Bypassing 47% Tariffs by Exporting to Southeast Asia at 19% Rates
60% of Exports Are Reprocessed in Southeast Asia Before Re-export
Rapidly Replacing Traditional Suppliers in Sectors Like Automobiles
On December 7 (local time), the Financial Times (FT) reported that, following the US-China trade war, China has rapidly increased its exports to Southeast Asian countries to avoid high tariffs.
According to ISI Market, from January to September this year, China's exports to the six major Southeast Asian economies-Indonesia, Singapore, Thailand, the Philippines, Vietnam, and Malaysia-reached 407 billion dollars (approximately 599 trillion won). This marks a 23.5% increase compared to 330 billion dollars during the same period last year.
China's exports to these countries have doubled over the past five years, and its trade surplus has reached an all-time high this year.
China has long faced criticism for threatening local manufacturing by dumping cheap goods at unfairly low prices in markets such as Southeast Asia. Roland Rajah, Chief Economist at the Lowy Institute, stated, "The China shock, which has persisted for several years, has been further amplified this year due to efforts to circumvent US tariffs."
Economists say the recent surge in exports is related to attempts to bypass tariffs imposed on Chinese products. The United States has imposed tariffs of about 47% on Chinese goods, while tariffs on products from several Southeast Asian countries are around 19%.
The United States has warned that it may impose transshipment tariffs of up to 40% on companies that disguise the origin of Chinese products by exporting them via third countries to avoid high tariffs. However, FT pointed out that it is unclear whether such measures are actually being enforced.
Rajah estimated that in September, China's exports to Southeast Asia increased by as much as 30% year-on-year, noting that this differs from previous simple export surges. "Chinese products are displacing other exporters in the region, but in reality, a significant portion of China's exports contribute to growth," he explained. According to his research, up to 60% of China's exports this year consisted of components, which are assembled within the region and then exported to other markets.
In particular, China is establishing itself as a dominant supplier by taking market share from other countries in the Southeast Asian consumer goods sector.
Doris Liu, an economist who previously worked at the Institute for Democracy and Economic Affairs in Malaysia, said, "China's oversupply, especially in the low-cost consumer goods sector, requires new outlets," adding, "Given geographical proximity, logistics, and market size, Southeast Asia is the most natural spillover market."
The most prominent example of this trend is in the automotive sector. Southeast Asian consumers are increasingly switching from Japanese brands such as Toyota, Honda, and Nissan to affordable electric vehicles from China's BYD.
According to PwC, as of the first half of 2025, Japanese manufacturers held a 62% market share in the six major Southeast Asian markets. This is a significant decline from the 2010s average of 77%. In contrast, the market share of Chinese vehicles has jumped from virtually negligible levels to over 5%.
Some Southeast Asian countries are strengthening import regulations or considering imposing tariffs on certain items to prevent domestic manufacturers from being pushed out by inexpensive Chinese products.
However, Liu commented that such measures are "fragmented and only temporary." She stated, "Southeast Asian manufacturers need to upgrade, or they will be eliminated," adding, "China's industrial ecosystem is far more innovative."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
