DBS Group Research says a US court ruling has overturned the unilateral IEEPA tariffs on the ASEAN-6. These countries now face their MFN rates plus a global 15% tariff under Section 122 until July 2026. Legal challenges could still arise before then.
Malaysia, Thailand, Vietnam, and Indonesia would see lower effective tariff rates under the 15% levy. Global Trade Alert estimates reductions of about 1.7 to 3.2 percentage points (pp).
Tariff Impact Across Asean Six
Singapore’s effective tariff rate would rise by about 1.1pp under the same framework. Even so, Singapore would still have the lowest effective tariff rate among the ASEAN-6.
Sector-specific tariffs under Section 232 are unchanged. Current exemptions, including those for semiconductors and non-branded pharmaceuticals, remain in place.
DBS is keeping its regional economic projections unchanged.
The recent US tariff ruling sets a clearer trade landscape. Removing the old IEEPA tariffs creates short-term winners and losers across the region. This shift changes export competitiveness for Malaysia, Thailand, Vietnam, and Indonesia relative to Singapore.
Positioning And Risk Considerations
Over the next few weeks, consider going long the currencies of the main beneficiaries, especially the Malaysian ringgit and the Thai baht. Thailand’s exports to the US, which were over $50 billion in 2025, now face a more favorable rate. Since the news, the baht has already strengthened from 35.2 to 34.8 versus the dollar. Derivative ideas include buying call options on these currencies, or on ETFs that track their local equity markets.
Singapore looks more neutral because its effective rate has edged higher. It is still the most competitive in the bloc, but the change reduces its relative advantage. One possible approach is a pairs trade: favor Malaysian or Vietnamese equities over Singaporean peers, since the market may not have fully priced in this tariff shift.
The key issue is that this tariff system is temporary and could face legal hurdles. It is set to expire in July. That points to elevated uncertainty and higher volatility in regional markets over the next five months. Buying straddles or strangles on major ASEAN equity indices could be a practical way to trade bigger swings, regardless of direction.
Selectivity still matters. Exemptions for major sectors like semiconductors will limit the impact on some stocks. The bigger opportunities may be in non-exempt manufacturing, such as furniture in Vietnam and electronics assembly in Malaysia. These areas reacted strongly to tariff news in 2025. For that reason, derivatives may work better when targeted at specific industries, rather than broad market indices.
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