Supply Chains Realign as China Loses Share
The tariffs that were imposed have transformed global supply chains. The share of U.S. supplier volume from China, Hong Kong, and Korea has dropped from 90% to 50% over the past decade. This shift began during the first wave of tariffs in 2018 and has continued to accelerate since then.
Moreover, Vietnam, Indonesia, Thailand, and India have emerged as the biggest winners. These countries now manage a growing share of U.S.-bound production. According to Wells Fargo, supplier diversification is now evenly split between North Asia and South Asia. Mid-size manufacturers have steadily shifted their operations to Southeast Asia.
On the other hand, imports from China to the U.S. are down 26% year-over-year. Meanwhile, China’s trade with Indonesia has increased by 29.2%, while Vietnam’s has risen 23% and India’s by 19.4%. In contrast, U.S. imports from Vietnam have also grown, increasing 23% this year.
U.S. Companies Grapple With Higher Tariff Costs
Trump’s tariffs are putting significant pressure on U.S. companies. Many firms that frontloaded inventory in early 2025 are now running low. As new tariffs take effect, importers are facing rising costs and tighter cash flow.
HSBC reports a surge in demand for trade financing. The average tariff has increased from 1.5% to double digits. Sectors such as retail and generic pharmaceuticals are particularly vulnerable due to their thin margins. As a result, companies are renegotiating payment terms and increasing their working capital requirements.
More than 70% of U.S. businesses surveyed by HSBC reported that their cash needs have increased compared to last year. Moreover, the financing tools, such as HSBC’s Trade Pay platform, are seeing increased use. Since the rollout of new tariffs in April, financing activity has increased by 20%. As inventory buffers deplete, the need for capital will continue to grow.