As European leaders turn their gaze toward Southeast Asia in response to escalating trade tensions from Washington’s tariff policies, experts caution that the existing framework of regional trade relationships presents significant barriers against challenging the established dominance of the U.S. and China.
Southeast Asia finds itself in a complex situation, grappling with a proactive China that has intensified its presence in the South China Sea. Recently, advanced Chinese bomber aircraft were observed in the disputed Paracel Islands, raising tensions particularly with the Philippines. Concurrently, the United States threatens to impose tariffs globally, leading to increased uncertainty as a 90-day postponement of trade measures approaches its end in July.
Amid this landscape, Europe is poised to establish itself as a potential alternative partner for emerging Asian economies. French President Emmanuel Macron emphasized this vision during the 2025 Shangri-La Dialogue, advocating for strengthened partnerships between Europe and Southeast Asia.
According to Bob Herrera-Lim, managing director at Teneo, Southeast Asia represents a significant market opportunity for Europe’s defense sector. Céline Pajon from Ifri added that the region could serve as a vital diversifier in supply chains, reducing economic dependencies on either the U.S. or China while also holding substantial natural resource reserves crucial for the EU’s green and digital transitions.
Despite Europe’s aspirations in the region, analysts remain skeptical regarding its capacity to eclipse the influence of the U.S. or China. Pajon noted in an email to Finance Newso that while Europe can provide Southeast Asia with a valuable alternative to mitigate dependence, it faces an uphill battle.
Trade trumps all
Southeast Asian and European relations, although spanning over half a century, have encountered numerous obstacles, primarily attributed to geographic distance and differing political and environmental perspectives, as pointed out by Teneo’s Herrera-Lim.
During his keynote address at the Shangri-La Dialogue, Macron highlighted the need for a robust alliance between Europe and the Indo-Pacific, addressing the “potential erosion of long-standing alliances” and the threat posed by nations seeking territorial control. He drew comparisons between China’s activities in the South China Sea and Russia’s invasion of Ukraine.
However, Herrera-Lim cautioned that such shared experiences may not be sufficient to sway emerging Asian nations away from their established partnerships with the U.S. and China. “Form follows function in Southeast Asia,” he remarked, noting that economic relationships are paramount in defining alliances in the region.
While the EU has existing trade agreements with Singapore and Vietnam, efforts towards new bilateral agreements and a broader EU-ASEAN free trade agreement have stalled for several years. Pajon emphasized that the EU still has considerable work ahead to enhance its investments and presence in Southeast Asia.
Beijing, for its part, has been Southeast Asia’s largest trading partner since 2009, with bilateral trade amounting to $982.3 billion in 2024. The U.S. ranks second with an estimated $476.8 billion in goods traded last year, while the EU lags behind with approximately €258.7 billion ($299.7 billion) in trade during the same period.
Without significant reforms or the promise of expanded trade opportunities, Herrera-Lim warned that Europe would struggle to compete against its established trading counterparts. “If China were to announce reforms aimed at opening domestic markets to Southeast Asian goods, those countries would eagerly seek access, irrespective of the political climate,” he explained.
Resisting
While Europe may not fully replace the influence of the U.S. or China in Southeast Asia, it can still present itself as a reliable partner that fosters transparent collaboration, according to Lizza Bomassi, a research analyst at the European Union Institute for Security Studies (EUISS).
“Europe’s value proposition lies in being a trustworthy ally in critical sectors such as energy security, green infrastructure, and digital governance,” Bomassi noted, underscoring the desire among Southeast Asian nations for diversification and resilience against overdependence.
Pajon from Ifri stated that strengthening ties with Europe would enable Southeast Asian countries to broaden their strategic partnerships, thus enhancing their ability to withstand hegemonic pressures.
“A greater number of partners, including Europe, raises the diplomatic stakes for China concerning territorial disputes, particularly in light of Beijing’s commitment to a ‘peaceful rise’,” Bomassi added. “In this context, the EU-ASEAN partnership is not about military deterrence; rather, it acts as an important symbolic buffer, reinforcing the notion that Southeast Asia is not isolated and possesses multiple partnerships, which bolsters the region’s resilience against coercive tactics.”
