Important Highlights
- A 40% tariff could hit goods linked to China, but there’s no clear definition yet.
- Vietnam, Indonesia, and the Philippines are on edge over rising export costs.
- Companies face major supply chain shifts under Trump’s tariffs plan.
Trump’s Tariffs Plan Leaves Exporters Guessing
Southeast Asian exporters are having a hard time as a result of Trump’s tariff plan.
The Philippines, Indonesia, and Vietnam are now subject to new U.S. tariffs: 19% for Indonesia and the Philippines, and 20% for Vietnam on a range of goods.
But the biggest shock comes from a 40% penalty for any product the U.S. decides is “transshipped” from China.
The problem? No one seems to know exactly what that means.
Companies are trying to figure out: does “Chinese” mean just raw materials?
Or does it also include parts, labor, or even where the machines come from?
With no clear answers, many manufacturers feel like they’re flying blind.
Trump’s Tariffs Plan Forces Tough Choices on Asia’s Supply Chains
Because of Trump’s tariffs plan, many businesses are now being forced to rethink how they operate and fast.
Take Vietnam, for example. To avoid being labeled as a gateway for Chinese goods, Vietnam has introduced new rules: only 30% of raw materials can come from China, and the final product must be at least 40% more valuable than its imported components. That’s easier said than done.
In actuality, between 60 and 70 percent of Southeast Asia’s exports to the United States still rely on Chinese-made components, particularly for machinery and electronics.
Swapping out suppliers isn’t just expensive it takes time, retraining, and sometimes, entirely new infrastructure.
Thailand, meanwhile, hasn’t signed any agreements yet, but officials say the U.S. could demand 60% to 80% local content in some products.
As the Deputy Prime Minister of Thailand Pichai Chunawajira said, “Emerging countries or new production base are clearly in damage.”
Uncertainty Reigns While the Clock Ticks
What makes things worse is the timeline. A senior U.S. official says the rules will be finalized by August 1 but that’s also when the penalties start.
Until then, manufacturers are left in limbo. Some countries like Malaysia and Vietnam have already tightened customs checks and created new origin rules. Others are racing to keep up.
Still, enforcing these policies is another challenge altogether. Even governments admit they’re not fully ready.
Additionally, exporters run the risk of making expensive errors by either paying exorbitant tariffs or losing American customers in the absence of clear direction from the United States.
Exporters scramble to adapt under Trump’s tariffs plan
Right now, Trump’s tariffs plan has everyone from government ministers to factory floor managers waiting for clarity.
Meanwhile, the pressure is increasing. Although they cannot take the risk of changing their business practices without understanding the rules, exporters do not want to lose access to the US market.
Manufacturers in Southeast Asia are forced to make educated predictions and hope that they are correct until Washington resolves the issue.
