When United States President Donald Trump returned to workplace 12 months in the past, he promised to slash the nation’s commerce deficit, which had swelled to about $918.4bn, or 3.1 p.c of gross home product (GDP), for items and companies in 2024.
Invoking the Worldwide Emergency Financial Powers Act (IEEPA), he launched “reciprocal tariffs” on US commerce companions to “rectify commerce practices”, which the White Home blamed for hollowing out US manufacturing, beginning on April 2.
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However preliminary commerce knowledge point out that whereas the worldwide US commerce deficit fell in 2025 as Trump meant, the tariffs haven’t had their meant impact in Southeast and East Asia. Moderately than cut back US dependence on the 2 areas, each main manufacturing hubs, the tariffs have merely rearranged provide chains.
“Should you squeeze a balloon in a single path and folks nonetheless need the product, then they’ll get the product, no matter it’s, from a unique location,” stated Deborah Elms, head of commerce coverage on the Hinrich Basis in Singapore.
“Commerce strikes to the place commerce alternatives might be discovered,” she instructed Al Jazeera. “We have now shuffled the best way that we do commerce, however we haven’t ended commerce.”
Drop in Chinese language exports to US
Considered one of Trump’s high targets was China, the world’s manufacturing unit and a serious supply of exports to the US.
Months of tit-for-tariffs imposed by Washington and Beijing ended with a median US obligation of 47.5 p.c on Chinese language items as of November 2025, in line with the US-based Peterson Institute for Worldwide Economics.
The ultimate duties may change following a future assembly between Trump and Chinese language President Xi Jinping, scheduled for April, but it surely has already led to a pointy drop in commerce.
Amid the turmoil of 2025, the worth of Chinese language exports to the US fell 20 p.c, in line with Chinese language customs knowledge.
The US Census Bureau, which publishes US commerce knowledge, reported that the commerce deficit for items additionally fell dramatically. The worth of imported items from China fell from $438.7bn in 2024 to $266.3bn in 2025, in line with US Census knowledge.
The general US commerce deficit for items fell from $245.5bn in 2024 to $175.4bn in 2025, in line with the identical knowledge.
US commerce knowledge inform a unique story for Southeast Asia, nonetheless, whose producers are a key a part of the “Chinese language Plus One” provide chain.
Southeast Asia’s acquire
The area was a serious goal of Trump’s “Liberation Day” tariffs, with preliminary duties set at 17 to 49 p.c for Cambodia, Indonesia, Malaysia, the Philippines, Thailand and Vietnam. Tariffs had been later negotiated to 19 to twenty p.c by way of bilateral commerce offers that allowed some sector-specific exemptions.
Whereas increased than earlier than, they’re nonetheless lower than the US tariffs imposed on China.
The US commerce in items with Thailand, Indonesia and the Philippines all rose in 2025, at the same time as these nations confronted “reciprocal tariff” charges of 19 p.c, in line with census knowledge. The US commerce deficit for items rose 11 p.c with Indonesia, 23 p.c with Thailand, and an astonishing 38 p.c with the Philippines – albeit from a comparatively modest $4.9bn to $6.8bn.
Commerce in items with Cambodia and Malaysia remained unchanged between 2024 and 2025, regardless of tariffs of 19 p.c, in line with census knowledge.
Essentially the most substantial change when it comes to the greenback quantity in Southeast Asia was seen in Vietnam, the place the US commerce deficit for items rose greater than $20bn – from $123.4bn in 2024 to $145.7bn in 2025 – regardless of a 20 p.c tariff, in line with the identical knowledge.
Is China simply rerouting its items?
A few of this shift might be defined by Chinese language items being rerouted by way of Southeast Asia to the US – a observe often called transshipment – however Zichun Huang, a China economist at the UK’s Capital Economics, instructed Al Jazeera that offer chains proceed to maneuver round.
“Rerouting of exports to the US through neighbouring nations has performed a task. Nevertheless it has not been the primary driver,” she stated by electronic mail.
“As a substitute, there’s been a extra elementary reconfiguration of provide chains: ASEAN is importing extra equipment and intermediate items from China, that are getting used within the manufacturing of exports despatched to the US,” she continued, utilizing the acronym for the Affiliation of Southeast Asian Nations.
Chinese language exporters are additionally increasing their buyer base past the US, as mirrored in China’s file $1.19 trillion international commerce surplus in 2025, posted final week by Beijing’s Basic Administration of Customs.
The White Home final yr threatened to impose a 40 p.c tariff on “transshipments”, however the time period has change into more and more exhausting to outline as provide chains unfold throughout Southeast Asia, with items crossing borders a number of occasions in the course of the manufacturing course of, in line with Nick Marro, principal economist for Asia on the Economist Intelligence Unit.
“Most likely one cause why we haven’t seen the US transfer on that is the issue in defining a transshipment,” he instructed Al Jazeera. On the identical time, he stated, the US is distracted with commerce and international coverage issues in different elements of the world.
Taiwan commerce booms, with AI as key driver
Trump has threatened new tariffs on European nations that oppose the US’s strikes to take management of Greenland, in addition to nations that proceed to do enterprise with Iran following Tehran’s crackdown on mass antigovernment protests.
Trump has in the meantime proven that he can have competing and even contradictory goals for the US financial system, in line with consultants like Elms. Whereas the US president might want the US commerce deficit to shrink, he additionally desires to gasoline the AI growth and US-based manufacturing.
Nowhere is that this clearer than in Trump’s dealings with Taiwan, which the US president has beforehand accused of stealing the chip trade from the US.
Commerce with Taiwan is booming, even because it has fallen elsewhere in East Asia, in line with US authorities knowledge. The US deficit with Taiwan ballooned greater than 50 p.c from $73.7bn in 2024 to $111.8bn in 2025, because of tariff carveouts for Taiwan’s semiconductors and by-product elements.
Trump’s “reciprocal tariffs” on Taiwanese items – agreed to final week as 15 p.c – solely affected about 30 p.c of exports, in line with Kristy Tsun-Tzu Hsu, director of the Taiwan ASEAN Research Centre on the Chung-Hua Establishment for Financial Analysis in Taipei.
Nonetheless, the surge in exports caught many observers off-guard, she instructed Al Jazeera.
“That is very completely different from what all people anticipated, as a result of Taiwan and different nations anticipated weak exports final yr, however due to this stock [stockpiling] and the AI growth, there’s very sturdy demand for semiconductors.”
Hsu stated the identical demand defined the surge in imports from Vietnam, which has risen by way of the ranks to change into one of many US’s high chip suppliers. She anticipated the surge to proceed into 2026 for each locations.
Elms stated Trump was unlikely to maneuver in opposition to Taiwan on the difficulty of chips, regardless of the ballooning US commerce deficit.
She acknowledged the US president’s “want to have the commerce deficits shrink”.
However she added, “Trump loves the inventory market growth because of AI.”
“I believe for Trump, in case you stated to him, would you slightly have a decrease commerce deficit total or a better booming inventory market? He would vote for the inventory market each time,” she stated.
What’s subsequent?
Whether or not the tariffs will stay in place is unsure as Trump’s “reciprocal tariffs” face a authorized problem on the US Supreme Courtroom. Consultants instructed Al Jazeera that even when the courtroom strikes them down, the tariffs may nonetheless take months if not years to unwind.
Priyanka Kishore, director and principal economist at Asia Decoded in Singapore, instructed Al Jazeera that the midterm elections within the US in November may dent Trump’s enthusiasm for tariffs because the nation’s costs rise.
“At this cut-off date, there’s a whole lot of uncertainty. There are two very sturdy colleges of thought. One is that he has a whole lot of different avenues to undergo,” stated Priyanka Kishore, director and principal economist at Asia Decoded in Singapore. “And the opposite is that the overall sentiment is popping in opposition to him. He doesn’t have the favored assist that he used to have.”
