NOTE: This is not a political article. I have an opinion about what is happening in the world, but I keep it private. This article is about what I think will happen next and how manufacturers in Southeast Asia can prepare. It is not intended to pick any political side.
The US just made Chinese products more expensive for their residents—but that doesn’t mean they made your life easier.
Yesterday, February 1st, 2025, the US government announced sweeping new tariffs: 25% on imports from Canada and Mexico, 10% on goods imported from China, and 10% on energy products (including crude oil) from Canada. The tax will be imposed starting on February 4th.
At first, this seems like a golden opportunity for manufacturers in Southeast Asia. However, if American buyers can no longer afford Chinese goods, they’ll need new suppliers—and fast.
But here’s the catch: Chinese companies aren’t just going to sit back and accept defeat.

The effect of tariffs for the countries involved
At this moment, the tariffs are aimed at Canada, Mexico, and China, but more are on the horizon. The new administration in the USA has been vocal about protecting the US industries with tariffs for all countries with which they have a trade deficit.
The possible immediate effect
These taxes increase the price of imported products for the USA market. This helps local manufacturers compete; since their products are not taxed, they become relatively cheaper.
The idea is that demand for locally made products increases since these are cheaper than imported goods, creating more jobs in the local factories.
This could work in the short term if the factories can find the resources to increase their output; for this article, let’s just assume they will. However, I believe most factories in the USA will struggle to scale up.
Conversely, the demand for products made in China would reduce since the price in the USA has gone up. Although China doesn’t pay import taxes, the US importer does, and it could face a slowing production pace.
The mid-to-long-term effect
Let’s think, for a moment, about why these product were imported.
The landed cost, which includes the cost of making the parts and transportation, is lower than for the same products made in the USA.
And since buyers—consumers and companies—want to pay as little as possible, they buy foreign goods.
Import taxes are there to ‘balance’ this price difference in favour of the local factories.
The USA manufacturer must spend considerable time and effort scaling up production and sourcing machinery, production staff, and materials, to name a few of the many challenges they face. They don’t have time to increase productivity to match the price of the foreign goods before the tariffs are imposed.
In fact, local companies are likely to become dependent on these taxes to maintain their “competitive edge.” In other words, most of these companies will become complacent.
The opposite occurs in countries whose products face taxation. If they experience a drop in demand, they have the (human) resources available to improve efficiency, lower costs, and ultimately counteract the tariffs.
Even more importantly, they have a strong incentive to drive costs down to offset the effects of the taxes.
Overall effect
The new tariffs will have a minimal immediate impact, but their long-term consequences will seriously undermine the strength of American industry, in our opinion.
But this is playing out far away from Southeast Asia, so how does this affect us in Singapore?
The Real Risk No One Is Talking About
It seems like many people assume that these tariffs permanently change the balance between foreign and US factories in favour of US companies. As we explained in the previous section, that is not how this works.
Imagine you own a factory in a country affected by high additional import taxes. What would you do?
Would you shrug and accept that you sell less?
I am confident that your answer is, “Hell no!”
Chinese, Canadian, and Mexican companies will also respond to the new situation and create opportunities. One way, as we explained in the previous section, is to increase their efforts to work cheaper.
Another potential strategy is finding customers in other countries to sell the surplus of goods (supposedly) not consumed in the USA.
The factories in Shenzhen, Guangzhou, and Shanghai aren’t shutting down, and their machines aren’t slowing down. They still need to sell their products. If the US isn’t buying, they’ll try to sell those goods elsewhere—in Southeast Asia, Europe, and Latin America. If needed, they could even accept a loss on the goods—effectively price dumping.
And that’s where the real problem begins if you operate a factory in Singapore, Malaysia, Thailand, or Indonesia. You’re not merely competing with US manufacturers seeking to reshore; you’re also up against cheaper Chinese exports that could potentially flood your region.
You Can’t Win a Price War—So Stop Trying
If you attempt to compete with China on price, you will inevitably lose. Competing on price is generally a poor strategy. The Chinese will always find a way to manufacture at a lower cost. Their economies of scale are simply too powerful, and in some instances, their government could financially support them to ‘win the war.’
But price isn’t everything.
Buyers in the US, Europe, and Australia are no longer just seeking the cheapest option. The turmoil of recent years—pandemic disruptions, supply chain failures, and now these tariffs—has imparted a hard lesson: Reliability is worth more than rock-bottom prices.
Moving fast can make you money in Southeast Asia
Imagine a US company that has relied on its Chinese supply chain for years. Suddenly, due to tariffs, its costs jump overnight. Its customers are screaming about price hikes, and it needs an alternative supplierimmediately.
Who do they choose?
It's not the cheapest factory. It's not the biggest factory.
They select a factory that can deliver promptly, communicate effectively, and ensure stability.
However, if the new supplier can match the previous vendor's prices, it will be a ‘no-brainer.’
At present, Southeast Asian manufacturers have a brief window to establish themselves as that alternative.
The key is moving fast—before Chinese companies adapt and can compete again despite the taxes.
This is a tremendous opportunity that can make you money in Southeast Asia.
What You Need to Do Right Now
Stop waiting for buyers to come knocking. They are eager to find new suppliers, but they won’t wait forever.
This is the moment to:
Lock in contracts before China floods your markets with discounts. The longer you wait, the more difficult it will be.
Achieve success through speed, reliability, and service—not just price. Buyers are fed up with unreliable, unpredictable supply chains.
Broaden your customer base beyond the US. If China is poised to reduce prices in Southeast Asia, you must secure business elsewhere—before their discounts arrive at your doorstep.
However, this is all much easier said than done. It’s not as if you turned customers away in the past, is it?
What steps can you take to acquire new customers abroad and ‘Succeed through speed, reliability, and service—not merely price?’
There are two critical steps we advise you to take:
Establish a distinctive company direction and value proposition for your niche market. This company direction steers you and your team through every challenge your organisation encounters, ensuring a steady course and a clear, consistent brand experience for clients.
Implement a high-performance culture in your company. Your employees and partners know exactly what they must do to realise your company’s vision and mission. Staff holds each other and partners accountable for their teams' results and progress towards short-, medium-, and long-term objectives. Leaders create the environment for their teams to thrive and exceed expectations.
These two crucial management activities never end. They are not ‘projects’ or ‘initiatives for 2025’; they are the core responsibilities of leaders. Small adjustments—course corrections—are made regularly in response to the changing world around your company.
Having said that, our clients see their first tangible results in mere months, and in many cases, weeks, after starting to implement our framework.
Make the Move Before It’s Too Late
This opportunity will shrink quickly. China will adjust, other suppliers will step in before you, and buyers will have already made their choices if you don’t act now.
If you don’t act now, someone else will seize this market.
Let’s talk.
In 30 minutes, we can demonstrate precisely how to position your business to attract new customers, enhance your operations, and capitalise on this once-in-a-decade shift.
We promise that everyone who has a call with us will leave with valuable insights and actionable ideas.
Even if you don’t want to work with us to eliminate risks and harvest opportunities, you get this value unconditionally and without strings attached.
China isn’t waiting. Neither should you.
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