The share of volume from suppliers in China, Hong Kong, and Korea has reduced from 90% to 50% in the last ten years, indicating a long-term diversification of supply chains that accelerated during the initial Trump administration and trade conflict, as per an analysis from Wells Fargo Supply Chain Finance.
“Between 2018 and 2020, the shift in suppliers away from China nearly doubled following the initial tariff measures,” remarked Jeremy Jansen, head of global originations at Wells Fargo Supply Chain Finance.
He stated that since the onset of the trade conflict, the steady rise in supply chain diversification away from China towards the South Asia Pacific area has consistently increased.
“According to our supplier counts, the diversification now stands at 50/50 between the northern Asia Pacific area and the southern,” Jansen indicated. “The flow of midsize suppliers can be traced into Taiwan, Vietnam, Indonesia, Thailand, India, and Malaysia,” he added.
Imports from China to the U.S. have fallen by 26 percent year-on-year, based on data from freight intelligence firm SONAR, yet trade volumes from China to the South Asia Pacific have significantly risen.
As reported by Project 44, which monitors supply chain changes, China’s trade in 2025 has surged to Indonesia by 29.2 percent, Vietnam by 23 percent, India by 19.4 percent, and Thailand by 4.3 percent. Consequently, year-on-year container trade volume to the U.S. has increased by 23 percent for Vietnam, 9.3 percent for Thailand, and 5.4 percent for Indonesia.
Data published by China on Monday revealed that while its exports to the U.S. continued to fall in November, exports to ASEAN and EU countries rose over 8% and nearly 15%, respectively. Throughout the first 11 months of the year, China’s total exports grew 5.4% compared to the previous annual period, resulting in a trade surplus surpassing $ trillion.
While the future of President Donald Trump‘s tariff strategy remains uncertain with the U.S. Supreme Court ruling pending and major corporations already filing for refunds, in the near term, the influence of Trump’s tariffs is increasingly noticeable on business balance sheets, as U.S. importers are seeking more financial arrangements to conserve cash.
“We have observed a rise in working capital requirements post-Liberation Day due to elevated tariffs,” noted Ajit Menon, leader of HSBC’s U.S. trade finance division. “The average tariff has escalated from 1.5 percent to double digits,” he remarked.
Menon indicated that the financial impact varies across industries. For instance, generic pharmaceuticals and retail/fashion sectors lack negotiation leverage due to slim margins. “This is the reason trading partners are discussing payment terms as an alternative, leading to a need for financing,” stated Menon.
HSBC, which supports over $850 billion in global trade flows yearly, launched its Trade Pay platform earlier this year, aimed at assisting clients in monetizing receivables, payables, and inventory.
Since Trump’s initial rollout of sweeping global tariffs, Menon has reported a roughly 20 percent surge in financing flows across all client categories, with the use rising as the inventory brought into the U.S. in early 2025 as part of a trade frontloading decreases. “The excess inventory brought in to counter tariffs is now nearly depleted,” Menon stated. “That indicates companies will require more working capital going forward as terms are renegotiated.”
In a recent survey of 1,000 U.S. firms conducted by HSBC, over 70 percent of participants expressed that they were encountering escalating working capital demands year after year, prompting Menon to say that many are re-evaluating their supply chain tactics and payment conditions.
“They are assessing what rates they are paying, as well as the financing duration. Cash is becoming vital,” he stated.
