The White House has unveiled its latest chart of reciprocal tariffs targeting Southeast Asian countries. Cambodia, with a 49% tariff; Vietnam, with 46%; and Thailand, at 36%, are among those affected. The move follows China’s additional 34% tariff on “Liberation Day” and raises pressure on manufacturers that have leveraged the region as “plus one” destinations.
The “China plus one” strategy, which involves routing supply chains through third countries like Vietnam and Thailand, has been popular among Western and Chinese companies. However, Vietnam is now expected to be the hardest hit due to its significant trade surplus with the US and its reliance on US exports.
Analysts predict that Vietnam’s GDP will grow by only 5% this year, down from 6.2%, as a result of the tariffs. Thailand also faces significant new tariffs, which will downgrade its growth forecast from 2.8% to 2%. The tariffs will no longer allow companies like Nike and Gap to leverage Southeast Asian economies as “plus one” destinations.
China’s latest tariff hike puts manufacturers in a bind. Companies that have diversified their supply chains away from China, such as Nike and Gap, now face an array of bad options: paying high tariffs on Vietnam, finding another jurisdiction with lower tariff rates, or moving manufacturing to the US at a significant cost.
Vietnam derives 30% of its GDP from US exports, making it highly vulnerable to the new tariffs. Analysts warn that the move will have far-reaching consequences for Southeast Asian economies and global supply chains.
Source: https://fortune.com/asia/2025/04/04/china-plus-one-bets-unravel-as-southeast-asian-economies-get-steep-liberation-day-tariffs