EP81: Shocks in Southeast Asia – An Earthquake & Trump Tariffs with Steven Okun
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Welcome to Straight Talk Southeast Asia. This is a podcast that covers current developments in the region, particular countries, domestic politics, as well as regional issues. We look in depth at what is happening, why it might be happening. We speak to analysts, academics from the region, based in the region, and to better understand what's happening and what might be the projections of what's happening ahead. We're now in our second season.

I'm Bridget Welsh. I'm a political analyst and academic who's worked on Southeast Asia for many decades. I was raised here. I'm living here. And very importantly, I care about what's happening in the region. Thanks for joining me. Welcome to Episode 13 of Straight Talk Southeast Asia. We're here in Season 3, and I'm joined with Zach Abouza as we discuss key developments that are happening in Southeast Asia.

This week has been marred by a terrible tragedy. The earthquake leased 17 kilometers from Mandalay. Between Mandalay and Sagang, it's had horrific damage that extended all the way to Thailand.

We'll be looking at this issue of the earthquake in depth next week, but we do make some remarks of our preliminary observations in this episode, and we will be talking with people on the ground to see what is the situation and what can be done. Our prayers and thoughts are with the people of Myanmar and in Thailand who are facing this tragedy.

We also discussed some key political developments in the past week and look ahead. And our focus of this episode is on tariffs with Stephen Okun, who was a prominent analyst of the Trump administration and U.S. politics based in Singapore. We unpack what some of the tariffs are, what the implications are, what has been the dynamics for business as we continue to look at what are the drivers of affecting instability.

We talk about how four of the countries in the region are on the Dirty 15. Another one is also being targeted for transshipment and what that means for regions' economies. We thank you very much for being here on Straight Talk Southeast Asia.

I would like to take a few moments to wish my Muslim friends a wonderful, meaningful, spiritual Eid Mubarak. May this be a wonderful Raya holiday for you and your families. I know this is a special holiday to many of my Muslim friends, and I look forward to joining some of you in celebration. Thanks for joining us here on Straight Talk.

A massive 7.7 magnitude earthquake struck central Myanmar on March 28th. Its epicenter was near Mandalay and Sagaing. There are scenes of mass destruction, including the collapse of buildings, hospitals, temples, and critical infrastructure.

Massive fires broke out caused by the rupture of gas lines. In the early hours, there were already thousands of casualties, several hundred in the capital of Naypyidaw alone, and that total will soar in the coming days. Most of the areas affected are in junta-controlled territory.

Given the military regime's collapse of the economy and the diversion of social service spending to fund their war effort, the military government's capacity is extremely limited. Menong Klang was filmed in uniform directing relief efforts in the cocooned military capital of Naypadok.

But for the extremely superstitious military leadership, the earthquake is a terrible omen and they will be extremely fearful of the way their rank and file and the general public will view the tragedy as a spiritual referendum on military rule. The political ramifications cannot be discounted. But for the junta, the tragedy is also an opportunity.

Neighboring states, China, India, and Thailand will use the earthquake as an excuse to engage the diplomatically ostracized military government. Beijing, New Delhi, and Bangkok all seek to prop up the failing military government ahead of sham elections in late 2025. And they will use this tragedy to both legitimize the military government, diplomatically engage it, and deliver desperately needed funds and assistance to it.

And of course, the military will use aid and relief supplies as a weapon to control the population. And they will seek to ensure that the opposition National Unity Government and the ethnic resistance organizations are deprived of any life-saving humanitarian aid.

This is an absolutely horrific tragedy, made all the more so as the people least capable of responding are in control of much of the population centers at the epicenter. We should all pray for the people of Myanmar who continue to suffer so much at the hands of an incompetent and rapacious military government.

A suspected ransomware attack on Kuala Lumpur International Airport shut down the flight information computer system for 10 hours. The attack did not have any impact on the flight control tower or endanger people's lives, though it was an embarrassment for Malaysia Airport Holdings Berhad, which operates the airport. The suspected attackers, who remain unnamed, demanded $10 million in ransom.

Prime Minister Anwar Ibrahim stated that he immediately rejected the payment, arguing that it would only encourage future attacks. A similar hack happened in Vietnam's Noi Bai Airport in July 2016 following a flare-up in the South China Sea. That attack had been tied to patriotic hackers in China and not transnational criminals.

The outage at Kuala Lumpur airport serves as a stark reminder about the threat posed by both state and transnational criminal organizations to the region's critical infrastructure and the need for continued investments in cybersecurity.

After two days of debate, Thai Prime Minister Paitung Tan Sinawatra easily won a no-confidence vote. The Prime Minister was under fire from both her own coalition partners and the opposition led by the People's Party, formerly known as Move Forward.

Pruitt, Wang Wusong, the former coup leader and deputy prime minister who heads the Palang Patarat Party and is a member of the governing coalition, accused her of falsely declaring assets. That irony was lost on no one. The People's Party focused on Pai Tung Tan's inept handling of the economy, the out-of-control air pollution, and corruption.

The Thai economy, the second largest in the region, grew at only 2.5% in 2024, amongst the lowest in Southeast Asia, though it has picked up to 2.9% in the first quarter of 2025, buoyed by high rates of tourism. But the person who was really on trial was Thaksin Shinawatra.

The People's Party, which decried the grand bargain that Phu Thai struck with the Conservative parties in order to bring Thaksin Chinnawatra home from 15 years of self-exile, dug into the former prime minister's active involvement in politics. In short, the government was accused of being run by someone without elected power and administered by someone who was unqualified.

Prime Minister Baitung Tanjianawatra survived the no-confidence vote given her parliamentary majority, with some 319 in support to 162 against. While her coalition held, her own partners as well as the opposition all stood to gain from her political bruising. On March 23rd, some 450 Indonesian military personnel were redeployed from Maluku province to West Papua

That announcement came days after reports that one Indonesian transmigrant was killed and several others were injured by the Liberation Army. The Liberation Army has declared that all teachers and health workers would be considered as Indonesian soldiers under the new military law.

President Prabowo Subianto, who served in Papua, has made the establishment of large military-run agricultural plantations a top priority for both food security and his free school lunch program initiative. The military has steadily transferred troops to the Restive region over the past five months and established five new battalions.

There are now 20,000 newly deployed troops across Papua. At the same time, the government has revitalized its controversial transmigration program, which is reviled across eastern Indonesia. These recent moves have only reinforced Papuan beliefs that their territory is under occupation. As such, it has led to increased violence, which has led to the deployment of more forces and more permissive rules of engagement.

Security forces have increased their human rights abuses, including the torture of detainees, according to Papuan sources. A dire humanitarian catastrophe is becoming all but inevitable, with shortfalls in international funding from donors for the approximately one million Rohingya refugees who were driven into Bangladesh following the Myanmar military's ethnic cleansing campaign in 2016 and 2017.

Two UN agencies, the UN High Commission for Refugees and the International Organization for Migration, have called for some $934 million to support the refugee camps and host communities for the coming year. Over eight years since the military's pogroms began, international support for the Rohingya has waned.

The now-shuttered U.S. Agency for International Development was the single largest provider of humanitarian assistance for the Rohingyan refugees, accounting for roughly 50% of all food aid. The U.S. government informed the World Food Program that funding would be cut from $12.50 a day per person to $6 a day. The World Food Program has warned that it would reduce food rations to the barest caloric levels.

I'm really delighted to have Stephen Okun, who's a senior advisor at Kroll. He is based in Singapore. Everyone knows who Stephen is. He's been looking and talking about what's happening in geopolitics, particularly in the Trump administration. Today, we're going to talk about what's going on in terms of tariffs. Stephen, thanks very much for being on the podcast. My pleasure. Great to see you again.

Let's talk a bit about the tariffs. There's so much tariff noise, but people don't necessarily know how to unpack it. There's a whole bunch of tariffs that are supposed to be effective this coming week on April 2nd. Can you tell us what type of tariffs, what's going on, how will they impact the region, and more generally, how you see these particular tools being used by the Trump administration to exert economic pressure?

What's the logic of what's going on here? Most people looking at trade would think that tariffs are destructive to an economic relationship. It seems to be that they're coming anyway. So what's going to happen?

First, you always have to remember that the most beautiful word in the dictionary, according to President Trump, is tariff. And the second thing I always remind people is that when Trump says something, believe him when he says tariff is his favorite word in the dictionary. Believe that he is going to use tariffs in a way that hasn't been used in our lifetimes.

So it's hard to predict with any specificity what's going to happen on Reciprocal Tariff Day, or as the President Trump calls it, Liberation Day. It's pretty safe to assume that these are going to be significant tariffs. They're going to go on countries that normally would not have tariffs thrust upon them by the United States, and it will have a significant impact

across the Asia Pacific and that Southeast Asia is no different. It's going to be a significant impact here. Can you unpack for our listeners, what is a reciprocal tariff exactly? Are the particular sectors that are going to be more impacted than others, like autos, for example? Autos for sure, because he's already tariffed those. So we know autos and auto parts is going to be significantly impacted.

Reciprocal tariffs in a way is almost too narrow to understand the Trump administration's thinking. The Trump administration says that anytime there is a trade imbalance between the United States and a country, it must be because that other country is treating the United States unfairly. Because how in the world could the most powerful country in the world have a trade imbalance with anybody? So that's the...

starting point, what you ask yourself if you're approaching this from an America first trade policy is why does the United States have that trade imbalance? Now, the first thing they look at is tariffs. And they will say if a country has higher tariffs for the U.S. going in than the U.S. has for that country coming into the United States, that's unfair and we need to add reciprocity if

in those tariffs rates. So you look at tariff rates, but there's other things that go into unfair trade practices from a U.S. perspective. It could be that a country has a VAT. And if a country has a value added tax, that is something that gets hit by U.S. exports to that country. So the VAT goes into determining what the tariff should be that the U.S. is going to levy. You look at things like

like non-tariff barriers. It could be foreign ownership restrictions.

Are there other unfair trade practices like unfair state subsidies a country is giving to its markets that then means its exports are less expensive? And then that partially results in a trade imbalance. So the Trump administration is looking at everything when it comes to why there's a trade imbalance. And then it is going to determine how much of a tariff to levy on that specific country

given all of those different criteria and probably some that I didn't even mention.

Hope you're enjoying listening to this episode. If you want to find out more about previous episodes, you can reach this on the website, straighttalksouthestasia.com. The link should also be available in the show notes. If you want to contribute to the production costs of the podcast, you can hit the link, buy me a coffee. Every little penny counts. All that money will not go to me, but go to the producers who are helping me to put the show together. Thanks for listening.

There are four countries in Southeast Asia who are on the Dirty 15, which are basically countries that have trade imbalances. And one country is also garnering attention, Singapore, for its focus on transshipments with China. Can you unpack what it means to be on the Dirty 15? What does this mean for the region when four among the most important economies in the region are being targeted for imports?

issues of tariffs. What does this mean from a perspective of uncertainty for businesses? Will the region have a policy to be able to manage this economic coercion that the U.S. is exerting?

Why 15? Because when the Trump administration originally came out, it had talked about literally 100 countries that could have been hit with reciprocal tariffs. And there is just no capacity from an administrative perspective that the United States could have put tariffs on the entire world on one day. It was just not possible. So they had to cut that back.

Why 15? Why not 12? Why not 20? 15 seems to be an imaginable number, and government by soundbite, no way. Let's just do dirty 15. So that's why we're at 15. It could have been less. It could have been more. It certainly seems that the driver to be on the dirty 15 is the trade imbalance that the United States has with each of those countries. And so that's where they are going to go first. It's not where they're going to be ending.

It's starting with the dirty 15. So that is how they chose them. And I think, as you mentioned, literally 30% of Southeast Asia is part of that dirty 15. And that is why you are going to have such a significant impact on Southeast Asia when it comes to April 2nd. It's not going to end on April 2nd, but it is going to have a significant impact on that starting date.

Will there be a regional response from Southeast Asia? I can't think of any significant response ASEAN has ever come up with to an external issue. So no, I can't imagine that ASEAN is all of a sudden going to come together and come up with a regional response, which means it's going to be left to each individual country in the region to respond or not respond as they are doing now.

So these countries on the Dirty 15 are Vietnam, Thailand, Malaysia and Indonesia. Also Singapore focusing on transshipment and in particular the China relationship that is drawing attention to how data centers have operated. Let's talk about how tariffs could impact Southeast Asian economies. You speak regularly to businesses here in the region.

What are the things that you're hearing? We've seen this last week, Indonesia had economic challenges. Most of that is driven by domestic factors, but there's also the tariff cloud as well. What's your sense from the perspective of impact on Southeast Asia's economies? Well, I would say we're short term right now. If you talk to anybody in business, in supply chain, in finance and investing, two words keep coming up, volatility and instability.

You can't make a business decision when you're facing those two dynamics at the same time. So pretty much right now, any new investment, how are you going to shift your supply chains? Where are you going to put new capital? That is really on hold to try and understand what is the impact of an America First trade policy going to be.

That's one thing on hold. Now, there is one exception, of course, and this is where President Trump and those believers in America first and say they're succeeding is that you're getting some investment into the U.S. that you wouldn't have had otherwise. Now, how much of that actually gets executed? Will it really happen? We'll have to wait and see.

Certainly decisions are being made to invest in the U.S. to avoid these tariffs that may not have been made otherwise, might be by U.S. companies, Japanese companies, Taiwanese companies across the board. So you are seeing some decisions on that. Within the region, it's on hold right now, and it has to be on hold because we don't know what the Trump administration is going to do on April 2nd. We don't know what they're going to do after April 2nd. And you said something that was very interesting in that it used to be

You had tariffs on the one hand as a tool that any government would use. And that would be if you wanted to protect your domestic industry. And we see that a lot in this part of the world. Or you want to use them as a way to get certain business practices addressed like the United States is doing when there's unfair trade practices. Now, as you mentioned, tariffs are moving into the realm of sanctions. And it used to be you would sanction tariffs.

a country or you would sanction a company if it violated an export control restriction or the like. And now the Trump administration more and more is using tariffs as another tool for sanctions. And that's something else that businesses have never had to really focus on before because it was clear you were on the sanctions list, you didn't do business with them. They weren't on the sanctions list, you did business with them. Now it's a different era and

And that is why businesses and investors, not only they need to know their entire supply chain, both from a tariff perspective, but also from a sanctions perspective. And it's a lot more complicated. Businesses are often now being thrust into do this on their own, partly because embassies and others don't quite have the same staff that they used to in terms of adjusting to the new environment.

What should businesses be doing? We've already discussed automobiles and EVs, so is it an extension of that? Are there particular sectors that are going to be hard hit? There's a lot of attention to semiconductors in the context of Malaysia. What are the things that we should be looking for? And if you were advising businesses, as you often do, what sort of things should they be doing before as they wait and see?

There's wait and see on what tariffs are going to get applied to which countries.

Are there going to be sector-specific tariffs on top of country-specific tariffs? So that's a wait and see. But in terms of what you need to be doing now is you have to understand we are in a new world. And we are in a world where I used to say in my career, starting back in the Clinton administration and working with UPS and KKR and now the work I do now, I used to say I worked at the intersection of business and government. And now I say I work at the collisiony

of business and government. And you have to understand we are now in the business world, it's an entirely different forces that we are dealing with. What are the things that we need to be understanding now? It used to be what would come to trade, you would have, this is national security and this is what you can't trade.

Then everything else, ag, healthcare, whatever, was all fine. And then there was a little category called dual use. And that was dual use is where you had to really focus to make sure you stayed on the right side of the line. If you sold something for a helicopter, is that helicopter going to be used for military? Is it going to be used for civilian? Those were the kind of questions you'd have to ask. Now, more and more, national security is everything. AI is national security. Renewables are national security.

Anything tech related is national security. A biopharmacist for sure, if not healthcare, is national security. When you're in any sector that can be considered national security, which is more and more, certainly semiconductors, electronics, pharmaceuticals, all of that is going to be under heightened scrutiny. So now you have to understand your

Your risk is greater. Your compliance costs are going to go way up and there's nothing you can do about it. And you better start doing compliance, not only on what's in your supply chain, but who is in your supply chain. And this is something you mentioned Singapore. If you're a U.S. company and you sell to a Singapore company and the Singapore company sells to a Malaysian company,

And the Malaysian company sells to a Chinese company. And that's where the U.S. is going to get concerned. The Singapore company says, well, that's not me. Went to Malaysia and U.S. is going to say, we don't care. You have to know how much more you have to know about your supply chain is critical now.

It's not just know your customer, it's know the entire supply chain in these processes. And you talk a lot about China as being the factor. It's been interesting to watch that the Trump administration has been really ratcheted down its rhetoric on China compared to Trump 1.0. The Trump 2.0, there seems to be more caution.

Everyone was expecting there would be U.S.-China competition the first two months of the Trump administration. The focal point seemed to be on its own neighbors and on Europe and its strong allies. Now, what we're seeing with April 2nd projection and this Dirty 15 list, now the attention seems to be moving towards Asia and, of course, with that Southeast Asia.

What is U.S.-China policy? We hear so much different things about it in the Trump administration. Are these old paradigms that we've just talked about right now, which is that if you're doing business with China, a.k.a. U.S. competitor, will this be something that will impact? Is the tension going to be as same or is it different? The school of thought on China policy is there are lots of debates because we haven't seen clarity in the Trump administration on this. What are your thoughts on this?

The rhetoric is down on China from the U.S., but the action has been there. China has gotten two rounds of tariffs already on it. There's 20% tariffs on China today that weren't there when President Trump was inaugurated. That piece has been there. The thinking is that the administration, for whatever reason, has focused on Greenland and Panama more than they focused on China. Certainly not anything on our bingo cards.

for Inauguration Day, but the attention is turning towards China. And part of what the region is watching is what is China going to do in reaction to U.S. tariffs? Because one of the real concerns in the region is that China is going to take all of that excess capacity that it had been dumping into the United States, which is part of what caused what we have now, and then dump all that excess capacity into Southeast Asia and Europe

in Russia. And that's something those countries don't want any more than the United States wants. So the tariffs that you have going on China right now aren't just from the United States. I mean, they're from Thailand, they're from Indonesia, they're from Canada, they're from the EU. Even the Russians are placing tariffs on China because the Russians want to protect their domestic automotive market. Everybody else needs a domestic automotive market

not only to be able to sell cars, but for national security. That's where a lot of your military equipment comes from. What is China going to do in reaction to what the U.S. does vis-a-vis, and certainly for here in Southeast Asia, we're all watching that very closely. And then there seems to be a little bit of tension in the Trump administration itself on China, because you have in one hand, you could call the China hawks who view China as a

close to, if not an existential threat to the United States and that the United States should be engaged in decoupling with China, then you have the America first portion of the Trump administration who kind of believe China can do what it wants to do and we can do what we want to do and we can coexist and there's no reason we should be focusing military and investment. That seems to be playing out a bit.

One theory is we may go to decoupling. One theory is for U.S.-China, we may just be in the status quo, the in-court status quo plus, where you had the term from the last administration, small yard, high fence. You allow everything into China except what you put in this small yard, AI and chips and the like. Maybe that yard grows a bit, but you still have engagement.

Or maybe you come up with the grand bargain that people seem to think that Donald Trump's a dealmaker and what he would like nothing more is to have some huge bargain that he can sign with Xi Jinping. So all of those options are hanging around the table, right? Are we going to get a birthday summit in June? The two presidents' birthdays are very close to one another. So we're going to have a birthday summit or are we going to have a grand bargain or are we going to keep going on? There's other options.

And that's what makes those words of volatility and unpredictability and instability. That's where we are in U.S.-China relations right now. I think you're quite accurate to show the gamut of things that are still unknown. It's definitely important to recognize Trump 1.0 is not Trump 2.0. They're very different things that are going on right now, both in scope and others. And part of that difference is that the Trump administration is seen very differently and the U.S. is seen very differently.

In all this intensive noise for the last two months, the perceptions of the United States in Southeast Asia have changed. What's your sense of some of those changes?

This was very clear that this was going to be an America first administration. It was going to be a much more distilled version of America first than we got in the first term because the president made clear during the campaign. I wrote about this before the election that if he were to win the Trump administration, no more rhinos, which is an American term, Republicans in name only.

We weren't going to have these institutionalists, McMasters and the Mattises and the Espers and the Cones, that we were going to have true believers in the president who were loyal to him and or to America first. And that is going to be a different administration.

Part of the essence of America First is that America is stronger when it acts bilaterally. It is stronger when it deals with a country one-on-one as opposed to working with partners in allies, as opposed to being in multilateral organizations where its power gets diluted because it's just one of many. And that's what we're saying. This should be no surprise to anybody. You have to respond differently from,

from a business perspective, from a diplomatic perspective, in terms of the United States, which is saying the existing global rules-based order did not advantage the United States or stopped advantaging the United States a decade or more ago.

We should have been doing this before. And so the countries here have to recognize this is the world that we are living in. And of course, it's changing the perception of the United States because the United States has changed. There are some people, and I don't blame them, who are kind of the ostrich who put my head in the sand because I just don't want to watch this anymore. And who can keep track of all of it? And things change all the time. So I would say don't do fat as much as you want to do it.

And it's understandable. Understand that there's different theories that this administration can go in. Think of it in a way almost as a puzzle. We don't know how many pieces there are to the puzzle. We don't know what the shape of the puzzle is. We don't have the borders that you can start with and work your way in. But every day we get a new piece of this puzzle. And understand Trump.

Understand that he means what he says. Now, he may not be able to execute on everything perfectly, but believe him when he says that this is going to be a different world. The United States is going to act differently. You have to take it from there. It will be very interesting to see how countries come together and react.

Will this be the impetus for Southeast Asia to actually come in and do more than it has done from a geopolitical perspective? We've seen the EU start to recognize. I don't compare the EU to Asia. I get that they're very different purposes and different governance and different everything. But the EU is saying we have to change because the United States has changed.

When you're sitting here and watch ASEAN, and ASEAN has never been able to come together on Myanmar. They haven't come together on the South China Sea, which are arguably the two biggest geopolitical risks they have to be dealing with and managing, and they haven't done it, frankly, at all.

is ASEAN. Well, we've now got a third geopolitical risk. It may be a bigger one in terms of trade and economics. And that is the US shifting to this America first approach, much more so than was in Trump 1.0. Is every country still going to be on its own? Because if it is, you're going to have a different dynamic and different reality than if you recognize the other.

This has been Steve Okun, Senior Advisor at Kroll, someone who follows the Trump administration and the U.S. politics very closely and has made very apt predictions of things to look out for. Thank you so much, Steve, for being on Straight Talk Southeast Asia. Thank you, Bridget. I hope to see you my next time up in Malaysia. Thank you for listening to the episode. Subscribe to the show on your favorite podcast listening app. If you'd like to keep up to date on current Southeast Asian political affairs, just keep following me.

This is Bridget Welsh, and I look forward to connecting to you in the next episode. Straight Talk Southeast Asia is produced by Norman Chella, a.k.a. Norm, and you can find him at thatsthenorm.com. Thanks so much for listening. ♪