How Trump tariffs, forced labor led China to $1 trillion trade record

China’s recent record $1.1 trillion trade surplus showed that despite President Donald Trump‘s efforts to use tariff policy to slow China’s manufacturing export strength, the geopolitical and economic rival has not only found global workarounds, but thrived. Trade and supply chain data shared with CNBC show that behind China’s success in mitigating the impact of U.S. tariffs, two factors loom large: use of secondary manufacturing markets to finish products, particularly in Asia, and forced labor.

In recent years, Chinese companies rerouted their manufacturing to Southeast Asian countries including Vietnam to offset tariffs that began with Trump’s first-term trade war in 2018, a shift that continues to benefit China today. Trade between China and Southeast Asia (including Malaysia, Singapore, Thailand, Vietnam, Indonesia, Philippines, Cambodia, Laos, Myanmar, Brunei, and Timor-Leste) tracked by the freight data tracker Vizion show increased volumes of Chinese goods during the 2025 frontloading effort by many manufacturers and importers to avoid the first tranche of Trump’s second term tariffs ahead of April’s so-called “Liberation Day.”

As that strength in trade flows has increased U.S. efforts to reverse its trade balance remain in flux: the U.S. deficit with its global trading partners nearly doubled based on the most recent data from November, to $56.8 billion, with European Union trade representing one-third and the goods deficit with China decreasing by about $1 billion to $13.9 billion. For the year-over-year period, the U.S. trade deficit was up 4%.

“Southeast Asia volumes are growing as shippers diversify imports away from China towards lower-tariffed countries,” said Paul Brashier, vice president of global supply chain at ITS Logistics. “Imports from key Southeast Asia countries (Vietnam, Thailand, Indonesia) are each up roughly 20 percent year over year.”

“The $1.1 trillion surplus is a result of the country effectively doing a global rerouting of manufacturing through the transshipment of products to other Asian countries,” said Brandon Daniels, CEO of Exiger, which provides supply chain and third-party risk management, and regulatory compliance solutions to over 150 Fortune 500 companies and 60-plus government agencies, including the U.S. Department of Defense and U.S. Customs and Border Protection. “China creates special economic zones in these countries. The reality is that the vast majority of the product is made in China and rerouted to these countries for assembly,” he said.

Redirected shipments and tariff evasion in trade war era

Based on 2024 full-year data from Exiger on the top 10 countries by number of shipments to the U.S. from companies with 100 percent ownership by Chinese entities, Vietnam accounted for 80 percent of those shipments. Italy ranked second, followed by Thailand and Malaysia. Daniels said he would expect 2025 full-year numbers…