^{Photo: South China Morning Post}

A Decade of Supply Chain Realignment

The United States’ reliance on Chinese manufacturing has been reshaped dramatically over the past ten years. According to Wells Fargo Supply Chain Finance, the combined supplier volume from China, Hong Kong, and South Korea has fallen from 90 percent to just 50 percent, marking one of the largest structural shifts in global sourcing since the early 2000s.

This diversification began in earnest during the first Trump administration, when waves of tariffs and geopolitical tensions sent manufacturers searching for more cost-effective and politically stable production hubs. Since then, the trend has intensified, especially as companies prepare for uncertainty surrounding the Supreme Court’s upcoming decision on Trump’s tariff structure.

Jeremy Jansen, head of global originations at Wells Fargo Supply Chain Finance, said supplier diversification nearly doubled between 2018 and 2020, and the momentum has continued. Today, the supplier base is evenly split between northern Asia and emerging southern Asia-Pacific economies.

Southeast Asia and India Emerge as New Powerhouses

Countries including Vietnam, Indonesia, Thailand, India, Malaysia, and Taiwan have been the biggest winners of this manufacturing migration. Wells Fargo’s supplier data shows mid-sized factories increasingly relocating to these markets, attracted by lower labor costs, pro-business policies, and expanding export capabilities.

Trade intelligence confirms this shift. SONAR reports that U.S. imports from China are down 26 percent year-over-year, while China’s shipments to alternative Asian partners have surged. Project 44 data shows China’s exports rising 29.2 percent to Indonesia, 23 percent to Vietnam, 19.4 percent to India, and 4.3 percent to Thailand in 2025.

In turn, U.S. container imports from these countries have soared—23 percent growth from Vietnam, 9.3 percent from Thailand, and 5.4 percent from Indonesia.

China’s own trade data echoes this trend. As shipments to the U.S. declined in November, exports to ASEAN countries climbed more than 8 percent, and exports to the EU surged nearly 15 percent. For the first 11 months of the year, China’s overall exports grew 5.4 percent, pushing its trade surplus past the $1 trillion mark.

Tariffs Trigger Cash Crunch for U.S. Importers

While long-term diversification offers resilience, the short-term financial impact on U.S. businesses is becoming increasingly visible. Many importers had frontloaded inventory earlier in 2025 to get ahead of tariff hikes. Now, with those inventories nearly depleted, companies are absorbing the full weight of higher duties.

Ajit Menon, head of HSBC’s U.S. trade finance division, said that after Trump’s tariff rollout, average tariffs climbed from 1.5 percent to double-digit levels, forcing businesses to rethink capital needs. Industries with slim margins—such as retail, apparel, and generic pharmaceuticals—are feeling the biggest squeeze due to limited room to renegotiate supplier prices.

To stay liquid, more businesses are turning to financing solutions. HSBC, which facilitates over $850 billion of global trade each year, launched its Trade Pay platform to help companies unlock working capital through receivables, payables, and inventory financing.

Menon noted that financing flows jumped roughly 20 percent across all client categories since the tariff plan began, and demand keeps rising as the last of the tariff-buffered inventory disappears. “Companies are now renegotiating payment terms and reassessing financing duration. Cash is becoming king,” he said.

Companies Brace for Higher Capital Needs

A recent HSBC survey of 1,000 U.S. companies found that more than 70 percent are facing higher year-over-year working capital pressures. With tariffs uncertain, inventory thinned out, and supply chains stretched across new regions, businesses are reassessing procurement strategies from the ground up.

Executives are scrutinizing freight costs, production timelines, and supplier reliability—factors that have become even more critical as the U.S. shifts into a post-China supply era. Many firms are preparing to strike new contracts in South and Southeast Asia as they attempt to buffer against future tariff shocks and currency fluctuations.

This turning point marks more than a temporary response to trade tensions. It signals a structural transformation in how American companies source, finance, and secure their global supply chains—one that will shape manufacturing patterns for years to come.