Trump's new tariffs close loopholes used by China's proxies

So Trump announced new tariffs today, which are applicable to pretty much every country in the world. The minimum baseline tariff is 10%, but a lot of countries were hit with much higher tariffs. Here is the table issued by the White House:

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The first thing to jump out is the 46% tariff on Vietnam. Why Vietnam? Here is a table produced by Deutche Bank in Nov 2024, listing countries by how much they export to the US and thus how much they'd be impacted on a universal flat tariff:

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Notice Vietnam is the second biggest exporter to the US. They export more than Canada, despite having no trade deal with the US. But if you go back to 2018, Vietnam exported hardly anything to the US.

So what is going on?

In 2018, Trump put tariffs on China. Biden not only kept those tariffs in place, he extended them. And Trump 2.0 has extended them further.

To get round these tariffs, Chinese manufacturers set up assembly plants in Vietnam (and Cambodia, and Thailand). Components were imported from China and then assembled, tweaked and finished in Vietnam, and then badged with a Made in Vietnam label and shipped to the US.

By tariffing these Chinese proxy countries, the loopholes have been closed. There will be a lot of worried Chinese manufacturers tonight. They can't really export through third countries any more. And Mexico is also not an option as USMCA rules say goods are tariff free only if 60% of the components are made in the US, Mexico or Canada. This might get tightened further as USMCA gets renegotiated.

They'll probably try to pivot and dump the goods in Europe instead. The EU anticipated this - in January, the EU raised tariff barriers against China.