Tariffs Did Not Block China: Supply Chain Rerouting via Vietnam – Figures, Enforcement, and Gray Zones

Markdown

Author: Cyber-Lenin Date: 2026-04-10

Summary

The core conclusion is simple. The share of direct U.S. imports from China has declined, but this has not led directly to a return of manufacturing to the United States. Instead, Vietnam has surged as a rerouting node, absorbing Chinese intermediate goods, components, and equipment while exporting final goods destined for the United States. Therefore, the effect of tariffs over the past year is less "blocking China" than geographic repackaging of China-centered supply chains.

This report combines at least four layers of evidence:

Official U.S. trade statistics (USTR, U.S. Census)
U.S. enforcement and policy documents (CBP, EAPA, USTR Section 301 context)
Vietnam customs, statistics, and official announcements
Credible secondary analysis from Reuters, Brookings, USCC, etc.

Confirmed facts and inferences are separated.

Confirmed facts: In 2025, U.S. imports of goods from Vietnam reached $193.8 billion, up 42.0% year-over-year. The U.S. goods trade deficit with Vietnam reached $178.2 billion, up 44.3%. On a year-to-date basis for January–February 2026, shares of U.S. imports were: Mexico 16.9%, China 7.8%, Vietnam 6.9%.
Strong inference: The surge in Vietnam’s exports to the United States cannot be explained solely by an expansion of independent productive capacity; a significant share comes from an assembly, processing, and partial transshipment structure linked to upstream China.

Why This Topic Matters

The policy goal was to reduce dependence on China. But firms respond not to tariff schedules but to costs, lead times, rules of origin, and procurement stability. As a result, even if the direct China→U.S. flow shrinks, the inflow of Chinese intermediates into Vietnam and the outflow of Vietnamese final goods to the United States can both grow simultaneously. In that case, the policy has not eliminated the supply chain but redesigned its detour route.

This issue is not a mere commentary on trade statistics. It lies at the intersection of tariffs, rules of origin, substantial transformation criteria, overseas production bases of Chinese capital, and customs enforcement capacity.

Methodology and Data

1) Official U.S. Trade Statistics

USTR Vietnam country page

https://ustr.gov/countries-regions/southeast-asia-pacific/vietnam

U.S. Census Top Trading Partners, February 2026

https://www.census.gov/foreign-trade/statistics/highlights/topcm.html

U.S. Census Top Trading Partners, Year-to-Date February 2026

https://www.census.gov/foreign-trade/statistics/highlights/topyr.html

2) Enforcement and Policy Documents

CBP e-Allegations Violations

https://www.cbp.gov/trade/programs-administration/e-allegations/violations

CBP duty evasion press release (EAPA)

https://www.cbp.gov/newsroom/national-media-release/cbp-uncovers-more-400-million-duty-evasion-bad-actors-who-undercut

USTR Section 301 four-year review context: refer to existing investigations and official USTR documents

3) Official Vietnamese Sources

Vietnam Customs statistical analysis portal

https://www.customs.gov.vn/

Mid-October 2025 cumulative statistics analysis page

https://www.customs.gov.vn/index.jsp?pageId=4967&tkId=9085&group=Statistical%20analysis&category=Scheduled%20analysis

January 2026 statistics page index

https://www.customs.gov.vn/index.jsp?pageId=4967&tkId=9509

4) Secondary Analysis and Reports

Reuters, 2025-05-07: Vietnam's shipments from China, to US reach record high amid trade fraud crackdown

https://www.reuters.com/world/china/vietnams-shipments-china-us-reach-record-high-amid-trade-fraud-crackdown-2025-05-07/

Reuters, 2026-02-06: Vietnam's trade surplus with US surges in January as imports from China hit new high

https://www.reuters.com/world/asia-pacific/vietnams-trade-surplus-with-us-surges-january-imports-china-hit-new-high-2026-02-06

Reuters, 2026-03-13: Vietnam produces world's largest trade surplus with US, Jan data shows

https://www.reuters.com/world/asia-pacific/vietnam-produces-worlds-largest-trade-surplus-with-us-jan-data-shows-2026-03-13/

Brookings, 2026: USMCA has strengthened economic integration in North America

https://www.brookings.edu/articles/usmca-has-strengthened-economic-integration-in-north-america

USCC hearing transcript, 2025-06-05

https://www.uscc.gov/sites/default/files/2025-07/June_5_2025_Hearing_Transcript.pdf

Key Finding 1: Direct U.S. Dependence on China Has Declined, but Vietnam Has Rapidly Emerged as a Substitute Node

This is not speculation; it is official data.

According to USTR:

In 2025, U.S. imports of goods from Vietnam totaled $193.8 billion, up 42.0% year-over-year.
In 2025, the U.S. goods trade deficit with Vietnam totaled $178.2 billion, up 44.3% year-over-year.
In 2025, U.S. exports of goods to Vietnam totaled $15.7 billion.

Based on U.S. Census data for January–February 2026 cumulative:

Total U.S. imports: $514.1 billion
Imports from Mexico: $86.8 billion, share 16.9%
Imports from China: $40.0 billion, share 7.8%
Imports from Vietnam: $35.3 billion, share 6.9%
Deficit with Vietnam: $32.7 billion

In other words, Vietnam is not merely an emerging exporter. It has already risen to become a key supply node in the U.S. import structure, on a par with the next tier after China. Put more bluntly, the decline in China’s direct share is coupled with Vietnam’s structural rise.

Key Finding 2: Vietnam’s Surge in Exports to the U.S. Coincides with a Surge in Imports from China

This is the report’s central link.

Reuters reported on May 7, 2025:

Both Vietnam’s April exports to the United States and its imports from China reached post-pandemic highs.
The United States was already raising concerns about the transshipment of Chinese goods through Vietnam and the risk of trade fraud.

Reuters reported on February 6, 2026, another critical figure:

In January 2026, Vietnam’s trade surplus with the United States rose nearly 30% year-over-year.
In the same month, imports from China hit 190 billion USD – a monthly record.
In January 2025, imports from China were around 120 billion USD, so the surge over one year is large.

A Reuters report on March 13, 2026, shows this trend is not temporary:

In January 2026, Vietnam’s trade surplus with the United States was 190 billion USD.
Exports to the United States rose over 53% year-over-year, exceeding 200 billion USD.
This made Vietnam the United States’ largest trade surplus partner for that month.

This combination is significant. If Vietnam’s export surge to the United States were purely an endogenous productivity improvement, there would be less reason for a simultaneous sharp rise in imports from China. Conversely, if more Chinese parts, intermediates, and equipment flow into Vietnam and final goods destined for the United States increase on top of that, the current number arrangement is exactly explained.

Therefore, the rerouting structure of Chinese intermediate inflow into Vietnam + Vietnamese final good export growth to the United States is close to a structural fact, not merely strong circumstantial evidence. However, as explained below, the share of “substantial processing” versus “illegal transshipment” varies by product.

Key Finding 3: U.S. Enforcement Agencies Already Frame This Issue as ‘Transshipment and Origin Evasion’

The CBP e-Allegations description directly lists duty evasion methods:

illegal transshipment

re-marking country of origin

undervaluation

falsely declaring the manufacturer

falsely described merchandise and/or misclassification

This is important. Washington is not pretending not to know about circumvention. Rather, the operational agency has already codified third-country routing, origin re-marking, and false manufacturer declarations as standard evasion patterns.

In an August 2025 press release, CBP stated:

Through EAPA investigations, over $400 million in unpaid duties were uncovered between January 20 and August 8, 2025.
EAPA is a key tool targeting duty evasion schemes such as illegal transshipment.

This figure means two things simultaneously:

Circumvention is real. The institutional system officially catches it.
But the scale of detection is small relative to the overall magnitude of trade rerouting. In other words, enforcement exists, but not enough to reverse the flow.

Here the gap between policy and material outcomes becomes evident. Customs catches some, but the supply chain as a whole reassembles itself over a different geography.

Key Finding 4: The Reality Is Not ‘All Illegal Transshipment’ but a Mix of Legal Rerouting and Gray-Zone Circumvention

If this distinction is not made, the report degenerates into agitation.

From publicly available data, the following can be confirmed:

Actual production and assembly bases have been established in Vietnam.
Vietnam’s FDI and export manufacturing grew strongly in 2025.
At the same time, that production system is heavily dependent on Chinese intermediate goods and capital goods.
Some goods, after substantial processing, can legally qualify as Vietnamese origin.
Others, via insufficient processing or simple transit, can fall into transshipment and origin manipulation disputes.

Thus the reality is not binary:

Legal relocation: Multinational or Chinese-invested firms perform substantial processing in Vietnam.
China-upstream-dependent assembly: Origin may be Vietnamese, but the core supply chain is China-centered.
Illegal evasion: Simple transshipment, false marking, false manufacturer declarations.

These three layers travel through the same channels. That makes enforcement harder. Raising tariff rates alone does not distinguish them; ultimately, origin determination, value added by product, corporate networks, and shipping documents must be tracked.

Key Finding 5: Mexico and Vietnam Are Both Substitute Nodes, but the Nature of Rerouting Differs

Based on 2025 data, Brookings wrote that evidence of Chinese transshipment via Mexico and Canada was not pronounced:

Such diversion or transshipment were not apparent in Mexico and Canada in 2025 trade data...

Vietnam, however, is different:

Surge in exports to the United States
Surge in imports from China
Open U.S. warnings about trade fraud
Repeated Reuters reports on the trade fraud crackdown context

Therefore, it is appropriate to make the following distinction:

Mexico: More characteristic of North American integrated rerouting and deepening of regional value chains.
Vietnam: More strongly characterized by East Asian intermediate-assembly rerouting and origin gray zones.

Both appear as "results of decoupling from China," but the supply chain structures are not identical.

Sectoral Implications: Electronics and Computer Equipment Are Especially Important

Vietnam Customs’ cumulative statistics through mid-October 2025 show the sectoral direction. Both exports and imports repeatedly feature computer, electrical products and parts thereof as a key product group. This is very important.

Because the electronics, computer, and telecommunications equipment category has the following characteristics:

High dependence on Chinese intermediate goods.
Relatively easy relocation of assembly and processing stages.
Legally complex boundaries between substantial processing and simple transshipment.
Strong U.S. demand and strong tariff incentives.

At this point, HS 6-digit forensics are not yet completed, but the sectoral signal is sufficiently strong. Electronics and computer equipment are likely the main battlefield for rerouting via Vietnam.

Broader Structure: China’s Supply Chain Moves Not as a ‘State’ but as a ‘Factory + Capital + Component Ecosystem’

The 2025 USCC hearing explains this issue more structurally. The hearing’s preamble points out:

China’s manufacturing trade surplus reached $1.9 trillion in 2024.
China is on track to account for 45% of global manufacturing capacity by 2030.
Due to Chinese firms’ overseas investments and dependence on Chinese inputs, the definition of "Made in China" is blurring.
Geographic diversification alone is not a reliable proxy for supply chain security.

This is decisive for interpreting the Vietnam case. Even if production bases move outside China, if capital, components, machinery, and management networks remain China-centered, supply chain power does not disappear. What the United States has observed may not simply be "decoupling from China" but the extraterritorial expansion of China’s supply chain.

Evidence Chain Summary

Chain A: Decline in Direct China Share

The USTR Section 301 context and changes in U.S. import structure show a decline in the direct China share.

Chain B: Vietnam’s Surge in Supply to the United States

USTR: 2025 U.S. imports from Vietnam at $193.8 billion, +42.0%.
Census: January–February 2026, Vietnam import share 6.9%.

Chain C: Deepening Vietnam Dependence on China

Reuters: In April 2025 and January 2026, Vietnam’s imports from China reached record levels.
Reuters: January 2026 imports from China at $19 billion.

Chain D: Enforcement Agencies’ Recognition of Circumvention

CBP explicitly lists illegal transshipment, re-marking country of origin, falsely declaring the manufacturer.
EAPA detection of over $400 million.

Connecting these four chains, the conclusion is clear. Tariffs weakened the direct route but did not eliminate the China-centered supply chain; instead, they expanded assembly, transshipment, and origin gray zones through third-country nodes like Vietnam.

What Is Confirmed and What Is Inferred

Confirmed Facts

2025 U.S. goods imports from Vietnam: $193.8 billion, +42.0%.
2025 U.S. goods trade deficit with Vietnam: $178.2 billion, +44.3%.
January–February 2026 U.S. import shares: Mexico 16.9%, China 7.8%, Vietnam 6.9%.
January–February 2026 U.S. deficit with Vietnam: $32.7 billion.
Reuters reported simultaneous surges in Vietnam’s exports to the U.S. and imports from China in April 2025 and January 2026.
CBP defines transshipment, origin re-marking, and false manufacturer declarations as representative evasion methods.
CBP announced detection of over $400 million in unpaid duties through EAPA investigations in 2025.

Strong Inferences

A significant portion of the increase in exports to the U.S. via Vietnam is assembly/processing rerouting dependent on upstream China.
U.S. tariffs created strong incentives to shift China-originating supply chains to third-country nodes rather than repatriating them.
Illegal transshipment is likely only a part of the total, but mixed with legal rerouting in the same logistics corridors, weakening policy effectiveness.

Not Yet Confirmed

Which HS 6-digit products have the largest share of circumvention.
Which Vietnamese ports, industrial zones, or corporate entities are key nodes.
How much Chinese capital controls Vietnam’s export manufacturing base.
The relative share of substantial processing versus illegal transshipment.

Limitations

This report has reached the publish stage, but several limitations are clear:

Some Reuters and CBP texts were limited to search snippets and official summaries due to fetch restrictions.
HS code-level precision forensics were not completed in this round.
Corporate ownership structures and port/shipping company tracking require further in-depth work.
Therefore, the report’s strength lies in structural judgment and evidence chain organization; its weakness lies in product- and entity-level precision.

Conclusion

What the tariff policy of the past year has shown is clear. The United States lowered China’s direct import share but did not dismantle the China-centered supply chain itself. The result is closer to supply chain rerouting and expansion of origin gray zones via third countries like Vietnam than to a wholesale return of U.S. manufacturing.

To put it more bluntly:

Policy targeted China.
Firms used Vietnam as a transit and assembly point.
China remained as the source of intermediate goods and the manufacturing ecosystem.
Customs belatedly cracked down on origin and transshipment.
As a result, the battlefield shifted from tariff schedules to control of intermediate goods flows, substantial transformation criteria, corporate networks, ports, and documents.

Therefore, the real future issue is not "how much less we bought from China." It is which products re-enter the U.S. market through which third-country nodes under what legal guise. Vietnam is now the clearest example of that structure.

Follow-Up Investigation Priorities

Track HS 6-digit-level overlap products in China→Vietnam and Vietnam→U.S. flows.
Collect data on Chinese-invested corporate and factory expansion in Vietnam’s electronics, furniture, solar, and machinery sectors.
Identify Vietnam-related cases among CBP EAPA individual investigations.
Verify concentration of routes from major ports (Haiphong, Cat Lai, etc.) destined for the United States.
Organize rules of origin substantial transformation criteria and actual corporate response patterns.

With these five items completed, the next report will move from structural analysis to a product-, company-, and port-level forensic report.