There’s a huge drop underway in Chinese imports entering the US — from China. But Chinese goods are arriving anyway, via other Asian nations such as Vietnam, Thailand, and Indonesia.
That may be good news for shoppers, because it means cheap Chinese goods are still making it to US stores despite the higher costs imposed by President Trump’s new import taxes. But shifting trade patterns will surely get Trump’s attention, and the tariff-happy president could easily put a stop to it by raising import taxes on what are turning out to be loophole countries.
Trump’s aggressive tariff regime is meant to make most imported products more expensive to encourage more domestic production. But Trump’s uneven approach has created opportunities for a kind of trade arbitrage that was all but inevitable. As things stand now, Trump has imposed new import taxes of 30% on most goods from China but only 10% on imports from most other nations. That 20% differential is a big advantage for the less-tariffed countries.
Sure enough, trade data shows that Chinese exporters are almost certainly “transshipping” goods to the US by passing them through neighboring countries. Chinese data shows that exports to the US dropped 35% in May compared with a year earlier. But during the same period, Chinese exports to six other Asian nations jumped 15%, including a 22% increase in exports to Vietnam and Thailand, a 12% jump in exports to Singapore, and an 11% rise in shipments to Indonesia.
“[China’s] direct exports to the US are down sharply, but its exports to all kinds of places across Asia are up massively,” economist Robin Brooks of the Brookings Institution posted on social media on June 9. “These are obviously transshipments to the US via third countries.”
The US Department of Commerce hasn’t yet published trade data for May, but data for April shows the mirror image of the Chinese data. Imports from China fell 20% from 2024 levels, while there was a 48% jump in Vietnamese imports, a 32% jump in shipments from Thailand, and a 16% increase in goods from Malaysia.
Trade experts have been predicting this shift since Trump began imposing new import taxes in February, because it’s the same thing that happened during the trade wars Trump waged during his first presidential term. Vietnam, in particular, was a big beneficiary of Trump’s tariffs on Chinese imports in 2018 and 2019. While imports from China fell by 11% from 2017 to 2019, imports from Vietnam boomed by 43%.
Since Trump’s first trade war, many Asian producers and their US customers have carefully diversified so they’re not overdependent on China. The US now imports less clothing from China, as one example, and more from Bangladesh, Indonesia, Pakistan, and India.
Transshipment can mean that some products are fully assembled in China and simply make a brief stopover in another country before heading to the US so that their country of origin isn’t China. Governments tend to discourage that, however, because those countries gain little from merely serving as a way station for Chinese products headed to the US. Plus, it may attract unwanted attention from Trump.
Chinese companies are also increasingly building their own production facilities outside of China. “There are two ways to transship,” Jason Judd, executive director of the Global Labor Institute at Cornell University, told Yahoo Finance. “In one, you’re just cheating. In the other, you disassemble your product in China and send the inputs and the know-how to a new place.” In Cambodia, for example, most of the companies making goods that go to the US have Chinese ownership.
Trump’s “reciprocal” tariffs — on ice for the moment — are meant, in part, to target countries that are way stations for Chinese products. When Trump announced those nation-by-nation tariffs on April 2, Asian trade partners other than China got hit with some of the highest rates.
The new tariff on Chinese imports was 34%. For Cambodia, the new tariff rate was 49%. Vietnam: 46%. Thailand: 36%. Indonesia: 32%. Malaysia: 24%. Those rates weren’t based specifically on transshipment of Chinese products but on the size of the trade deficit in goods each country has with the US. The larger the deficit, the higher the tariff.
President Trump speaks with reporters in the Oval Office of the White House on June 10. (AP Photo/Evan Vucci) ·ASSOCIATED PRESS
Trump suspended those tariffs on April 9, following a week of mayhem in financial markets. That eventually left the tariff rates at 30% on most imports from China and 10% on most imports from every other country. But Trump said the reciprocal tariffs could go back into effect if nations don’t make trade deals with him one by one by a July 9 deadline.
By then, a boom in imports from Asian nations other than China will give Trump plenty of justification for more reciprocal tariffs. But he may choose to overlook it.
Trump seems to have a much bigger trade beef with China than he does with other nations. His advisers are also telling him that high tariffs across the board could mean shocking price increases on clothing, electronics, appliances, and many other things just as Americans start their back-to-school shopping this summer. After that will come a Christmas season possibly starring Trump as the Grinch.
So Trump might end up talking tough on China and looking the other way as the country’s products enter the side door. That would make stealthy Chinese imports an unintended innovation triggered by Trump’s trade war.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
If the U.S. continues to impose AI semiconductor restrictions on China, then chipmaker Huawei will take advantage of its position in the world’s second-largest economy, Nvidia CEO Jensen Huang told CNBC Thursday. “Our technology is a generation ahead of theirs,” Huang told CNBC at the sidelines of the Viva Technology conference in Paris. However, he
NOK-Freudenberg (China) Technology Center in Wuxi. [Photo provided to chinadaily.com.cn] German multinational Freudenberg Group is strengthening its commitment to the Chinese market through increased investment in local research, development and manufacturing capabilities. NOK-Freudenberg, a joint venture between Freudenberg and Japanese manufacturer NOK, opened its China Technology Center and new factory in Wuxi, Jiangsu province, late
With the commencement Gaokao entrance examinations, highly competitive national university entrance exam, a number of China’s technology giants, including Alibaba and Tencent, have decided to disable key AI features on their platforms to prevent students from resorting to cheating. Disabling the means of academic dishonesty was deduced to be an efficient way to ensure exam
A patrol aircraft dispatched by Japan—a treaty ally of the United States—was intercepted by fighter jets launched from a Chinese aircraft carrier operating in the wider western Pacific. Newsweek has contacted the Chinese Defense and Foreign Ministries via email for comment. Why It Matters China, which has the world’s largest navy by hull count—deployed both
Japan said J-15 warplanes operating from two Chinese aircraft carriers in the Pacific carried out risky manouvres around patrol planes. Japan has protested to Beijing over what was described as Chinese fighter jets’ “near-miss” manoeuvres near Japanese maritime patrol planes over the Pacific where China’s two operational aircraft carriers were spotted deployed simultaneously for the
Photo Credit: Getty Images Scientists in China have achieved a major milestone in clean energy generation. According to Interesting Engineering, scientists from the Chinese Academy of Sciences have built the world’s first working thorium molten salt reactor (MSR). The big breakthrough came when they successfully loaded fresh fuel into the working reactor. Up to this
US President Donald Trump has announced a breakthrough in trade talks with China, declaring that a new framework agreement has been reached in London to restart rare earth mineral exports and formalise tariff changes agreed last month. The deal, struck at Lancaster House following nearly 20 hours of negotiation, now awaits final sign-off from both
A general-purpose intelligent humanoid robot developed by Shenzhen-based AI2 Robotics works at an automotive factory. File photo: Courtesy of AI2 Robotics Amid surging enthusiasm in Hong Kong’s stock market and growing investor appetite for hard tech, Chinese robotics companies are igniting a new wave of IPO fever on the Hong Kong Stock Exchange (HKEX), a
