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Tariffs

Chinese Businesses Evade US Tariffs by Shipping Via South-East Asia

Strategic Insights

— 2 min read

Chinese businesses are shifting a significant portion of their exports to the US through south-east Asia in an attempt to circumvent the tariffs imposed by Donald Trump during the trade war. According to data from the US Census Bureau, China's exports to the US declined by 43% year-over-year in May, resulting in a loss of $15 billion worth of goods. However, China's overall exports rose by 4.8% in the same period, offset by a surge in shipping to the Association of Southeast Asian Nations (ASEAN) trade bloc and the European Union (EU). US Treasury Secretary Scott Bessent warned that tariffs on imports from some countries could "boomerang" back to the steep levels set by Trump if countries do not make concessions and strike deals with Washington.

Key Takeaways:

  • China's exports to the US declined by 43% year-over-year in May, resulting in a loss of $15 billion worth of goods.
  • China's overall exports rose by 4.8% in May, driven by a 15% increase in shipping to ASEAN and a 12% rise to the EU.
  • US Treasury Secretary Scott Bessent warned that tariffs on imports could "boomerang" back to the steep levels set by Trump if countries do not make concessions.
  • The Vietnam deal includes a 40% levy on goods that are transshipped through the country, specifically targeting Chinese re-exports to the US.
  • Research by Capital Economics estimated that $3.4 billion of Chinese exports were rerouted through Vietnam in May, a rise of 30% compared to the same month last year.
  • Exports of electronic components to Vietnam increased by 54% or $2.6 billion in May compared to the same period last year.
  • Mark Williams, chief Asia economist at Capital Economics, noted that the increase in exports to Vietnam was a "really striking pattern" similar to that seen during the first US-China trade war.

Statistics:

  • $15 billion: decline in China's exports to the US in May, a 43% year-over-year decrease.
  • 4.8%: increase in China's overall exports in May.
  • 15%: increase in shipping to ASEAN in May.
  • 12%: rise in shipping to the EU in May.
  • 40%: levy included in the Vietnam deal on goods transshipped through the country.
  • $3.4 billion: estimated rerouting of Chinese exports through Vietnam in May, a 30% increase from the same month last year.
  • $2.6 billion: increase in exports of electronic components to Vietnam in May, a 54% increase from the same period last year.

Sources:

  • US Census Bureau
  • Chinese data
  • Capital Economics
  • US Treasury Secretary Scott Bessent
  • ABC
  • Stephen Miran, chair of the White House council of economic advisers
  • CNN

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