Tariffs, Trade Tensions, and Route Rethinks: Reshaping of the Global Supply Chain

Global trade routes are once again in flux - not because of pandemic-era disruptions or geopolitical conflicts, but due to a new wave of tariff hikes and import policy changes from the United States.

In 2025, Washington’s decision to raise tariffs on a range of imports from China and Southeast Asian nations, alongside the removal of the “de minimis” import exemption, is forcing businesses to rethink how and where they move their goods.

This recalibration of supply chains isn’t without cost. It’s triggering increased logistical complexity, higher freight bills, and shifting cargo volumes in ways that could reshape regional trade corridors for years to come.

US Tariff Hikes Create a “Tariff Wall”

In an effort to protect domestic manufacturing and address persistent trade imbalances, the United States has imposed tariffs ranging from 25% to 40% on a wide array of goods from China and select Southeast Asian countries.

Dubbed by analysts as a new “tariff wall,” these duties have made direct exports to the US financially unviable for many manufacturers.

“We Do Not Have Competitors We Only Have Partners and Alliances”

To bypass these punitive tariffs, companies are rerouting their supply chains through third-party nations such as Vietnam, Thailand, Indonesia, and Malaysia. Goods are being partially assembled or relabeled in these countries before continuing to American shores under preferential or lower-duty trade agreements.

The result? A sharp rise in transshipment activity through Southeast Asia, with Vietnam emerging as a major beneficiary, though this has simultaneously increased cargo processing delays, customs scrutiny, and operational costs for shippers.

De Minimis Exemption Removal Hits e-Commerce Hard

Another significant policy change driving trade shifts is the removal of the US de minimis exemption. Previously, individual shipments valued under $800 could enter the United States without incurring duties or taxes — a boon for e-commerce businesses, especially those reliant on air freight.

With the exemption scrapped, low-value e-commerce shipments to the US plunged by around 43% in May 2025, while air cargo volumes fell by approximately 11% year-over-year.

This sharp decline is directly impacting online marketplaces and small traders who heavily depended on de minimis privileges for cost-effective, rapid deliveries to American consumers.

Many of these low-value shipments are now being rerouted to alternative destinations or stockpiled in Southeast Asian hubs, awaiting bulk shipment options that can offset new duty costs.

Rising Logistical Complexity and Costs

For logistics providers, freight forwarders, and exporters, this shift isn’t seamless. Moving goods through multiple countries adds layers of complexity, including:

• Longer transit times

• Increased customs procedures

• Documentation and compliance challenges

• Higher handling and warehousing expenses

These costs are already squeezing profit margins, particularly for small and medium-sized enterprises without the scale or leverage to negotiate favorable shipping and handling rates.

Port congestion in Vietnam and Malaysia has also intensified as rerouted cargo volumes surge, driving up container dwell times and transport premiums in those markets.

The Strategic Response from Industry Players

To navigate this evolving trade landscape, logistics firms and multinational brands are adapting their supply chains with new strategies:

• Establishing satellite distribution centers in Southeast Asia

• Increasing investment in digital trade management tools to track regulatory compliance

• Shifting manufacturing bases from China to Vietnam, Indonesia, and India

• Exploring nearshoring options in Mexico and Central America to mitigate cross-Pacific tariffs altogether

Some freight carriers have responded by launching specialized services between Southeast Asian hubs and secondary US ports, avoiding heavily trafficked routes and reducing customs bottlenecks.

Conclusion

The US’ aggressive tariff and import policy adjustments in 2025 have set off a new phase of trade rerouting and logistical realignment. While Southeast Asia stands to benefit from rising cargo volumes, the operational headaches and rising costs for exporters and supply chain managers are undeniable.

As trade tensions persist and regulatory landscapes evolve, the container shipping industry will need to remain agile, adaptive, and digitally empowered to navigate the complexities of this new era in global commerce.

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