China’s bid to diversify manufacturing through offshore expansion is faltering as fresh US tariffs hit Southeast Asia and crack down on transshipped goods. With blanket 40% duties now applied to Chinese goods rerouted through third countries, and regional tariffs rising to as much as 40%, the financial rationale behind shifting operations away from China is being eroded.

Manufacturers are now facing shrinking margins, a reorientation of supply chains, and escalating costs to relocate again. Some are already eyeing a return to China, seeing fewer advantages in alternative hubs. The commercial calculus is shifting fast—and staying competitive may require a fresh rethink on global production footprints.

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