U.S.- China Tariff Policy Changes Under Trump and Business Response Strategies

Since Donald Trump took office as President of the United States in 2017, the U.S.-China trade relationship has undergone significant changes. His administration’s “America First” policy led to an unprecedented trade war that reshaped global trade dynamics. The implementation of tariff policies disrupted supply chains and trade strategies, forcing businesses to adapt swiftly to maintain competitiveness.

During his presidential campaign, Trump frequently criticized China’s trade policies and advocated for imposing higher tariffs on Chinese goods. After assuming office, the U.S.-China tariff policies were expected to evolve as follows:

1. Higher Tariff Rates

Trump hinted at imposing tariffs as high as 70% on Chinese imports, particularly targeting industries such as steel, aluminum, and textiles.

2. Broader Tariff Scope

Tariffs could extend beyond traditional goods to include high-tech products and service trade sectors.

3. Stronger Trade Enforcement

The U.S. was expected to intensify investigations into alleged “unfair trade practices” by China, such as anti-dumping and anti-subsidy violations.

Key Response Strategy: Transshipment Through Third-Party Countries

To mitigate the impact of high tariffs, companies can consider using transshipment through third-party countries. Here’s a breakdown of this strategy:

1.Choosing the Right Third-Party Country

Countries with Free Trade Agreements (FTAs): Countries like Singapore, South Korea, Malaysia, and Vietnam have favorable trade agreements with the U.S., providing tariff benefits.

Operational Approach: Export goods to a third-party country, perform simple processing or repackaging, obtain the country’s certificate of origin, and then export to the U.S.

Example of Tariff Advantage: For textiles, the U.S. imposes a 10% tariff on direct Chinese exports, but textiles from Singapore may enter the U.S. tariff-free.

Geographical Proximity and Logistics Convenience: Countries such as Vietnam and Malaysia are close to China, reducing transportation costs.

Transportation Cost Savings: Transshipment via Vietnam can reduce transportation costs by 15% to 20% compared to direct exports.

Political and Economic Stability: Choose countries with stable political and economic environments to ensure a secure trade process.

2. Setting Up A Transit Company or Partnership

Establishing a Company in the Third-Party Country: Manage transshipment processes to ensure compliance with rules of origin.

Collaborating with Local Logistics Firms: Leverage their networks and expertise to improve efficiency.

3. Improving Documentation and Procedures

Ensure Complete Documentation: Include certificates of origin, commercial invoices, and packing lists.

Comply with Customs Regulations: Avoid delays or fines caused by incomplete or incorrect documentation.

4. Risk Control

Monitor Policy Changes: Stay updated on tariff adjustments to refine strategies.

Select Reliable Partners: Work with trustworthy logistics and customs partners to minimize risks.

Purchase Insurance: Protect goods in transit to ensure security.

Other Countermeasures

1. Market Diversification

Explore new markets to reduce dependence on the U.S. market.

2. Enhancing Product Competitiveness

Improve product value through technological upgrades and brand building.

3. Strengthening Intellectual Property Protection

Protect intellectual property to avoid trade disputes and sanctions.

Case Studies

Case 1: Textile Transshipment via Malaysia

Process: A Chinese textile company exports fabrics to Malaysia for cutting and sewing. The goods receive a Malaysian certificate of origin and are then exported to the U.S.

Tariff Benefit: Textiles exported directly from China face a 10% tariff, while those from Malaysia enter the U.S. tariff-free.

Cost Savings: For a $1 million shipment, using Malaysian transshipment can save approximately $100,000 in tariffs and $15,000 to $20,000 in transportation costs.

Case 2: Electronics Transshipment via Singapore

Process: A Chinese electronics manufacturer ships components to Singapore for assembly and testing. The final products receive a Singaporean certificate of origin and are exported to the U.S.

Tariff Benefit: Electronics from China face a 5% U.S. tariff, while Singaporean exports are tariff-free.

Cost Savings: For a $5 million electronics shipment, transshipment through Singapore can save $250,000 in tariffs.

Conclusion

Following Trump’s inauguration, U.S.-China tariff policies became stricter. Companies must adopt proactive strategies such as transshipment through third-party countries to navigate trade restrictions. Simultaneously, enhancing product competitiveness and expanding market outreach are critical to mitigating risks.

In an increasingly complex international trade environment, resilience and adaptability are not optional—they are essential components of a successful business strategy.

If your business is facing challenges navigating U.S.-China trade policies, contact us today for expert solutions tailored to your needs. Our team specializes in trade strategy, supply chain optimization, and compliance support.