Source: CNN
Date: 11th August 2025

US trade measures target transshipments and key manufacturing hubs, reshaping production strategies and regional trade flows.

Over the past decade, rising US tariffs on China prompted many manufacturers to diversify into South and Southeast Asia, turning countries like Vietnam, Cambodia, Malaysia, and Bangladesh into export-driven manufacturing hubs.

However, with the latest wave of US tariffs extending beyond China, these nations now face some of the steepest trade levies in the world. While final tariff rates for many were reduced from initial threats, analysts warn they remain historically high, threatening both regional economies and US consumers.

The new policy also introduces a 40% tariff on “transshipments”, goods that originate in high-tariff countries but are routed through other nations before entering the US. This expanded definition appears aimed at Chinese content, casting a wide net over Asian exports.

The uncertainty around how these rules will be applied has left businesses unsure of which products may be targeted and how origin content will be assessed, adding another layer of compliance risk to cross-border trade.

While some regional leaders framed the lowered final tariff rates as diplomatic wins, trade experts argue that the rates are still punitive. For low-cost manufacturing hubs, the impact is significant as it erodes competitive advantages built over decades. Although most garment-producing nations received similar rates around 20%, leveling the field among competitors, the new measures create additional pressure on industries dependent on US market access.

The tariffs are expected to reshape supply chains over the medium to long term. The Southbound manufacturing shift from China to Southeast Asia, accelerated by US-China tensions and the pandemic, could slow or reverse in some low-margin sectors such as furniture and toys, where production might be reshored to China or nearshored closer to the US.

At the same time, companies could explore more complex manufacturing arrangements abroad to maintain preferential origin status for exports.

Not all analysts believe the offshoring trend will be reversed. China’s rising labor costs continue to push some industries toward relocation. In some cases, the transshipment tariffs might encourage Chinese firms to move more of their manufacturing processes directly into Southeast Asian countries to meet origin requirements.

The overall result is a more fragmented and adaptive supply chain landscape, with production strategies increasingly shaped by shifting tariff structures and geopolitical pressures.