Thought Leadership

The scale of the challenge

The numbers tell a compelling story. In 2024, ASEAN nations exported $350 billion worth of goods to the United States, with Vietnam alone accounting for $140 billion in electronics, textiles, and furniture. When tariffs were imposed on "Liberation Day," these exports faced immediate pricing pressures that threatened entire supply chains. The ASEAN-6 stock market index dropped 13% in the first nine months of 2025, reflecting investor concerns about profitability across the region.

However, the response from ASEAN countries has been notably pragmatic. Rather than engaging in confrontational trade disputes, most nations pursued conciliatory negotiations. Cambodia exemplifies this approach: facing potential tariffs on $10 billion in exports while only importing $400 million from the US, the government strategically eliminated most of its import tariffs. This diplomatic maneuvering, combined with nominating President Trump for the Nobel Peace Prize for his role in regional peace negotiations, helped reduce Cambodia's tariff rate from 46% to 19%.

The 'China Plus One' acceleration

While US-China trade tensions began during the first Trump administration, the current tariff regime has accelerated what's known as the "China Plus One" strategy - or increasingly, "China Plus Two", where manufacturing clients are now establishing parallel production facilities across Southeast Asia, particularly in Thailand, Vietnam, and Malaysia.

This isn't simply about tariff avoidance; it's about building resilient, diversified supply chains that can withstand future disruptions—whether from trade policy, pandemics, or geopolitical tensions. The pandemic taught businesses that supply chain vulnerability can be as costly as tariff exposure, making diversification a strategic imperative beyond immediate tariff concerns. Chinese inputs into ASEAN manufacturing grew substantially prior to 2024, demonstrating how supply chains were already shifting before the latest tariff round.

Where accountancy firms add value

The advisory opportunities emerging from this landscape are multifaceted and complex, requiring exactly the kind of cross-border expertise that associations such as PrimGlobal can provide.

Clients need support across several critical areas:

Feasibility and market entry: Companies considering manufacturing diversification need sophisticated analysis of labor availability, talent pools, tax benefits, land costs, and regulatory environments across multiple jurisdictions. This requires local expertise combined with global coordination, precisely what associations such as PrimeGlobal offer.

Compliance and documentation: Perhaps the most underestimated challenge is the regulatory burden of proving country of origin. US customs officials are scrutinizing component sourcing with unprecedented rigor, and confusion about enforcement is widespread. One Vietnamese manufacturer of video screens for gaming machines faced a six-week battle with customs officials who initially imposed a 90% tariff before accepting that the goods qualified for an exemption. The cost isn't just the tariff, it's the working capital tied up in ports, the delivery delays that erode customer confidence, and the administrative burden of verification.

Rules of origin navigation: The definition of "substantial alteration" remains frustratingly vague. When does assembly become manufacturing? If 70% of components originate in China but final assembly occurs in Vietnam, how will US authorities classify the product? Vietnam recently announced a 40% tariff for "trans-shipment goods" versus 20% for standard goods, but even local authorities struggle to define the distinction clearly. Clients need expert guidance to navigate this ambiguity.

Strategic tax planning: The interplay between tariffs, transfer pricing, corporate structures, and tax treaties creates complex optimization opportunities. Firms with regional presence and tax expertise can help clients structure operations to minimize total tax and tariff burden while maintaining full compliance.

The opportunity mindset

Critically, firms that position tariff challenges as pure cost centers will miss the broader opportunity. Yes, clients face immediate pressures, such as margin compression, cancelled orders, and pricing challenges. But they're also gaining diversified manufacturing capabilities, reduced supply chain risk, and access to new markets. Foreign direct investment into ASEAN reached $225 billion in 2024, the highest on record, with US companies among the top three investors.

Firms should approach these conversations from an opportunity perspective: How can diversification strengthen your business beyond tariff mitigation? What new markets become accessible with regional manufacturing presence? How can we help you build resilience for the next disruption, whatever form it takes?

Building collaborative networks

No single firm can provide all the expertise clients need across multiple ASEAN jurisdictions, trade law, customs regulations, and tax planning. The most successful advisory relationships will involve collaboration across association firms, combining local knowledge with coordinated global strategy, as clients expect seamless cross-border service delivery, and tariff-related advisory work demands it.

The structural nature of current tariff policies means that even if specific rates change, the diversification strategies companies are implementing now will persist. Manufacturing facilities established in Thailand or Vietnam won't be abandoned if tariffs decrease. And crucially, tariffs are unlikely to be substantially altered under the next US administration, as evidenced by the Biden administration keeping China tariffs imposed under the first Trump Presidency. 

Advisory relationships built to navigate this transition will create long-term client engagement opportunities for firms that position themselves effectively now. PrimeGlobal’s Strategy 2030: Ready for Business is focused on strengthening cross border collaboration between member firms, helping them deliver even greater value in a rapidly changing environment.