In 2024, when Donald Trump took office, he promised to reduce the nation’s trade deficit, which had increased by about $ 918.4 billion, or 3.1 percent of GDP.
Beginning on April 2, he invoked the International Emergency Economic Powers Act (IEEPA), which he called “reciprocal tariffs” on US trade partners to “correct trade practices” that the White House attributed to the hollowing out of US manufacturing.
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However, preliminary trade data indicate that while Trump intended, the US trade deficit overall decreased in 2025. However, the tariffs did not have the desired impact in Southeast and East Asia. The tariffs have simply rearranged supply chains in an effort to lessen US dependence on the two regions, both of which are major manufacturing centers.
According to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, “If you squeeze a balloon in one direction and people still want the product, they will get the product, whatever it is, from a different location.”
She told Al Jazeera, “Trade moves to places where there are trade opportunities.” “We have changed the way we conduct trade, but we haven’t ended it.”
US exports to China decreased
China, the largest exporter to the US, was one of Trump’s top targets.
According to the US-based Peterson Institute for International Economics, the average US duty on Chinese goods as of November 2025 came after months of tit-for-tariffs imposed by Washington and Beijing.
Following a upcoming meeting between Trump and Chinese President Xi Jinping, which is scheduled for April, the final duties may change. Trade has already drastically decreased as a result.
According to Chinese customs data, the value of Chinese exports to the US decreased by 20% in the wake of the upheaval in 2025.
According to the US Census Bureau, the trade deficit for goods also dramatically decreased. Using US Census data, imported goods from China decreased from $438.7 billion in 2024 to $ 266.3 billion in 2025.
According to the same data, the overall US trade deficit for goods decreased from $ 245.5 billion in 2024 to $ 175.4 billion in 2025.  ,
Southeast Asia, whose manufacturers make up the “Chinese Plus One” supply chain, is a different story from US trade data.
Gain for Southeast Asia
Trump’s “Liberation Day” tariffs targeted the region particularly, with preliminary duties set at 17 to 49 percent for Vietnam, Indonesia, Malaysia, Philippines, Thailand, and Vietnam. Through bilateral trade agreements that provided some sector-specific exemptions, tariffs were later agreed upon to 19 to 20%.
They are lower than the US tariffs on China, though they are higher than before.
According to census data, the US trade in goods with Thailand, Indonesia, and the Philippines all increased in 2025 despite these nations experiencing “reciprocal tariff” rates of 19%. The US trade deficit for goods increased from a relatively small $4.9 billion to $ 6.8 billion, increasing by 11 percent with Indonesia, 23 percent with Thailand, and an astonishing 38 percent with the Philippines.
Despite having tariffs of 19%, trade with Cambodia and Malaysia continued to be stable between 2024 and 2025, according to census data.
Despite a 20% tariff, the most significant change in the dollar amount in Southeast Asia was seen in Vietnam, where the US trade deficit for goods increased by more than $20 billion from $ 123.4 billion in 2024 to $ 145.7 billion in 2025, according to the same data.
Does China simply reroute its products?
China’s supply chains continue to move, according to Zichun Huang, a China economist at the United Kingdom’s Capital Economics, who explained this shift to Al Jazeera. Some of this can be attributed to the transshipment of goods through Southeast Asia.
“Rerouting of exports to the US via neighboring countries has a function. However, she claimed in an email that this has not been the main driver.
Instead of using the acronym Association of Southeast Asian Nations, ASEAN is importing more machinery and intermediate goods from China, which are being used to produce exports to the US.
China’s record $ 1.19 trillion global trade surplus, announced last week by Beijing’s General Administration of Customs, shows that the country’s exporters are expanding beyond the US.
According to Nick Marro, principal economist for Asia at the Economist Intelligence Unit, the White House threatened to impose a 40% tariff on “transshipments,” but the term has since become more difficult to define as supply chains spread across Southeast Asia and goods are frequently transgressed throughout the manufacturing process.
He told Al Jazeera, “The difficulty in defining a transshipment is probably one reason why the US hasn’t seen any progress in this,” he said. He claimed that the US is distracted by global concerns about trade and foreign policy at the same time.
AI is a key driver of Taiwan’s trade booms.
Following Tehran’s crackdown on widespread anti-government protests, Trump has threatened to impose new tariffs on European nations that oppose US policies in Greenland as well as on those that continue to conduct business with Iran.
According to experts like Elms, Trump has also shown that he can have competing and even contradictory goals for the US economy. The US president may want to reduce the country’s trade deficit, but he also wants to encourage the US-based economy and the growth of AI.
Nowhere is this crystal clearer than in Trump’s dealings with Taiwan, which the US president has previously claimed he stole from the country’s chip industry.
According to US government data, trade with Taiwan is flourishing despite the decline in other East Asian markets. Due to tariff carveouts for Taiwan’s semiconductors and derivative parts, the US deficit with Taiwan increased by more than 50% from $ 73.7 billion in 2024 to $ 111.8 billion in 2025.
According to Kristy Tsun-Tzu Hsu, director of the Taiwan ASEAN Studies Center at the Chung-Hua Institution for Economic Research in Taipei, Trump’s “reciprocal tariffs” on Taiwanese goods, which were agreed last week as 15%, only affected about 30% of exports.
However, she told Al Jazeera, many observers were caught off guard by the surge in exports.
Because Taiwan and other nations anticipated weak exports last year, but because of this inventory [stockpiling] and the AI boom, there is a very high demand for semiconductors, according to the author. “This is very different from what everyone expected.”
Hsu claimed that the rise in imports from Vietnam, which has risen through the ranks to become one of the top US chip suppliers, was a product of the same demand. She anticipated that the increase would continue into 2026 in both cases.
Despite the growing US trade deficit, Elms predicted that Trump would not make any moves against Taiwan regarding the chip issue.
She expressed her desire for the US president to “reduce the trade deficits.”
Trump, however, added that AI-driven stock market boom is a Trump supporter.
If you asked Trump, would you prefer a lower trade deficit to a higher-exploited stock market, in your opinion? She said, “He would always vote for the stock market.”
What comes next?
Given that Trump’s “reciprocal tariffs” are up for legal challenge, the US Supreme Court may decide whether or not they will. Even if the court rejects the tariffs, experts claim it could still take months, if not years, to unwind.
As the US midterm elections in November, Priyanka Kishore, director and principal economist at Asia Decoded in Singapore, warned Al Jazeera that Trump’s support for tariffs could be undermined by the country’s rising prices.
Source: Aljazeera
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