Trump Tariffs Shrink China’s Asian-US Shipping Dominance

China’s Asia-US Shipping Dominance Erodes Under Trump Tariffs, Southeast asia Gains

President Trump’s ongoing tariff policies have considerably impacted China’s market share in Asia-US maritime transportation, with exporters increasingly shifting production and shipments to Southeast Asian nations. According to data analyzed by Nikkei Asia, this trend has lead to a sustained decrease in cargo volume originating from China.

In June, total container shipments from Asia to the United states saw a year-on-year decline of 7.3%, reaching approximately 1.68 million TEU. Shipments from China experienced a sharper drop of 24.9%, falling to around 760,000 TEU. Consequently, China’s share of the Asia-US shipping market has remained below 50% for four consecutive months, settling at 45.3% in June. This marks a notable decrease from the 50.4% average throughout the first half of the year, a decline from 54.2% during the same period last year.

Historically, China has been the undisputed leader on the Asia-US route, wich served as the world’s largest trade lane in 2024 with a total of 2.14 million TEU transported. Benefiting from its status as a “world factory” and competitive labor costs, China commanded a significant market share, reaching 65.5% of Asia-US routes in both 2009 and 2014.

However, during President Trump’s first term, escalating US-China trade tensions spurred companies to diversify their manufacturing bases towards Southeast Asia. This strategic shift has continued, with President Trump adopting a more assertive stance on China in his second term, implementing tariffs that have, at times, reached as high as 145%. While current tariffs stand at 30%, the possibility of further increases looms shoudl negotiations fail to reach a resolution by the August 12 deadline.

Southeast Asia has emerged as the primary beneficiary of this trade realignment. In June,shipments from the region to the United States surged by 31.6% year-on-year. This growth has propelled Southeast Asia’s market share to 33.2%, while the shares of Japan and Korea have receded to 3.3% and 6.4%, respectively.

Vietnam, in particular, has seen a importent increase in shipments, with an 18% rise. The country’s strategic importance has been further amplified by its recent trade agreement with the United States, signed on July 2. President Trump also announced a mutual tariff rate of 20% for Vietnam, a rate lower than that imposed on other nations. Data from Descartes Data Main indicates that maritime container transportation from Vietnam to the US between January and June increased by 36% year-on-year, positioning Vietnam as the second-largest Asian exporter to the US after China.

Meanwhile, Singapore is solidifying its role as a key hub port in Asia, with container throughput increasing by 7% year-on-year to approximately 21.7 million TEU from january to June. Port operators across Southeast Asia are actively expanding their facilities, and Vietnamese logistics companies are accelerating their maritime transportation capacity to meet the growing demand.

How do Trump-era tariffs incentivize companies to re-evaluate their supply chain strategies?

The Shifting Landscape of US-Asia Trade Routes

For decades, China has held a dominant position in Asian-US shipping, acting as the world’s factory and a central hub for global supply chains. though, the implementation of Trump-era tariffs, and the continued consideration of new ones as of 2025, are demonstrably reshaping this landscape. This isn’t simply about increased costs; it’s a fundamental restructuring of trade flows, impacting everything from manufacturing locations to port congestion and carrier strategies. The Tax Foundation has extensively analyzed the revenue implications of these tariffs [https://taxfoundation.org/blog/trump-tariffs-revenue-estimates/], providing crucial data for understanding the economic forces at play.

How Tariffs Impact Shipping Volumes from China

The core effect of tariffs is to make Chinese exports to the US more expensive. This has several direct consequences for shipping:

Reduced Demand: Higher prices naturally lead to decreased demand for certain goods manufactured in China. This translates directly into fewer containers being shipped across the Pacific.

Diversification of Sourcing: Companies are actively seeking alternative manufacturing locations to avoid tariffs. Vietnam, India, Mexico, and other Southeast Asian nations are benefiting from this shift, leading to increased shipping activity from these countries to the US. This is a key trend in nearshoring and friend-shoring.

Shift in Trade Lanes: Conventional shipping routes heavily focused on China are becoming less congested, while routes serving alternative manufacturing hubs are experiencing increased volume. This impacts vessel utilization and port infrastructure.

Increased Costs for US Importers: Even with sourcing diversification, the overall cost of goods can increase due to higher labor costs or less efficient supply chains in alternative locations.

The Rise of Alternative Manufacturing Hubs

The tariff-driven shift is accelerating the growth of alternative manufacturing centers in Asia and beyond. Here’s a breakdown:

Vietnam: A major beneficiary, experiencing meaningful growth in textile, footwear, and electronics manufacturing.This has led to increased demand for shipping services from Vietnamese ports like Cai Mep and Hai Phong.

India: Emerging as a key player, especially in pharmaceuticals, chemicals, and increasingly, electronics. Indian ports like Mundra and nhava Sheva are seeing rising container volumes destined for the US.

Mexico: Benefiting from its proximity to the US, Mexico is attracting investment in manufacturing, particularly in automotive and electronics. This is boosting rail and truck freight volumes across the US-Mexico border.

Southeast asia (Thailand, Malaysia, Indonesia): these countries are also experiencing increased investment and manufacturing activity, contributing to a more diversified Asian supply chain.

Impact on US Ports and Infrastructure

The changing trade patterns are putting pressure on US port infrastructure:

1. West Coast Ports: Historically reliant on cargo from China, ports like Los Angeles and Long Beach have seen fluctuating volumes. While still significant, their dominance is being challenged.
2. East Coast and Gulf Coast Ports: These ports are experiencing rapid growth as they handle increasing volumes from Southeast Asia and Mexico. This requires significant investment in infrastructure to accommodate larger vessels and increased throughput.
3. Inland Logistics: The shift in port activity is also impacting inland logistics networks, requiring adjustments to rail and trucking capacity to efficiently move goods to their final destinations.
4. Port Congestion: While West Coast congestion has eased,East Coast and Gulf Coast ports are facing increasing pressure,leading to potential delays and higher costs.

The Role of Shipping Carriers

Ocean carriers are adapting to the new reality by:

Adjusting Vessel Deployments: Reallocating capacity to serve growing trade lanes and alternative manufacturing hubs.

Offering New Services: developing direct services from Southeast Asian ports to the US, bypassing traditional transshipment hubs in China.

Investing in Infrastructure: Partnering with port operators to improve infrastructure and increase capacity at key US ports.

Blank Sailings & Capacity Management: Utilizing blank sailings (canceled voyages) to manage capacity and stabilize freight rates in response to fluctuating demand.

Tariff Revenue and Economic Considerations

While the stated goal of tariffs is frequently enough to generate revenue, the economic impact is complex. The Tax Foundation’s analysis highlights that tariffs are not a straightforward revenue source. They can:

Increase Costs for Consumers: Tariffs are often passed on to consumers in the form of higher prices.

Disrupt Supply Chains: Leading to inefficiencies and potential shortages.

Trigger Retaliatory Tariffs: Escalating trade tensions and harming US exporters.

Impact US Businesses: Increasing input costs and reducing competitiveness.

Practical Tips for Businesses Navigating the New Trade Landscape

Diversify Sourcing: Reduce reliance on a single country by exploring alternative manufacturing locations.

Optimize Supply Chains: Streamline logistics processes and improve inventory management.

Negotiate with Carriers: Secure competitive freight rates and capacity commitments.

Monitor Tariff Changes: Stay informed about evolving trade policies and their potential impact.

* Consider Nearshoring/Reshoring: Evaluate the feasibility of bringing manufacturing closer to the US market.

Case Study: The Furniture Industry

The furniture industry provides a clear example of the impact of tariffs. Initially heavily reliant on Chinese manufacturing, many furniture companies have shifted production to Vietnam and Mexico to avoid tariffs. This has led to increased shipping activity from these countries and a decline in furniture imports