It’s been a brutal week for capital markets.
On April 2, US President Donald Trump signed an executive order slapping “reciprocal tariffs” on over 100 countries. US stock indexes nosedived, and the ripple effects hit Asian equities, crude oil, cryptocurrencies, and precious metals. Still, in the midst of market chaos, a curious calm persists among the exporters and cross-border merchants most directly in the line of fire.
For many, the shock wasn’t in the strike—it was in the scale. Ever since Trump retook office, a segment of the global trade community has been mentally preparing for trade war flashbacks. But few expected the hit to land this hard, this soon.
Under the new rules, nearly all Chinese exports to the US will face a 34% tariff, on top of existing duties. For products like textiles and machinery, the combined rate could reach as high as 54%.
This time, though, it’s not just about China. Factories in Vietnam, Malaysia, and Indonesia that had picked up slack during previous trade disruptions are also caught in the crosshairs. Trump’s order targets a sweeping list of trade partners, undercutting many of the diversification strategies companies adopted after the last round of tariff tensions.
Vietnam, long a poster child for “China Plus One,” had absorbed a large share of China’s manufacturing spillover over the past decade. But much of that momentum was built on Chinese inputs. In key industries like electronics and textiles, Vietnam often functions as a final assembly hub—importing components from China, then exporting finished goods to the US. That structure now works against it. Vietnam not only faces a hefty 46% tariff—one of the steepest under the new rules—but also struggles to meet stricter origin requirements that make Chinese-linked exports harder to clear.
According to the Observatory of Economic Complexity (OEC), China exported USD 11.2 billion worth of goods to Vietnam in February, a 36.2% jump from the year before. Over the same period, Vietnam’s exports to China rose by 13.6%, reaching USD 6.5 billion.
To cushion the blow, Vietnam’s top leadership has reportedly signaled a willingness to engage with Washington on potential tariff exemptions or bilateral trade terms.
Mexico may be one of the few countries that comes out ahead. Imports from Canada and Mexico remain governed by rules implemented in early March. USMCA-compliant goods won’t be subject to the new tariffs, though some exceptions remain. For instance, Canadian energy and potash will face a 10% duty, and fentanyl-related products will be taxed under a separate policy.
The broader message is clear: Trump is reactivating tariffs as both cudgel and currency in a new phase of economic brinkmanship.
That strategy has forced exporters and importers into a grim calculus. When Trump floated a 10% tariff hike in February, businesses found ways to cope—split the cost, tweak margins, pass a fraction on to consumers. But the April order pushes past that threshold. Many now say it’s financially unfeasible to absorb the added costs or even maintain US operations at scale.
Across boardrooms and logistics hubs, companies are splitting into three camps. Some have frozen orders from US buyers altogether, bracing for whiplash before making any moves. Others are accelerating shifts away from the US entirely, betting on Southeast Asia, the Middle East, or other markets seen as less volatile.
A third group is trying to adapt without pulling out. Some are leaning on overseas warehouses to mask the China leg of their supply chain, while others are embracing semi-managed models—like those used by Shein and Temu—that route inventory through intermediary hubs. The goal is to soften the tariff blow by changing how and where goods enter the US. But as origin rules tighten and transshipments come under greater scrutiny, these workarounds may not hold up much longer.
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Still, not every company has the luxury of walking away.
Cross-border e-commerce businesses, in particular, are locked in. The US accounted for about USD 1.2 trillion in online retail sales in 2024, according to FTI Consulting—nearly nine times the projected size of Southeast Asia’s e-commerce market in 2025, based on Statista data. Some companies have already invested heavily in localization or signed long-term distribution agreements that effectively tie them to the US market.
For those firms, the new tariffs land like a one-two punch.
On the Chinese side, countermeasures were swift.
Beijing’s Tariff Policy Commission announced that, starting April 10, all US imports would be hit with a 34% tariff on top of existing duties. In parallel, the Ministry of Commerce placed 16 US entities—including High Point Aerotechnologies—under export control measures, and added 11 others, such as drone maker Skydio, to its “Unreliable Entity List.”
Meanwhile, on April 4, Chinese authorities opened an anti-dumping investigation into X-ray tubes from the US and India. That same day, new export restrictions were introduced on seven rare earth elements—including dysprosium, terbium, and gadolinium—critical for manufacturing electronics and defense systems. In coordination with customs authorities, import qualifications have also been suspended for several US firms dealing in sorghum, meat and bone meal, and poultry products.
None of this is unfamiliar territory. But this round feels different—not just for its breadth, but for the underlying uncertainty.
Seasoned exporters have weathered plenty, but there’s a sense that this is only the beginning. And right now, all anyone can do is wait—and brace for what’s next.