Source: Hunter Clark and Gregory Simitian, “In What Ways Has U.S. Trade with China Changed?” Federal Reserve Bank of New York, May 4, 2026.
Commentary: Over the past year, major changes in U.S. trade policy toward China have significantly altered global trade patterns, even though overall trade imbalances remained largely unchanged. The U.S. trade deficit stayed near $1.2 trillion in 2025, while China’s global trade surplus did rise slightly to roughly $1.2 trillion. However, trade flows increasingly shifted away from direct U.S.-China exchanges and instead moved through Southeast Asia, particularly countries in the Association of Southeast Asian Nations (ASEAN), with Vietnam playing a major role.
Much of this shift reflects tariff avoidance and supply chain diversification. U.S. imports from China declined, while imports from ASEAN surged, especially in high-tech computer and networking-related goods. Companies including Lenovo, Apple, Dell, and HP moved portions of their manufacturing and final assembly operations to Southeast Asia to reduce exposure to U.S. tariffs on Chinese goods. Indeed, only 1 percent of tech goods under HS code 84 coming from ASEAN faced tariffs compared to about 90 percent for those from China. Nevertheless, at the same time, Chinese firms continued supplying many of the upstream components used in ASEAN-based manufacturing, meaning China remains deeply embedded in global supply chains despite declining direct exports to the United States.
The rise of artificial intelligence infrastructure also contributed to these changes. Growing demand for servers, networking equipment, semiconductors, and data centers increased the importance of ASEAN in technology supply chains. Overall, geopolitical tensions and tariff policies are reshaping global production networks, with ASEAN becoming a critical intermediary between China and the United States in advanced technology manufacturing.
