For years, countries like Vietnam, Cambodia and Thailand have worked to turn themselves into alternatives to China for factories making the bags, electronics, shoes and auto parts that eventually end up in the United States.
That is now poised to change after President Trump on Wednesday aimed his most punishing tariffs at countries in Southeast Asia.
The news came as a hammer blow to American companies that have come to depend on factories in the region amid growing U.S.-China trade tensions. Some were asking: Where to now?
“This is much worse than what most of us had anticipated,” said Sonal Varma, chief economist for Asia excluding Japan at Nomura, the Japanese bank.
There were no illusions that any one country in Southeast Asia would be spared, but the size of the tariffs was a shock, as many of these countries are trade partners and allies with the United States.
Singapore, a close partner of the United States, said it was disappointed by the imposition of 10 percent tariffs despite a free-trade agreement with the United States and said that it would engage with the United States to understand how it calculated the tariffs.
Vietnam and Cambodia were singled out with new tariffs of 46 percent and 49 percent — among the steepest meted out to any country in the world, not accounting for earlier tariffs on specific sectors and countries such as China. In Thailand and Indonesia, the tariffs were high too, at 36 percent and 32 percent.
Mr. Trump had not previously given much air to concerns about the region, unlike his lengthy tirades against countries like China and Mexico, said Priyanka Kishore, an economist in Singapore and the founder of Asia Decoded, a consulting firm. “And then bam, Southeast Asia gets hit really hard,” she said.
The tariffs on Vietnam were especially harsh and could have long lasting effects on global trade because of how important the country has become as a substitute to manufacturing in China. “I’m still wrapping my head around it,” said Ms. Kishore.
Together with Mexico, Vietnam has been the biggest beneficiary of shifting global supply chains in recent years, as companies moved their factories out of neighboring China because of rising costs and growing tensions between the U.S. and China. The boom sent Vietnam’s trade surplus with the United States ballooning to $123.5 billion in 2024, the third highest after China and Mexico.
Initially, much of that trade was from companies rerouting products from China into Vietnam before exporting them to the United States. But in recent years, more of that trade has been driven by products made in Vietnam, as companies built new factories in the country and tried to replicate much of the China supply chain.
The United States is Vietnam’s largest export market, accounting for more than 30 percent of its total exports, including consumer electronics, smartphones, garments and footwear and wood furniture. Around a third of U.S. footwear was made in the country last year, making it the largest exporter of shoes to the United States. Nike, the sportswear brand, produces about 50 percent of its footwear in Vietnam.
Vietnam’s prime minister, Pham Minh Chinh, held an emergency cabinet meeting with his top ministers on Thursday to discuss how to respond to the tariffs. Other government agencies convened to try to understand how the Trump administration tariffs were calculated and how they would be applied. Companies and business associations, many of which had anticipated a tariff of 10 percent, expressed hope that the government could still hold talks with the Trump administration to reduce the levy.
“I was horrified when I saw the tariff numbers on the chart,” said Hong Sun, chairman of a South Korean business association in Vietnam, whose members includes the consumer electronics companies Samsung and LG.
“We can only hope that the Vietnamese government can help us weather this tsunami,” he said.
In Thailand, the government emphasized that it was ready to negotiate and “engage in dialogue” with Washington. But it also encouraged companies to “seek new potential markets” in the face of the 36 percent tariffs levied on goods going to the United States, its biggest export market.
For American business owners such as Patrick Soong, who helps U.S. companies to design and make their products in the region, the tariffs on Thursday create uncertainty. His clients make everything from luggage to camera accessories to medical devices.
Mr. Soong and his company, Allitra, spent months looking for alternatives to China for his clients after Mr. Trump was re-elected last November. But on Thursday he was already making plans to move some production out of Thailand and Vietnam.
Mr. Soong planned to visit new factories in the Philippines with the idea of potentially moving some manufacturing there. Mr. Trump imposed new tariffs of 17 percent on the Philippines, less than half the duty he placed on Thailand and nearly a third lower than on Vietnam.
“I was planning on moving more product to Thailand," said Mr. Soong.
“I was looking at it as a next bet,” he said. “That has been disrupted.”
Damien Cave and Tung Ngo contributed reporting from Ho Chi Minh City, and Muktita Suhartono and Sui-Lee Wee from Bangkok .
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