SEA’s Export Boom: How to Track the Effect on Chemicals Demand and Trade Flows
THE FT REPORTS that Southeast Asia (SEA) has weathered the latest US tariff blitz, with SEA exports to the US up ~25% in Q3 2025 vs Q3 2024. This resilience is underpinned by tech demand, Asia’s cost advantages, and the rerouting of goods that previously moved directly from China to the US.
The newspaper highlights how “China + 1” strategies have held up: Cambodia’s apparel shipments kept growing after headline tariffs were trimmed, and indirect exports from China via SEA hit record levels—with Vietnam, Indonesia, Thailand, and Cambodia emerging as prominent nodes.
But Washington’s renewed focus on “trans-shipped” goods and high Chinese content has put a spotlight on origin auditing and supply chain declarations. Freight and legal experts warn that stricter enforcement of rules of origin and anti-circumvention will complicate rerouting strategies that rely heavily on Chinese intermediates embedded in SEA exports.
Why this matters upstream
Chemicals producers, traders, and distributors must monitor the implications for overall SEA chemicals demand growth and for changes in trade flows. In a worst-case outcome—which seems unlikely—the US slams the door shut on SEA exports, severely suppressing local economies and chemicals demand.
Alternatively, where some chemicals are not available locally, downstream manufacturers might switch sourcing from China to friendly third-party countries and regions with which the US doesn’t have a trade dispute—e.g., the Middle East, South Korea and Japan.
As always in this post-Chemicals Supercycle world, we face much greater complexity requiring deeper, more nuanced scenario planning. This post can only scratch the surface of that planning. But I hope the thoughts that follow will give you a framework for thinking about the challenges and opportunities created by the re-ordering of global trade flows.
Before we get into the framework for analysing downstream industries in SEA, here’s some important background. And note that what applies to SEA also applies to other export-focused economies that serve as alternatives to China, such as India, Turkey, and Mexico. I will focus on these other countries in later posts.
Why SEA has stayed resilient despite the tariff noise
• Established diversification and capacity: Corporate relocation and expansion into Vietnam and neighbouring markets didn’t begin last quarter—it’s been building since the first Trump trade war. Factory-level reporting shows greater OEM clustering (electronics, modules, and assembly) across northern Vietnam, backed by cost, labour, and supply chain density.
• China + 1 is broadening: 2025 saw marquee moves by Apple, HP, Dell, and Foxconn to diversify output to India, Vietnam, and Mexico, reinforcing a multi-node production footprint that can serve US and EU demand even with tariff friction.
• Tech carve-outs and demand: The FT notes that many tech-related exports were exempted and electronics shipments were expanding ~40% YoY—a powerful support for SEA’s throughput even as non-tech products face tariff regimes.
Three headline scenarios for SEA chemicals demand
• BestCase (accelerated indirect boom): With exemptions intact and audits manageable, expect high demand growth for PP/PE, styrenics, polyesters, engineering plastics, plus solvents/adhesives/films for packaging, consumer electronics (smartphones, laptops, tablets, electrical appliances), and sub-assemblies (printed circuit boards, connectors, housings).
• Medium Case (compliance drag): Overall chemical and polymers growth flat to low single digit. Commodity chemicals demand slows because of the impact on lower-value manufacturing. But demand for higher-value chemicals that go into consumer electronics and electrical appliances is unaffected because of legislative carve-outs and SEA’s supply-chain advantages. However, lead times affect all chemicals demand.
• Worst Case (gate slams shut—low probability): Coordinated, punitive rules and minimal carve-outs hit exports hard. Chemicals and polymers demand contracts sharply in H1 before pragmatic reopening pressures mount (buyers need scale/cost; alternatives are limited), making a prolonged “closed door” unlikely.
The above chart shows the ICIS base case for SEA demand growth across a broad range of polymers from now until 2030. We expect demand to rise to 32.8m tonnes in 2030 from 28.5m tonnes in 2030, representing annual average growth of 4%. This serves as a reasonable starting point for the medium Case outcome. Discuss with our experts what demand could look like under the Best Case and Worst-Case outcomes.
It’s not straightforward to replace SEA’s scale, cost base, and supplier density in electronics and consumer products for the US/EU in the near term. Past trade actions have also often evolved into managed compromises—sector carve-outs, phased thresholds and documentation-heavy compliance regimes.
Plus, as we shall now discuss, a lot will depend on how downstream manufacturers respond to a significant uptick in rules of origin and compliance rules.
Chemicals producers, traders and distributors must:
- Assess whether their customers are mapping their exposure by product and markets to stricter rules of origin. Are they identifying Chinese content within their Bills of Material?
- Are they pre-qualifying alternative chemicals and polymers suppliers—for example, examining the feasibility of replacing Chinese ABS supplies with supplies from South Korea?
- Are they investing more in compliance operations such as audit-ready traceability (lot-level certificates, chain of custody). Are they training their teams on rules of origin calculations?
What should also be watched are shifts in headline indicators: FDI announcements (component parks, compounding lines), freight rates, transit times and new antidumping and countervailing duty announcements.
Conclusion
It is not all doom and gloom. Yes, we are in a downcycle that might last until the mid-2030s. Yes, we face probably the greatest geopolitical uncertainty since the 1930s. Climate change, ageing populations, and the long-term secular decline of growth in China represent major challenges. The global trading system has been shaken up by the current White House.
But by being smart, nimble, and flexible, there is money to be made despite the headline doom and gloom. Chemicals producers, traders, and distributors can make some of this money—as this post has sought to demonstrate—by accurately predicting the future direction of SEA manufactured-goods exports.
The post SEA’s Export Boom: How to Track the Effect on Chemicals Demand and Trade Flows appeared first on Asian Chemical Connections.