- Chinese companies are reportedly redirecting exports through Southeast Asia to bypass US tariffs. Direct shipments from China to the US dropped by 43% in May, yet China’s exports overall increased by 4.8%.
- This surge was marked by a 15% increase in exports to Southeast Asia and a 12% rise to the EU. In retaliation, the US has implemented a 40% tariff on trans-shipped goods as part of its trade deal with Vietnam.
According to VT Markets, Chinese companies are reportedly redirecting exports through Southeast Asia to bypass US tariffs.
Chinese companies are reportedly redirecting exports through Southeast Asia to bypass US tariffs. Direct shipments from China to the US dropped by 43% in May, yet China’s exports overall increased by 4.8%.
This surge was marked by a 15% increase in exports to Southeast Asia and a 12% rise to the EU. In retaliation, the US has implemented a 40% tariff on trans-shipped goods as part of its trade deal with Vietnam.
Trade Redirection Tactics
Given the current setting, it’s clear that the sharp drop in direct exports from China to the United States—down 43% in just one month—points to more than a straightforward dip in demand. Instead, what we are seeing is a tactical redirection of trade, where the origin remains Chinese, but the shipment routes tell a different story. It’s a move that potentially clouds the true source of goods while maintaining volume.
China’s overall export growth of nearly 5% in the same time frame contradicts the decline in direct US shipments. This suggests that rerouting through neighbouring regions is already proving effective. One such example is the noticeable 15% rise in exports to Southeast Asia, followed by an uptick of 12% to the European Union. The volume hasn’t vanished; it’s merely changed course.
From a trading standpoint, what this reveals is the beginning of more active positioning by both exporters and regulators alike. The United States, aiming to blunt these manoeuvres, has responded with a 40% tariff on certain trans-shipped goods under its agreement with Vietnam. That figure isn’t arbitrary—it’s designed not just to match the portion of value added through re-routing, but to discourage the practice entirely.
Economic Implications and Strategies
Now, this creates several pressure points for us to watch over the next few weeks. First, patterns in regional trade volumes need to be scrutinised. If ASEAN countries continue showing gains in exports which are disproportionate to their manufacturing metrics, the redirection may be broader than currently assumed. Second, inventory data from American ports and warehousing hubs could reveal whether US consumers and importers are absorbing these costs, delaying acceptance of goods, or switching to alternative supply chains.
For those trading derivatives tied to regional demand or global freight, this environment suggests a higher probability of sudden pricing adjustments. For example, SE Asian transport indices may be exposed to a sudden revaluation if US tariffs begin biting into reshipped Chinese goods. That would affect not just shipping rates but also equity and commodity contracts influenced by trade flows.
It also adds layers of complexity for risk pricing. Sudden regulatory changes—like the one seen in the US-Vietnam deal—can ripple outward very quickly. Hedging against policy uncertainty needs to account for more than likelihood; exposure now depends heavily on second-order effects. It’s no longer enough to hedge the China-US axis directly; traders need to monitor second-leg exposures in neighbouring economies.
We should also factor in that a rise in compliance inspections and origin verification processes could delay delivery cycles. This, in turn, may impact timing assumptions in forward delivery contracts and increase roll cost estimates across short-term positions.
So, as this redirection of trade beds in, derivatives linked to transport bottlenecks, port capacity and even regional currencies may respond in ways that vary not just by market, but also by tenor. That’s a wide field, but it’s one that needs watching day by day, even hour by hour, as tariffs and shipments adjust.
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Source: VT markets
