For more than a decade, the global supply chain has been through a major transformation and the current trade environment under former President Donald Trump’s policies is pushing those changes toward a critical turning point.
Once the world’s dominant sourcing hub, the Asia-North region, led by China, Hong Kong, and Korea supplied up to 90% of US importer volume. Today, that figure has fallen to roughly 50%, according to Wells Fargo Supply Chain Finance. The shift began during the initial trade war from 2018 to 2020, when new tariffs sparked an urgent reevaluation of sourcing strategies.
Supplier diversification away from China nearly doubled after the first tariff actions. Today, the ratio is almost 50/50 between North Asia and the Southern Asia Pacific region. Countries such as Vietnam, Indonesia, Thailand, India, Malaysia, and Taiwan have became the fast-growing alternatives, supported by competitive labor markets and increasing investment in manufacturing infrastructure.
Even though U.S. imports from China have dropped by 26% year-over-year, China has significantly increased its trade volume with other Asia Pacific markets. These goods are, in turn, being routed onward to the United States.
Data from Project 44 shows just how quickly sourcing patterns are shifting throughout the Asia Pacific region. In 2025, China has significantly increased its trade flows into neighboring manufacturing hubs up 29.2% to Indonesia, 23% to Vietnam, 19.4% to India, and 4.3% to Thailand. Much of this production is eventually routed to the United States, contributing to sizable increases in containerized imports. Shipments to the U.S. are up 23% from Vietnam, 9.3% from Thailand, and 5.4% from Indonesia, confirming that Southeast Asia is playing an increasingly critical role in feeding US supply chains.
Meanwhile, uncertainty remains over the future of Trump’s tariff strategy, with the Supreme Court reviewing legal challenges and several major importers already seeking refunds. Regardless of the ultimate ruling, the near-term financial impact is already being felt. Importers are facing rising duties and shrinking liquidity, and many are turning to trade financing arrangements as a way to protect cash flow and manage the mounting costs tied to global sourcing.
Many U.S. businesses stocked up heavily on inventory in early 2025 to beat tariff activation schedules, a strategy that is now backfiring. Those reserves are running dry just as new duties are being fully imposed. The average tariff jumped from 1.5% to double digits, thus the pressure is particularly intense for industries like apparel and pharmaceuticals, where margins were slim even before the new costs took effect.
As production moves from a single concentrated region into a wider geographic network, supply chains inevitably become more complex. Shipping routes require new stops and transshipment points, inland logistics capabilities must expand, and lead times require more careful forecasting and planning. At the same time, compliance obligations are becoming more intricate.
The global supply chain is no longer defined by a single manufacturing powerhouse. The new distribution of production across Southeast and South Asia shows a structural change in global trade. For importers, the challenges are real: higher duties, tightening cash flow, and extended supply chains. But so are the opportunities, greater resilience, reduced exposure to geopolitical risk, and new supplier networks ready to fuel growth. As your trusted logistics partner, Translindo is here to help you stay a step ahead.
