Years of U.S. tariff policy pushed manufacturers to build a “China-plus-one” supply chain, shifting some production to Vietnam, Thailand, Malaysia and Mexico. Now that strategy is being reassessed as President Donald Trump’s newer tariff actions changed the math again, especially for companies comparing China with other export hubs. Reuters reported in June that the new tariff structure has reduced the gap that had once made moving out of China a clearer financial decision.
Tariffs changed the cost equation for multinationals
The shift became clearer after U.S.-China talks produced a temporary tariff reprieve in May and June 2025. According to Reuters, U.S. tariffs on Chinese imports had climbed as high as 145% between March and May before a 90-day reprieve left a base 30% import tax rate on goods made in China. Reuters later reported on June 11 that a White House official described a 55% effective tariff level on Chinese imports as the combination of a 10% reciprocal tariff, a 20% fentanyl-related tariff and pre-existing 25% first-term China levies.
That still leaves China facing higher tariffs than some competitors, but Reuters reported the gap has narrowed enough to change planning decisions. During the April 2, 2025 tariff rollout, Vietnam was assigned a 46% rate, Thailand 36% and Malaysia 24%, according to Reuters. Those rates hit countries that had benefited most from manufacturers trying to reduce direct China exposure after Trump’s first-term trade war.
Reuters quoted trade specialists and business advisers saying companies may now pause or slow moves that were intended to relocate larger portions of production out of China. Wu Xinbo of Fudan University told Reuters that many companies were likely to keep China as their main operating hub while using neighboring countries for partial capacity rather than full replacement.
The immediate impact is being felt most sharply in the countries that absorbed factory investment during the earlier China shift. Reuters reported that Vietnam, Thailand and Malaysia had all positioned themselves as lower-cost alternatives for U.S.-bound production, while Mexico benefited from proximity to the U.S. market and tariff-free treatment for many goods under the U.S.-Mexico-Canada Agreement.
What is confirmed is that those countries are now under pressure to preserve their relative advantage. Reuters reported that Vietnam and other Southeast Asian exporters opened talks with Washington after facing unexpectedly steep tariff rates in April 2025. Vietnam’s exposure is especially significant because major global brands including Apple, Nike and Samsung have large manufacturing operations there, according to Reuters.
Mexico’s position is different but also more complicated. Reuters reported that most Mexican exports to the United States under USMCA remain tariff free, but the country is still dealing with separate U.S. duties on steel, aluminum, vehicles and auto parts. The full list of companies changing sourcing decisions across these countries has not been publicly released, and many manufacturers have not disclosed plant-by-plant decisions.
The broader reason companies are reconsidering their moves is not simply the headline tariff number on China. Reuters reported that Trump’s changing tariff announcements have created uncertainty that makes long-term capital planning harder, even when one country’s rate looks better than another’s at a given moment. Manufacturers must weigh tariffs alongside labor costs, shipping, supplier networks and the risk that trade rules could change again before a new factory is fully operational.
That uncertainty is also affecting North American planning. Reuters reported that U.S. Trade Representative Jamieson Greer told Mexican business groups that at least some tariffs are “here to stay,” even as U.S. and Mexican officials continue formal negotiations. Reuters also reported that Trump’s 25% duty on global automotive imports disrupted decades of largely tariff-free vehicle trade in North America and left Mexico less competitive against countries that later secured lower tariff deals.
For consumers and businesses, the practical takeaway is that supply chains are likely to remain mixed rather than fully relocated. Reuters reported that some companies are expected to keep China as a central production base while maintaining smaller operations elsewhere, reflecting a strategy built around flexibility as much as cost. The main fact now is that the tariff gap that once made leaving China more straightforward is no longer as wide.