Warburg Says Comparable U.S. Tariffs Will Be Slapped On ASEAN Markets

Southeast Asian nations will likely be subject to comparable U.S. tariffs because large disparities would fail to meaningfully reduce the overall trade deficit, according to Jeffrey Perlman, CEO of private equity firm Warburg Pincus, Bloomberg News reporters Cathy Chan and Haslinda Amin reported.

Warburg Pincus is one of the largest global private equity firms active in Southeast Asia. I Photo: James Petts Wikimedia Commons

Drastic tariff differences would merely shift the trade deficit among countries rather than eliminate it, Perlman said. Some nations may negotiate for lower tariffs, especially if the U.S. recognizes that certain regional products are unlikely to be domestically produced.

“The tariff rates will probably be pretty close—sitting on top of each other across a number of those markets,” he said.

The 20% tariff on Vietnam still makes the country “very competitive” and “well positioned,” given its reputation as a high-quality producer, he added.

The U.S. said it reached a tentative deal with Vietnam for a 20% tariff, while regional rivals such as Thailand, Malaysia, and Indonesia face tariffs ranging from 25% to 40%.

Warburg Pincus is one of the largest global private equity firms active in Southeast Asia.

The firm has invested more than $5 billion in 28 companies across financial services, healthcare, real estate, technology, and business services. It has around $2 billion committed to eight Vietnamese companies.

Private equity firms will continue to face headwinds from a higher-rate environment.

Firms that went on a buying spree in 2021 at “very high valuations” are now likely to face tough times, Perlman warned.

He also noted a “structural step-up” in long-term rates, which will likely hover between 4% and 6%, rather than the previous 2% to 4% range, as Paolo Montecillo, Naman Tandon, and Sam Nagarajan also reported for Bloomberg News.