Source: The Business Times
Date: 26th July 2025

As new US duties target Chinese-linked goods, manufacturers brace for disruption amid vague local content thresholds.

Recent trade measures introduced by the US administration impose new tariffs of 19–20% on goods from several Southeast Asian countries, with a punitive 40% rate threatened for products suspected of transshipment from China. These policies aim to limit Chinese goods from entering the US market via third countries.

However, manufacturers are left uncertain due to the lack of specific criteria on how the US will calculate local content, particularly what qualifies as sufficient domestic input to avoid higher tariffs.

Some production facilities in Southeast Asia are already adapting by adjusting sourcing strategies to meet local content requirements, but doing so is proving challenging.

Many manufacturers in the region rely heavily on Chinese components, which account for an estimated 60–70% of export content. While certain nations have local rules in place, such as value-added thresholds and limits on Chinese raw material input, these standards are being tightened as countries rush to avoid falling afoul of US tariff enforcement.

Despite regional governments increasing trade scrutiny and implementing stricter rules of origin, enforcing compliance remains a challenge.

Many Southeast Asian economies lack the systems and incentives to verify true local content, especially when such enforcement might disrupt ties with China, their largest trading partner.

Without clear guidelines from the US and with enforcement hurdles at home, exporters are left navigating a trade landscape defined more by uncertainty than by clarity.