every country in the world in April, it has since imposed bilateral “deals” on many countries. These deals commit countries to major concessions and trade-distorting practices, some of which arguably infringe on their sovereignty. In return, the United States will reduce its threatened punitive tariff levels to something more moderate, but still grossly asymmetric. The average weighted tariff applied to products entering the US is now 18 percent, a rate not seen since the 1930s. The tariff rate for some sectors and countries is much higher, as tracked by the United Nations Trade and Development. 

President Donald Trump signs an executive order on the administration’s tariff plans in April 2025

Regionally, countries are reckoning with the rise of China as a military and economic power. Although China has declared its commitment to multilateral rules and international institutions, it is also seeking to assert itself internationally, commensurate with its increased resources. What this means for a region long accustomed to operating under a preponderance of US power remains to be seen. Like Australia and New Zealand, the willingness of Southeast Asian countries to engage in mutually beneficial trade with China does not necessarily signal comfort with Chinese assertiveness over contested territories in the region.  

The countries of Southeast Asia have consistently asserted that any regional order must not be dominated by outside powers and must have the Association of Southeast Asian Nations (ASEAN) as the central regional institution. Although most countries are somewhat aligned with either the United States or China, they have consistently refused to take sides in the escalating competition between the two. Leaders, including Singapore’s prime minister, Lawrence Wong, have decried the disruption to global trade and international law generally, warning that the world faces a new era of sharply increased instability and the risk of declining prosperity. 

In June this year, Singapore's prime minister, Lawrence Wong, met with Philippines' president Ferdinand "Bongbong" Romualdez Marcos Jr for bilateral talks where they desicussed, among other things, the importance of strengthening ASEAN unity and stability

In the first phase of US tariffs and export controls targeting China, starting in 2018, several countries in Southeast Asia benefited from the diversion of investment and trade out of China as companies sought to de-risk their exposure. This saw an increase in exports from Southeast Asia to the US, much in the same way as New Zealand’s exports to the US have increased since 2020. However, this placed the region in a vulnerable position when President Trump unilaterally raised tariffs to punitive levels for many countries in 2025. Viet Nam, Malaysia and Indonesia have been forced to accept grossly asymmetric deals dictated by the United States. Although it remains unclear how these agreements will be implemented, particularly with regards to so-called transshipments of Chinese products via Southeast Asia, the US appears set on a path of trade protectionism and a transactional approach aimed at wresting the region away from its dependence on intermediate products trade with China. 

In response, several countries in the region are in the process of shoring up alternative trading arrangements and developing new platforms for cooperation that will allow a degree of resilience in the face of US unilateralism. In addition to the 15-member Regional Comprehensive Economic Partnership (RCEP, which includes New Zealand, most of Southeast Asia and China) and the 12-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, which includes New Zealand and some Southeast Asian countries) a flurry of new or renewed agreements have been announced. In September, Indonesia and the European Union announced the conclusion of a bilateral trade and economic cooperation agreement. ASEAN’s proposed free trade agreement with the European Union, mooted since 2007, is now under more serious negotiation, and there is also a proposal for an ASEAN agreement with Canada. FTAs with the European Union are also under negotiation with renewed urgency with Malaysia, Thailand and the Philippines.  

Prime Minister of Malaysia Dato' Sri Anwar Ibrahim visited Indonesia in June to discuss key issues such as trade and regional cooperation

Malaysia’s prime minister, Anwar Ibrahim, has called for countries of the Global South, including the BRICS group, to play a more influential role in the international system. 

Most recently, Singapore chaired the inaugural meeting Future of Investment and Trade (FIT) Partnership, a group of 16 smaller partner countries, including New Zealand, along with six observers. The partnership is not a trade agreement but ‘aims to advance open and fair trade practices amid growing challenges to the global trading system.’ 

Although New Zealand and Southeast Asia are different in many ways, including their economic structures and domestic governing systems, we face some common diplomatic challenges in the current moment. New Zealand has long-standing security connections with the US and Australia is our only ally. China is still our largest export market and most important economic partner. We are thus caught in the escalating tension and rivalry between these two great powers. Similarly, Southeast Asian countries must balance their economic ties to China with their security relationships with an increasingly erratic and transactional United States. 

The sense of vulnerability and renewed awareness of convergent interests in a predictable and rule-based international system is clearly driving initiatives to diversify and strengthen alternative partnerships. The path ahead, however, remains challenging in the face of both domestic economic weaknesses and US pressure for exclusive arrangements. 

About the author 

Natasha Hamilton-Hart joined the Department of Management and International Business at the University of Auckland in January 2011. Prior to joining the University of Auckland, she held positions at the National University of Singapore and the Australian National University. She received her PhD from Cornell University in 1999 and BA (Hons) from the University of Otago in 1990.

The Foundation's Asia in Focus initiative publishes expert insights and analysis on issues across Asia, as well as New Zealand’s evolving relationship with the region.