The global trade map is actively shifting before our feet. The economic relationship between the United States and China, a cornerstone of global commerce, continues to navigate a period of intense flux. Just today, reports indicate a significant, albeit temporary, de-escalation in the recent tariff war. The US and China have reportedly agreed to a 90-day pause, rolling back the most extreme reciprocal tariffs (which had soared to over 100%) to still substantial, but lower, baseline levels—around 30% for the US on Chinese goods and 10% for China on US goods. This move offers a brief respite but underscores the volatile environment US businesses face.
The “China Plus One” Momentum Remains Strong
Even with this temporary tariff truce, the strategic push for supply chain diversification is not slowing down. What began as a cautious “China Plus One” approach has cemented itself as a core business strategy.
Visual data on shipping volumes underscores this shift. As the provided chart illustrates, Outbound Ocean TEU Volume Indices from countries like Vietnam (OOTI.VNMUSA), Thailand (OOTI.THAUSA), and India (OOTI.INAUSA) to the USA have shown significant growth trends over the past few years, particularly notable for Vietnam and Thailand which show indexed increases of +136% and +147% respectively since mid-2021. At the same time, volumes from China to the USA have declined -3%. This surge in shipping activity from “Plus One” countries is tangible proof of companies actively diversifying their manufacturing and sourcing away from over-reliance on China.
This trend is driven by a desire to mitigate geopolitical risks, address rising costs, and navigate the still significant baseline tariffs. Early 2025 has seen continued strong foreign direct investment into Vietnam and Thailand, particularly in sectors like electronics, EV components (with companies like Sunwoda and Mazda expanding), and semiconductors. This isn’t just about tariff avoidance; it’s a long-term recalibration. Interestingly, many Chinese manufacturers are also establishing bases in these nations to maintain global market access.
China’s Strategic Pivot Continues
Simultaneously, China is actively strengthening its trade networks beyond the US. Deepening ties with ASEAN nations, leveraging frameworks like the Regional Comprehensive Economic Partnership (RCEP), and pursuing its Belt and Road Initiative are key components of this strategy. Recent data confirms China’s growing trade with these regions, partially offsetting declines in US-bound exports, and highlighting a reshaping of global supply routes.
The New Normal for US Businesses: Navigating Uncertainty
For American companies, the recent tariff de-escalation provides some breathing room, but the operational reality remains one of heightened complexity. The 90-day window for further US-China negotiations means uncertainty persists. Businesses must still contend with potentially fluctuating costs, the challenges of establishing new supply lines (which can initially mean longer lead times), and the critical need for quality assurance with new partners.
What’s the playbook in this dynamic environment?
- Strategic Diversification is Still Key: The tariff truce doesn’t negate the need for a robust “China + N” strategy. Evaluate alternatives like Vietnam, Thailand, Malaysia, or nearshoring options in Mexico, aligning with your risk tolerance and product needs.
- Deepen Supply Chain Visibility: Understand your dependencies beyond direct suppliers. The origin of components within Southeast Asian supply chains often still traces back to China.
- Invest in Agility and Technology: Real-time tracking, improved demand forecasting, and scenario planning are crucial. The adoption of AI in supply chain management is becoming a key differentiator in 2025 for navigating these complexities.
- Build Resilient Partnerships: Beyond contracts, foster collaborative relationships with new suppliers and logistics providers built on transparency and trust.
The era of predictable, singularly focused supply chains is over. While the latest US-China tariff adjustments offer a temporary easing, the underlying imperative for businesses is to build resilience, diversify strategically, and stay agile in a global trade environment that promises continued evolution.
