Containers are unloaded from the Wan Hai 175 cargo ship at the Tan Vu Terminal operated by Vietnam Maritime Corporation at Hai Phong Port in Hai Phong, Vietnam, Wednesday, January 15, 2025.
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The share of volume from suppliers in China, Hong Kong and South Korea has declined from 90% to 50% over the past decade, reflecting the long-term diversification of supply chains that gained momentum during the first Trump administration and trade wars, according to an analysis by Wells Fargo Supply Chain Finance.
“From 2018 to 2020, after the initial tariffs, supplier diversification from China nearly doubled,” said Jeremy Jansen, head of global origination for Wells Fargo Supply Chain Finance.
He said that since the first trade war, the diversification of supply chains from China to the South Asia-Pacific region has gradually increased and grown steadily.
“Based on our number of suppliers, diversification is currently 50/50 between the north and south of Asia Pacific,” Jansen said. “We can track the migration of medium-sized suppliers to Taiwan, Vietnam, Indonesia, Thailand, India and Malaysia,” he added.
Imports from China to the United States fell 26% year-on-year, while trade volumes from China to the South Asia-Pacific region increased significantly, according to data from cargo intelligence firm SONAR.
According to Project 44, which tracks changes in supply chains, China’s trade value in 2025 increased by 29.2% with Indonesia, 23% with Vietnam, 19.4% with India, and 4.3% with Thailand. Meanwhile, the volume of container trade to the United States increased by 23% in Vietnam, 9.3% in Thailand, and 5.4% in Indonesia compared to the previous year.
The fate of President Donald Trump’s tariff plans remains uncertain, pending a U.S. Supreme Court ruling and with major companies already suing for refunds, but in the short term, Trump’s tariffs could have an increasing impact on corporate balance sheets as U.S. importers look more to financial agreements to preserve cash.
“Working capital needs have increased since Liberation Day due to the tariff hike,” said Ajit Menon, head of HSBC’s U.S. trade finance business. “Average tariff rates have increased from 1.5% to double digits,” he said.
Menon said the economic hit will vary by industry. For example, generic drugs and retail/apparel have low profit margins and therefore no bargaining power. “This is why trading partners are negotiating payment terms as an alternative, which is where the need for financing emerges,” Menon said.
HSBC, which finances more than $850 billion in global trade flows annually, introduced its Trade Pay platform earlier this year, which allows customers to monetize their accounts receivable, payables and inventory.
Menon said the bank has seen a roughly 20% increase in financing flows across all customer segments since President Trump first introduced sweeping global tariffs in April, and usage is increasing as inventories brought into the U.S. in early 2025 as part of trade frontloading shrink. “The surplus inventory brought in to offset the tariffs is now almost depleted,” Menon said. “This means companies will need more working capital going forward as terms are renegotiated.”
In a recent HSBC survey of 1,000 U.S. companies, more than 70% of respondents said their working capital requirements have increased over the years, prompting many companies to reconsider their supply chain strategies and payment terms, Menon said.
“They’re looking at things like the interest rates they’re paying and the length of the loan. Cash is becoming king,” he said.
