'China plus one' bets unravel as Southeast Asian economies get steep 'Liberation Day' tariffs

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Source: Fortune

‘China plus one’ bets unravel as Southeast Asian economies get steep ‘Liberation Day’ tariffs

Lionel Lim
Fri, April 4, 2025 at 3:12 PM EDT 3 min read

A few countries stand out on the White House’s new chart of its so-called reciprocal tariffs. Cambodia, with a new 49% tariff; Vietnam, with 46%; and Thailand, at 36%.

Southeast Asia—even compared to its Asian peers—was particularly hard hit on “Liberation Day.”

Economies in Southeast Asia have largely benefited from the “China plus one” strategy, an approach to supply chains where major manufacturers began to route some of their supply chains through third countries. Both Western and Chinese companies embraced supply-chain diversification for several reasons: cheaper labor outside China, tariff avoidance, and ensuring resilience amid disruptions like the COVID-19 pandemic.

Vietnam had a trade surplus of $123.5 billion with the U.S. last year, leading analysts to warn earlier this year that the country was most at risk. Hanoi had tried to win itself a reprieve by preemptively cutting import duties in the lead-up to April 2. On Friday, Trump also said he had a productive call with Vietnam’s top leader To Lam. According to Trump, Lam offered to cut Vietnamese tariffs on U.S. goods down to zero if the two countries could reach an agreement.

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Read more: https://finance.yahoo.com/news/china-plus-one-bets-unravel-191221951.html