Editor’s Note
by Mattia Peroni, Lead Editor - Mekong Belt Desk
Trade can start wars, but it can also end them—at least for now. In this issue of the Mekong Belt we unpack how intertwined Southeast Asia’s future has become with shifting U.S. trade policy and the region’s own political realities. From Thailand’s hard-won tariff reduction to Laos’s struggle under some of the steepest U.S. rates, and Cambodia’s ceasefire diplomacy intersecting with trade negotiations, the through-line is clear: access to the American market remains a powerful bargaining chip. These economic recalibrations are unfolding against a volatile backdrop—most starkly in Myanmar, where Washington’s rollback of sanctions on junta-linked businesses risks undoing years of pressure that had curbed the military’s firepower. For these reasons, at the table is a region negotiating not just trade terms, but the terms of its stability—where every percentage point, every shipment, and every handshake has the potential to shift the balance between prosperity and peril.
Thailand 🇹🇭
Thailand Wins Tariff Relief After Ceasefire with Cambodia
by Natamon Aumphin, in Bangkok
Thailand and Cambodia secured a major trade win after agreeing to a sudden ceasefire along their disputed border—a move that quickly paid off in Washington. Just two days after the truce, President Donald Trump’s administration announced a sharp cut to their reciprocal tariffs, slashing Thailand’s rate from 36% to 19%, matching that of its neighbors.
The breakthrough followed a tense five-day clash in late July that left several dead. On July 24, Trump warned that tariff negotiations would be taken off the table unless the two countries halted hostilities. By July 28, both countries agreed to a ceasefire in Kuala Lumpur, with Malaysia as the mediator. The speed of the deal underscored how critical U.S. trade ties are, with America buying roughly one-fifth of Thailand’s exports, worth more than US$45.5 billion annually.
The new tariff was set at 19%, which is similar to the rates that Trump imposed on other Southeast Asian nations. Since the region is heavily reliant on exports, the decision to put on par tariff rates will help maintain regional competitiveness.
The U.S. constitutes one-fifth of Thailand’s exports, generating a surplus of over $45.5 billion. Yet, unlike Vietnam, Thailand did not rush to the negotiating table until the border conflict prompted Trump’s direct involvement. On the contrary, Thailand faced several challenges in securing the new deal. Beyond its large trade surplus, these included its decision to deport 40 Uyghur asylum seekers to China—defying a request from U.S. Secretary of State Marco Rubio—and a court ruling that jailed U.S. academics on lèse-majesté charges. Moreover, earlier last month, Thailand had failed in its previous attempt to lower the tariff, making these latest talks high-stakes, as they were the final opportunity before the reciprocal tariff took effect on August 7, 2025.
Therefore, to seal the latest deal before the August 7 tariff deadline, Bangkok made significant concessions. It granted tariff exemptions on over 90% of U.S. goods—opening even its highly protected agricultural sector—and pledged to cut its trade surplus with the U.S. by at least 70% within three years. Thailand also agreed to address transshipment, a practice in which the production of goods from countries facing steep tariffs—particularly China—is relocated through Southeast Asia to avoid the fees. Although the “China Plus One” strategy and Southeast Asia’s reliance on exports turned the region into a hotspot for this kind of tariff evasion, how Thailand plans to enforce its pledge remains unclear, and so remain the implications these efforts will have on Thailand’s industrial sectors.
Hence, while the tariff cut offers welcome relief for Thailand’s sluggish economy, it comes with strings attached. Sustaining the deal will require tighter trade compliance, greater transparency, and careful navigation of U.S. demands, or Bangkok might find itself back on the wrong side of Washington’s tariff wall.
Natamon has served as a rapporteur at the Institute of Security and International Studies (ISIS Thailand). She has also worked as a research assistant on diplomatic issues in Southeast Asia. Her work focuses on how domestic politics shape foreign policy in the region. She holds a degree in international relations and has experience in policy analysis, event reporting, and regional research.
Lao PDR 🇱🇦
Laos Hit Hard by U.S. Tariffs as Global Trade Politics Shift
by Chammie Lo, in Vientiane
Donald Trump’s latest round of tariffs has left Laos among the hardest-hit ASEAN members. While Thailand, Cambodia, and Vietnam managed to negotiate rates near 20% through bilateral deals, Laos faces a punishing 40% tariff—stacked on top of existing duties from single-digit MFN rates. For a landlocked nation already struggling to secure its place in global value chains and move up the industrial ladder, this is a crushing blow.
Looking at recent developments in U.S.-Laos trade, it is not hard to understand the drivers of American policy. Despite Laos’ modest export volumes, bilateral trade with the US has surged from $166 million in 2019 to $843 million in 2024. Last year, America imported $802.8 million worth of Lao goods while exporting only $39.8 million in return, creating a $763 million deficit that caught Washington’s attention. Specifically, America’s Lao import portfolio consists mainly of electronics assemblies for phones and televisions, footwear, apparel, and coffee.
What the policy overlooks is the stark economic asymmetry. The average Lao citizen produces barely $2,124 annually, less than 3% of the average American counterpart. That figure is also partly shaped by a legacy that the U.S. has contributed to shape: tens of millions of bombs dropped during the Vietnam War, of which many still unexploded, continue to affect citizens decades later. At the current clearance rate, they’ll still be there for generations.
Unlike American consumers who can switch suppliers, Laos has no such flexibility. The economy confronts twin crises that will amplify the tariff’s impact: a labour shortage caused by the migration of over 200,000 workers to Thailand and South Korea, and double-digit inflation that persisted through Q1 2025.
Among all sectors, the garment sector, which contributes 13% of Lao’s GDP, faces the most visible impact. Industry leaders warned that 20,000 jobs and up to 40 factories tied to U.S. orders could vanish. The uncertainty brought by the tariff will also make foreign investors think twice about setting up factories in Laos, undermining the country’s pitch as a manufacturing diversification hub.
Ironically, this move could push Laos further into China’s orbit. Chinese investors already dominate the country’s rail, mining, and energy sectors. The China-Laos railway, operational since 2021, has reshaped the country’s narrative from landlocked to “land-linked,” cutting freight travel times to Europe in half compared to sea routes.
As Laos is scheduled to “graduate” Least Developed Country status by next year, the country must decide whether to continue pursuing low-margin manufacturing jobs, an advantage rapidly eroded by AI and automation, or pivot towards sectors that leverage its natural assets—including agri-processing, niche handicraft, ecotourism, and the emerging logistics services along the railway corridor.
Chammie is a development professional working on sustainable finance and inclusive livelihoods in Laos. She holds a degree in Politics and Law from the University of Hong Kong and has contributed research insights to academic and community spaces on heat governance, climate migration, and emission transparency.
Cambodia 🇰🇭
Cambodia backs establishment of ASEAN observer group to safeguard fragile ceasefire with Thailand
by Chandara Samban, in Kandal
Cambodia and Thailand agreed to an immediate and unconditional ceasefire on July 27, 2025, after five days of clashes along the border that displaced more than 300,000 people on both sides and left at least 36 dead. Despite the ceasefire, distrust still runs deep, with each side accusing the other of violating the truce.
On August 5, the Cambodian Ministry of National Defense claimed that Thailand had violated the ceasefire and encroached on its territorial integrity by moving troops, digging bunkers, and laying barbed wire in the An Ses area near the Preah Vihear temple, a World Heritage Site located between Preah Vihear and Sisaket provinces.
Two days later, at the General Boundary Committee (GBC) meeting in Kuala Lumpur, Cambodia and Thailand agreed on 13 points, including a commitment to “uphold the spirit of the ceasefire.” The most notable outcome was a decision to draft Terms of Reference (TOR) for an ASEAN Observer Team, comprised of Cambodian and Thai representatives, to monitor and verify compliance on the ground.
Cambodian government spokesman Pen Bona told The ASEAN Frontier that Cambodia welcomes the ASEAN Observer Team mechanism as an important step to ensure the ceasefire’s implementation, emphasizing the need for both parties to observe and monitor closely to avoid mutual accusations of violations.
“Cambodia hopes with high expectations that the ceasefire observer mechanism will be important and effective in upholding the ceasefire,” he said. “Apart from ASEAN, we have two other major countries—namely the United States and China—actively involved. We hope that there will be a real ceasefire in the future.
Pen Bona praised Malaysia, ASEAN’s 2025 chair, for brokering the ceasefire and pushing the monitoring proposal. The spokesman also urged both ASEAN and the wider international community to monitor the ceasefire’s implementation, while also stressing that Cambodia does not seek armed conflict but will defend its sovereignty if necessary.
Thong Mengdavid, an international affairs expert affiliated with the China-ASEAN Studies Center, said the observer team could help build trust among Cambodia, Thailand, and ASEAN, paving the way for longer-term negotiations. Still, he noted that tensions persist along the border, with both militaries remaining on alert, expressing hope that the mechanism could facilitate the unconditional release of 18 Cambodian soldiers detained by Thailand.
Ultimately, the establishment of an ASEAN observer mechanism is a promising step toward stability, offering a framework to monitor compliance and ease tensions. Yet, with mistrust lingering, soldiers still on alert, and long-standing territorial disputes unresolved, the ceasefire remains fragile—and its survival will depend on sustained diplomacy and mutual restraint.
Chandara is a freelance journalist with a focus on foreign affairs, security issues, and ASEAN affairs. He also serves as a Junior Counterterrorism Intelligence Analyst.
Myanmar 🇲🇲
Trump's Sanctions Lift: A Hidden Lifeline for Myanmar's Military Regime
by May
As preparations intensify for the upcoming elections, the military regime abolishes the state of emergency in some regions of Myanmar. Things may seem settled down, but it only touches the tip of the iceberg.
In a move that stunned human rights advocates, the United States quietly lifted sanctions on several companies and individuals tied to the military regime. have long been known for their role in financing and facilitating military procurement in exchange for political loyalty. These sanctions, first imposed under the Biden administration after the 2021 coup, were reversed on July 24 by the U.S. Treasury Department under President Donald Trump.
In a decision that stunned human rights advocates, the United States quietly lifted sanctions on several companies and individuals tied to the military junta. These figures, commonly referred to as “junta cronies,” have long served as financial intermediaries facilitating transactions for military weaponry in return for political loyalty. The sanctions were imposed under the former Biden administration shortly after the coup in 2021, however, their removal was announced on July 24th by the U.S. Treasury Department under the new Trump administration.
While U.S. ambassadors maintain no formal engagement with the junta, President Trump sent a letter in early July to coup leader Min Aung Hlaing, offering to lower a previously announced 44% tariff to 40% in exchange for a new trade deal—paired with a promise to lift U.S. sanctions. The Senior General, in turn, praised Trump for “regulating broadcasting agencies and funds,” a nod to the administration’s cuts to Voice of America and Radio Free Asia, two outlets that have independently covered the Myanmar war and consistently reported the military’s ongoing violations of human rights.
According to Tom Andrews, the UN Special Rapporteur on Human Rights in Myanmar, the individuals and businesses removed from the sanctions list have been directly linked to the junta’s domestic weapons manufacturing, supplying critical raw materials for ammunition and military equipment. Sanctions had proven to be effective in the past, successfully reducing the volume of military equipment by 30% between 2023 and 2024, significantly affecting the junta’s capacity to carry out indiscriminate bombings of hospitals, refugee camps, and civilian neighborhoods. Reversing them, Andrews said, signals a concerning trend for Burmese civilians, and a major setback for international efforts on humanitarian aid.
Investigations by Washington-based advocacy groups reveal that U.S. law firms have helped junta cronies navigate sanctions loopholes and re-enter the business world. For clients like Jonathan Kyaw Thaung, a businessman exposed by The New York Times for supplying the junta with European aircraft and naval weapons, these firms offered legal methods and lobbying services to evade those sanctions.
The Trump administration has not explained the rationale for the sanctions rollback. Critics suspect it to be related to strategic competition with China, particularly over Myanmar’s lucrative rare earth mineral reserves. Although the majority of the resources lie under Kachin Independence Army (KIA) territories, the extraction and export still pass through junta-controlled systems. In this context, speculation arose about the possibility of the United States using the junta as a go-between to negotiate with the KIA, with critics warning that such move would hand the military regime both political legitimacy and fresh revenue.
What appears on paper as a calculated diplomatic shift risks becoming a lifeline for a regime still waging war on its own people. For Myanmar’s civilians, the rollback of sanctions may not bring peace, but rather fuel the very violence the world claims to oppose.
May has previously worked in the editorial department at a media group in Myanmar. She also has experience in film and photography, and engages with people-centered stories through her travels and creative work.
Editorial Deadline 08/08/2025 11:59 PM (UTC +8)
