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AsianFin -- The announcement of steep "reciprocal tariffs" by U.S. President Donald Trump last week has sent shockwaves through Chinese businesses operating in Southeast Asia.
A veteran of the energy storage sector nicknamed Kexpressed his frustration: "Since the announcement, we've been seeing a lot of regret in the industry group chat. Those who've built factories in Cambodia and Vietnam in recent years are especially feeling the heat." And he is not alone.
Trump's sweeping tariffs, which sparked intense reactions on Chinese social media, is expected to adversely impact Chinese enterprises operating factories in Southeast Asia. Meanwhile the tariffs could also lead to a reshaping of the strategies behind Chinese companies' overseas expansion.
Since Trump's reelection, the U.S. has consistently emphasized the need for higher tariffs on international trade and hinted at imposing "reciprocal tariffs" globally. On April 2, 2025, Trump signed an executive order to impose a 10% "minimum baseline tariff" on all trade partners starting April 5. Higher tariffs will be enforced from April 9 on countries with the largest trade deficits with the U.S.
According to the tariff chart, Cambodia, Laos, Vietnam, and Myanmar would face tariff rates of over 40%, some of the highest tariff rates in this round. In Southeast Asia, with the exception of Singapore, the Philippines, and Brunei, other countries are seeing tariff rates above 20%.
Analysts from ING, including Padhraic Garvey and Francesco Pesole, stated in a report that the regions most impacted by this tariff announcement are undoubtedly emerging markets in Asia.
When asked about the short-term and long-term effects of these tariffs on Southeast Asia, Zhang Ping, the founder of Shanhaitu Technology, who has worked in Southeast Asia for six years, said, "It's hard to tell right now, but Vietnam seems to be the most affected."
According to the U.S. Trade Representative's office, Vietnam's exports to the U.S. reached $136.6 billion in 2024, accounting for nearly 29.23% of the southeastern Asian country's GDP. The 46% tariff on Vietnam is bound to disrupt its exports to the U.S. and harm its economy.
What's Next for Chinese Firms’ Overseas Expansion?
This round of tariffs will not only impact Southeast Asia's exports but will also negatively affect Chinese businesses investing in factories there. In recent years, Chinese manufacturing investments in Southeast Asia have surged.
The 2023 Annual Report on China's Foreign Direct Investment shows that by the end of 2023, Chinese investments in ASEAN manufacturing industries totaled $56.86 billion, with over 7,400 direct investment enterprises in ASEAN, including non-manufacturing sectors.
Among these nearly 10,000 businesses, many were hoping to set up factories in Southeast Asia to produce goods and export them to the U.S. and European markets.
One supply chain executive at a listed company told AsianFin that, in response to high U.S. tariffs on Chinese goods, their company had gradually shifted its supply chain to countries like Vietnam and Cambodia, where component tariffs were lower.
However, with these new global "reciprocal tariffs," Chinese companies that had been using Southeast Asia as a gateway for exports to the U.S. now face major challenges. These businesses will have to rethink their overseas expansion strategies and objectives.
AsianFin has examined five major industries—automotive, new energy, electronics manufacturing, home appliances, and furniture and found that the top ten Chinese companies in each sector that have invested the most in Southeast Asia. These companies have collectively invested nearly $35 billion, and their future moves may define the new path for their overseas expansion.
Drawing from the experience of solar companies affected by previous U.S. anti-dumping investigations, companies could shift their focus to other markets. Reports from news outlet Yicai noted that some Chinese solar firms successfully turned to other Southeast Asian countries, the U.S., and the Middle East as new markets.
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