Malaysia’s ASEAN Chairmanship and Trump 2.0: Challenges and Opportunities

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On 1 January 2025, Malaysia assumed the 2025 ASEAN Chair for the fifth time since the Association of Southeast Asian Nations was established in 1967. With ‘Inclusivity and Sustainability’ as the annual theme, Malaysia has made clear its two key priorities. On the strategic front, it aims to foster a more inclusive regional dialogue and engagement, whether in restoring peace in Myanmar, responding collectively to Trump’s renewed tariff war, or engaging China in the Indo-Pacific in a more meaningful and transparent manner. 

It would be particularly interesting to gauge how Malaysia’s traditional ‘non-aligned’ stance plays out vis-à-vis Beijing on the South China Sea (SCS) issue, and whether it can achieve any meaningful progress on that front. On the Myanmar front, Malaysia has already secured some gains by ensuring that the Tatmadaw and the National Unity Government (NUG) extend their ceasefire. Malaysian Prime Minister (PM) Dato’ Seri Anwar Ibrahim’s participation in the recent talks held in Bangkok demonstrates this proactive approach.

Malaysia’s ASEAN 2025 agenda also includes trade and investment, supply chain resilience, climate change, and sustainable development as the remaining pillars of this plan.

Furthermore, Malaysia’s ASEAN 2025 agenda also includes trade and investment, supply chain resilience, climate change, and sustainable development as the remaining pillars of this plan. In his address at the 44th ASEAN Summit Plenary Session in Vientiane, Laos, PM Anwar clearly outlined his priorities, including “expanding trade and investment linkages and fostering digital transformation in the region.” He further emphasised, “ASEAN needs to secure the regional supply chain and strengthen its global economic linkages…I believe that with determination and commitment, ASEAN can achieve economic resilience and be on track to become the fourth-largest (global) economy by 2030.”

2025 also marks the decadal anniversary of the formal establishment of the ASEAN Community. Timely as it is, Malaysia’s Chairmanship would allow it the opportunity to lay the foundations for realising the ASEAN Community Vision 2045.

However, as ASEAN Chair, Putrajaya must now steer the bloc through an increasingly complex geopolitical and geoeconomic landscape. Key among these challenges are Donald Trump's return to the White House as the 47th President of the United States (US), the intensifying US-China rivalry, and the protracted SCS dispute, which risks turning into an accidental conflict if China-Philippines tensions keep escalating.

Trump's well-documented disregard for multilateralism, coupled with his ongoing tariff wars against allies, partners, and rivals alike, amidst escalating US-China tensions, further complicates ASEAN’s task of maintaining unity and strategic autonomy. The rapidly evolving geopolitical landscape underscores that while challenges such as the SCS dispute and the US-China rivalry are pressing, those in the realms of trade, investment, and supply chain resilience are even more immediate and critical.

Trump 2.0 and US-ASEAN Relations

During his first term, Trump exhibited a transactional approach to foreign policy, prioritising economic gains and bilateral negotiations over multilateral commitments. His absence from ASEAN-led meetings, such as the East Asia Summit and forums, resulted in reduced US engagement with ASEAN. His return to the White Office has signalled significant policy shifts from the previous Biden administration, which are likely to directly impact Southeast Asia— a region central to global trade and supply chains. The signs of such a policy shift are already emerging. 

Malaysia’s calibrated approach to simultaneously engage both the US and China would necessitate diversified diplomatic strategies to hedge against any potential volatility in US policy towards ASEAN and the broader Indo-Pacific region. 

Under Trump’s leadership, scepticism toward multilateral frameworks such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Indo-Pacific Economic Framework (IPEF), Asia Pacific Economic Cooperation (APEC) and the ASEAN-centred Regional Comprehensive Economic Partnership (RCEP) is likely to arise. The likelihood of Trump participating in the APEC (Asia-Pacific Economic Cooperation) and the ASEAN-steered EAS (East Asia Summit) also appears minimal. 

These developments raise concerns regarding Malaysia’s ability to make its 2025 ASEAN Chairmanship meaningful while ensuring continued US engagement, one of its most significant dialogue partners. The US participation in ASEAN meetings this year is particularly significant for Malaysia as a host. A critical step would be to strengthen ASEAN's diplomatic efforts across multiple key platforms, including regional ASEAN-led regional institutions. Malaysia’s calibrated approach to simultaneously engage both the US and China would necessitate diversified diplomatic strategies to hedge against any potential volatility in US policy towards ASEAN and the broader Indo-Pacific region. 

Trade and Investments as Diplomatic Tools

In light of the Trump administration’s economic priorities, Malaysia could propose strategic initiatives that align ASEAN’s interests with those of the US. For instance, positioning itself as a reliable supplier and processor of critical minerals needed for the US technology and defence industries. With rising global competition for such resources, especially amid China’s halting of the export of critical minerals, Malaysia's role as a stable supplier could bolster bilateral economic ties and incentivise continued US engagement in the region. 

Given that the Trump administration is likely to revisit most existing trade arrangements—potentially expanding engagement with partners such as India and Indonesia—ASEAN should proactively explore the feasibility and possibilities of a comprehensive ASEAN-US Free Trade Agreement (FTA).

The US-based multinational company, Intel, recently placed its Penang (Malaysia) project on indefinite hold due to financial constraints—a setback for Malaysia’s aspirations in the semiconductor industry. This project was envisioned as a critical step that would have helped the country achieve the ‘third leap’ in semiconductor development. 

Notably, US investments in the 1970s were instrumental in establishing a strong semiconductor base in Malaysia. To realise its renewed ambition of becoming a global semiconductor hub, as reiterated by PM Anwar, Putrajaya must prioritise strategic collaboration with the US. Malaysian leaders have consistently stated that the country seeks to avoid taking sides in the US-China competition—a policy often termed a 'hedging' strategy. Now is an opportune time to actively implement and operationalise this strategy, particularly in the economic domain. Rather than becoming overly reliant on China for economic security, Malaysia and ASEAN should pursue a more ‘constructive engagement’ with the US to secure mutual economic gains, especially if new tariffs or trade restrictions are imposed.

Malaysia could consider advocating for a long-term investment framework that channels Malaysian funds into select sectors of the US economy. From the Malaysian end, for instance, Petronas and PERTAMINA could invest in US natural gas projects, while conglomerates such as the MMC (Malaysia Mining Corporation Berhad) could contribute to strengthening the trade infrastructure. This strategy would build economic interdependence and contribute to de-escalating the risk of unilateral US tariffs targeting Malaysian/ASEAN exports. Negotiating reciprocal tariff agreements may serve as a preemptive buffer against protectionist policies that the Trump administration could potentially introduce. 

Trump’s Isolationist and Unilateralist Tendencies

Trump's disinterest in multilateral diplomacy, reflected in his broader ‘America First’ policy, may lead to reduced US involvement in regional initiatives such as the Just Energy Transition Partnerships (JETP). These initiatives, which support energy transitions in countries such as Vietnam and Indonesia, could face funding cuts, hindering ASEAN’s progress toward sustainable development and clean energy. Such a withdrawal may force ASEAN members to seek alternative partnerships with the European Union (EU), China, India, or Japan to fill the financial and technological gaps left by the US. 

Trump’s approach to security in Southeast Asia is likely to remain transactional yet assertive. His first term saw strengthened ties with key ASEAN member states such as Indonesia, Vietnam and the Philippines – a trend already resurfacing.

Moreover, Trump’s well-documented scepticism toward climate change mitigation, global public health forums such as the World Health Organisation (WHO), and gender equality initiatives could further weaken ASEAN’s progress in these domains. The absence of strong US support may slow down efforts toward sustainable development goals, threatening not only climate resilience efforts but also long-term economic stability. 

 Malaysia and ASEAN’s Diplomatic Dilemmas

Trump’s approach to security in Southeast Asia is likely to remain transactional yet assertive. His first term saw strengthened ties with key ASEAN member states such as Indonesia, Vietnam and the Philippines – a trend already resurfacing. Although Trump has shown limited interest in the SCS dispute, his second term would likely witness a firmer US position on the issue targeting China. Reinforcing military presence, strengthening security cooperation with partners such as the Philippines and Vietnam, and elevating ties with  Singapore and Indonesia are other possibilities. While this could deter Chinese expansionism, it also risks heightening regional tensions—something ASEAN’s consensus-based, dialogue-driven mechanisms are ill-equipped to defuse.

A major concern for Malaysia's ASEAN chairmanship is the potential shift in US security policy—from “engagement” to overt rivalry with China. While this may be welcomed by countries such as Vietnam and the Philippines, none of the SCS claimant countries would want to face a scenario akin to the Ukraine conflict—where Trump unilaterally reverses his position and announces his willingness to talk to China, just as he did by initiating talks with Russia in the Ukraine conflict. 

If the US opts for a grand bargain with China that sidesteps ASEAN interests, the region risks being excluded from shaping its own security and economic futures. Malaysia's role as the ASEAN chair is, therefore, critical in ensuring that the region's collective interests are not sacrificed in great-power negotiations. Strengthening ASEAN's internal mechanisms, such as the ASEAN Outlook on the Indo-Pacific (AOIP), could serve as a strategic counterbalance to external power plays. As ASEAN 2025 Chair, Malaysia is well-positioned to act as the group’s ‘collective voice’ and a neutral arbitrator in the US-China dynamics, provided it does not lean too much towards China. A nuanced diplomatic posture is essential: one that promotes de-escalation while maintaining inclusive regional security dialogues involving both the US and China. 

The Way Forward

The uncertainties surrounding a second Trump presidency present a complex mix of challenges and opportunities for Malaysia's 2025 ASEAN chairmanship. While diminished US multilateral engagement and heightening US-China tensions may weaken existing ASEAN initiatives, these shifts also open new avenues for ASEAN to assert its strategic autonomy and 'convening power' in the emerging Indo-Pacific order. A strategic, multi-layered approach—encompassing economic diversification, adaptive diplomatic skillsets, and security pragmatism—is essential for ASEAN under Malaysia’s 2025 Chairmanship to navigate the shifting geopolitical tides.

Rahul Mishra is Associate Professor, Centre for Indo-Pacific Studies, Jawaharlal Nehru University, New Delhi and a Senior Research Fellow, German-Southeast Asian Centre of Excellence for Public Policy and Good Governance, Thammasat University, Thailand.

Asma Rassy and Nurul Majidah (Jade Zihan) are research scholars at the Universiti Malaya, Kuala Lumpur, Malaysia.

• International Affairs
• Great Power Dynamics
• US Foreign Policy
• East and Southeast Asia
• 2025 asean chair
• asean chairmanship
• asean in 2025
• asean summit
• malaysia chairmanship asean
• us asean relations

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