U.S. and EU Procurement from China Sinks

According to data published by the Council on Foreign Relations, procurement from China is becoming less important for buyers from the United States and the European Union as other regions, for example Southeast Asia, are becoming a bigger source for internationally traded goods. This includes countries like Vietnam, Malaysia and Thailand, which like China received high rates of reciprocal tariffs from the Trump administration before these were paused at the beginning of April.

While factories in Southeast Asia are increasingly offering alternatives to buying from China, they often also use Chinese materials. The move by the Trump administration therefore tried to levy comparably high duties on the nations in questions to close the loophole of getting around old and new China tariffs.

As a response to the developments, the Council on Foreign Relations reports that "Asia’s poorest countries, as well as those with massive trade imbalances and limited leverage, are trying to meet Trump’s demands to reduce the severity of the proposed tariffs." This has led to leadership in Cambodia and Vietnam making concessions to buy more American goods despite the countries' limited financial ability to do so. Richer countries with more leverage, for example Japan, have been taking more time to negotiate, with the Japanese delegation not likely to reach a deal before July.