**Introduction** Tariff shocks could accelerate economic divergence within the Association of Southeast Asian Nations (ASEAN) by affecting member states unevenly, depending on their export structures, industrial capabilities, and geopolitical positioning. Some ASEAN economies may benefit from trade diversion and supply chain relocation, while others could face declining competitiveness, reduced investment, and greater exposure to external economic volatility. As trade policy becomes more closely tied to industrial strategy and geopolitical rivalry, tariff shocks risk reinforcing structural asymmetries within ASEAN and complicating regional economic integration[1][2]. **Contextual background** ASEAN economies are highly integrated into global trade, but they differ substantially in industrial development, technological capability, and dependence on external markets. Singapore, Malaysia, Thailand, and Vietnam are deeply embedded in advanced manufacturing and electronics supply chains, while several lower-income ASEAN members remain concentrated in lower-value manufacturing, agriculture, or commodities. At the same time, rising geoeconomic fragmentation has increased pressure on ASEAN economies to navigate intensifying strategic competition between major powers, particularly the United States and China. Tariff measures are increasingly linked not only to trade balances, but also to national security, industrial resilience, and strategic influence[2]. **How tariff shocks could increase divergence within ASEAN** **1. Trade diversion could disproportionately benefit more competitive ASEAN economies** Tariff escalation between major economies often redirects investment and production toward alternative manufacturing locations. ASEAN economies with stronger infrastructure, deeper supplier networks, and more developed industrial bases are better positioned to capture these opportunities. As a result, economies such as Vietnam and Malaysia are better positioned to absorb redirected manufacturing and foreign direct investment because they are already integrated into electronics and intermediate goods supply chains, while Singapore benefits through logistics and financial services[3]. Less developed ASEAN economies may attract fewer gains because they lack the industrial base needed to support large-scale supply chain relocation. This could widen gaps in productivity, export sophistication, and industrial upgrading across ASEAN[1]. **2. Tariff shocks may expose weaker ASEAN economies to greater external vulnerability** Economies that rely heavily on a narrow export base or external demand are more vulnerable to global tariff escalation and slower trade growth. Tariff shocks can reduce manufacturing orders, weaken commodity demand, and discourage cross-border investment, with disproportionate effects on smaller and less diversified economies. Geoeconomic fragmentation is expected to generate larger relative losses for smaller open economies that depend heavily on trade integration[4]. Within ASEAN, lower-capacity economies may find it harder to offset external shocks through domestic demand or fiscal support, increasing the risk of uneven growth trajectories across the bloc. **3. Strategic realignment pressures may deepen policy fragmentation within ASEAN** Tariff measures increasingly operate within a broader geoeconomic environment shaped by US-China rivalry and security-linked trade policies. ASEAN members have responded differently depending on their economic structures and strategic priorities, creating the risk of diverging alignments within the region. Countries such as Vietnam and Thailand are likely to deepen economic and security ties with the United States, particularly in electronics and advanced manufacturing supply chains, while economies such as Laos and Cambodia remain more closely tied to China economically[2]. Some economies, including Malaysia, may continue hedging between competing blocs. Over time, these diverging alignments could produce separate production corridors and overlapping regulatory standards, raising compliance costs and slowing intra-ASEAN trade integration. This would weaken ASEAN’s policy cohesion and reduce its collective bargaining power in regional and global trade negotiations[2]. **4. Uneven industrial policy capacity could widen development and industrial gaps within ASEAN** Governments increasingly use subsidies, investment incentives, and local content measures to strengthen domestic industries and improve resilience against tariff shocks. However, ASEAN members have highly unequal fiscal and institutional capacities to use these policies effectively. More advanced economies such as Singapore are better positioned to support higher-value industries linked to semiconductors, digital trade, and clean energy manufacturing. Lower-income ASEAN members may remain concentrated in lower-value activities without the fiscal resources or institutional capabilities needed for industrial upgrading[1]. Over time, tariff shocks combined with industrial policy competition could widen existing gaps in technological capability, productivity, and industrial development across ASEAN. **Conclusion** Tariff shocks could accelerate economic divergence within ASEAN by amplifying existing differences in industrial capacity, investment attractiveness, and resilience to external trade disruptions. Some ASEAN economies may benefit from supply chain diversification and strategic investment inflows, while others risk slower growth, weaker industrial upgrading, and greater vulnerability to fragmented trade conditions. As global trade becomes more shaped by geoeconomic rivalry and industrial policy, ASEAN’s long-term cohesion will depend on its ability to manage these asymmetries and sustain inclusive regional integration.
