The US-China trade war has entered a new phase, creating significant challenges for businesses. Tariffs on Chinese goods have increased to a shocking 145%, resulting in significant costs for businesses exporting to the United States. In response, China is looking for new trade routes through Southeast Asia. Let’s discover opportunities and new risks for logistics companies working with cross-border deliveries.
| Product | Previous rate | New tariff | Change (%) |
| Automotive parts | 25% | 145% | +120% |
| Technical goods | 10% | 145% | +135% |
| Textiles and clothing | 15% | 145% | +130% |
| Food products | 5% | 145% | +140% |
| Building materials | 30% | 145% | +115% |
Significant trade flows to grow from China to Southeast Asia by 20-30% in mid-2025 are expected, according to the World Trade Organization.
Let’s open up which new opportunities there will be for the countries of the region and what challenges logistics companies face.
1. Reorienting global trade: The ASEAN opportunity
ASEAN countries, including Vietnam, Thailand, Malaysia, Indonesia, and others, are becoming major new partners for Chinese exporters. This will partially offset the losses from the US market, creating new opportunities for local businesses.
Forecast for trade flows:
- Vietnam: Trade between China and Vietnam is expected to increase by 25% by the end of 2025. Actively used as a manufacturing hub for electronics and textiles that were previously imported from China for further processing.
- Malaysia: An increase of 15% in 2025 due to agreements to reduce customs barriers and promote free trade.
- Indonesia: Bilateral trade turnover between China and Indonesia is expected to grow by 20%, particularly in the construction materials, metallurgy, and machinery sectors.
Customs agreements & economic cooperation:
The ASEAN-China Free Trade Agreement is the key to flexible trade conditions. This agreement significantly reduces customs duties, allowing Chinese exporters to effectively redirect products to new markets.
The main areas of the Agreement:
- Improving logistics corridors: By increasing the capacity of ports in Vietnam and Malaysia, China will be able to increase the volume of transportation through these countries.
- Technical and industrial investments: ASEAN countries are actively attracting Chinese investment in the development of production facilities, which allows them to increase production volumes and reduce dependence on Chinese imported goods.
Infrastructure investments
It is expected that by 2025, Chinese investment in Southeast Asia's infrastructure will increase by 35%.
- Belt and Road Initiative (BRI) to ensure building new transportation and logistics corridors: port modernization of ports, rail lines, and warehouses;
- The Ream Naval Base (Cambodia) is a Chinese-funded expansion near key sea lanes that has caused surprise in Washington;
- The Phunan Tekho Canal (Cambodia) - designed to bypass Vietnamese ports and increase the autonomy of Sino-Cambodian trade;
- Joint logistics and training centers are a signal of long-term trade and military cooperation in the region.
2. Critical compliance issues
Under new US regulations, freight forwarders can be held legally liable for facilitating unauthorized transshipment, even unintentional ones. The details:
- The BIS guidance update emphasizes the critical level of due diligence in circumstances where transshipment may be construed as an intent to circumvent tariffs, even without intent. These include high-risk destinations, unclear departure information, or frequent route changes to avoid countries subject to higher tariffs.
- Also, repeated changes of departure or destination with unclear justification.
- Missing or suspicious documents, such as inappropriate commercial invoices, export codes, or license references.
Penalties: civil fines of up to USD 300,000 per violation, as well as criminal charges in cases of “willful blindness”.
Logistics providers need to ensure that documents, routes, and points of departure are thoroughly checked, especially for high-risk destinations. It is important to maintain clear communication with all parties, avoid frequent route changes without justified reasons, and make sure that the correct export codes and licenses are in place to avoid fines and criminal sanctions.
3. China's export surplus: Impact on markets and logistics
Due to this great surplus that China has in exportation, it brings about many complications in the global supply situation, as these surplus goods bring instantaneous and differential changes in their profitability and policies of national regions. Here is what it means for business and logistics:
- Sudden increases in export volumes for shorter terms. The fact is that China currently opens new markets for its merchandise, especially for the less costly ones.
- Lower profit margins due to this pressure. Selling bulk shipments of the low-cost export puts pressure on prices and, hence, profitability, as producers force themselves to sell their goods at less.
- Abrupt policy changes. The EU or any country can suddenly impose some new tariff or anti-dumping duty on these imports, which can make it difficult for Chinese goods to enter the said markets.
| Factor | Description | Risks for the market | Impact on logistics |
| Short-term spikes in exports | Exporting large volumes of goods to new markets, often low-priced goods. | Market instability, short-term fluctuations in demand. | The need to quickly adapt to new transportation conditions. |
| Pressure to reduce profitability | Chinese goods are flooding new markets, which reduces prices and business profitability. | Reducing profitability, fighting dumping. | The need to optimize the cost of transportation and storage of goods. |
| Sudden changes in EU policy | The imposition of anti-dumping restrictions or customs restrictions that make it difficult to import Chinese goods. | Possibility of restricting access to important markets. | It is necessary to adjust routes and choose new markets for supplies. |
4. Moving from hubs to logistics networks
- Multipolar network planning models: Global routes are no longer built around a few large hubs. The US, China, and the EU are no longer the only major trade centers. Focus on creating multipolar strategies that include new trade hubs that are rapidly gaining popularity as a result of political and economic changes.
- Growing re-export hubs: Key geographical regions such as Mexico, Turkey, the UAE, and Indonesia increasingly tend to become re-export powerhouses. They are becoming an important cross-flow that allows passing the entry requirements in big markets.
- Shift towards a resilience-based strategy: The traditional way of thinking is about linear routes and large trade hubs, which is now gradually influenced by a strategy of resilience and how networks can adapt to volatility. Logistics providers must consider the ability to respond quickly to changes in customs regulations, tariffs, and political landscapes.
For LSP to consider:
- Shifting centers of gravity: Identify and use multipolar networks, including alternative routes through such new trade hubs as Turkey and the UAE, to avoid disruptions.
- Adjusting to instability: Be flexible and adaptive, changing routes and plans quickly and efficiently.
- Regionalization strategies: With increasing global trade relying on regional networks, deliver modular solutions for rapid directional changes of shipment due to market or policy changes.
5. Trade insights as a key to customer loyalty
Customers are not only concerned with the transportation of goods but also with expert insight into customs rates, trade routes, and risks. Logistics companies can fill a unique niche by offering services around in-depth analytical and trade risk management.
- Trade route change analysis: Report weekly on changes in customs tariffs, trade barriers, and any new regulations affecting trade between two countries; this information should help customers understand how such changes affect their business activities.
- Customs consultation and documentation verification: Provide all possible customs support, including documentation verification, customs procedure advice, and assistance in avoiding fines due to lack of compliance.
- Platforms for trade risk analysis: Trade-risk monitoring applications through partnerships with fintechs and regtechs for developing user-friendly interactive dashboards for customers to monitor trade risks in real time will entail additional value.
Logistics providers that can offer services focused on intelligence and adaptation to change stand to gain credibility with the customers and enhance their own market positioning.
Keep your logistics resilient
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Wondering how to address your supply chain needs in the current circumstances? Reach out to us at [email protected] for streamlined and tailored logistics solutions.
