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How Chinese Exporters Are Getting Creative With Tariff Workarounds

MarketDash Editorial Team
10 hours ago
Major Chinese firms are rerouting shipments through Malaysia and other third countries to avoid hefty US tariffs. With China's trade surplus topping $1 trillion and effective tariff rates still hovering near 30%, exporters are finding creative solutions to keep goods flowing and profit margins intact.

Here's something fascinating about global trade: even when countries throw up tariff walls, goods have a funny way of finding alternate routes. While the recent trade deal between the United States and China grabbed headlines, Chinese exporters are quietly perfecting the art of creative shipping solutions to minimize costs and avoid tariff headaches.

When the Trump administration announced reciprocal tariffs in April 2025, it sent shockwaves through China's massive export machine. And we're talking genuinely massive here. In 2024, China's total exports hit $3.58 billion, crushing second-place United States by more than $1.5 billion.

The numbers get even more impressive. China's trade surplus with the world topped $1 trillion for the first time this year, with forecasts suggesting it could climb to $1.23 trillion by the end of 2025. That's the kind of export prowess that doesn't disappear overnight, even when tariff rates get uncomfortable.

But here's the thing: despite these strong export numbers, Chinese companies remain nervous. Heightened US trade tariffs and an uncertain political landscape create real concerns about future profit margins. China's economic recovery is still a work in progress, with the government rolling out stimulus packages to support growth. In this environment, more companies are viewing trade challenges as opportunities to get creative with rerouting.

The Tariff Math That's Driving This Shift

The recent trade deal between the United States and China brought President Trump's Liberation Day tariff down to 10%, which sounds like good news. But research from Oxford Economics tells a more complicated story. The effective tariff rate on Chinese goods entering the US currently sits at 29.3% as of November 2025.

That's better than the 37.1% rate before the trade agreement, sure. But it's still enough to put serious pressure on exporters' bottom lines.

The situation gets worse for certain products. Steel and aluminum products, along with their derivatives, remain at a punishing 50% rate. Copper faces the same treatment. Other goods like inorganic chemicals and animal and vegetable products get slapped with a 25% levy on top of base rate tariffs.

Faced with these numbers, exporters are doing what businesses always do when confronted with expensive obstacles: finding workarounds. The solution? Bypass US tariffs by rerouting shipments through third countries, which helps mask the origin of goods and opens the door to considerably lower tariff rates.

Major Chinese firms are actively eyeing nations like Malaysia as rerouting hubs. The process is straightforward: ship goods to Malaysia, obtain a new certificate of origin, then send products on to the United States.

Malaysia has become particularly attractive for this purpose. The Trump administration lowered Malaysia's base tariff rate from 25% to 19% in July. Even better, many Malaysian exports are completely exempt from tariffs, including semiconductors, steel, pharmaceuticals, critical minerals, aluminum, automobiles, copper, consumer electronics, lumber, and polysilicon.

"Rerouting exports is a grey trade practice for Chinese firms seeking to recapture efficiency when it comes to exporting to the United States," explained Iván Marchena, Senior Economist at global brokerage brand Just2Trade.

"During the earlier trade war between China and the United States during Trump's first presidency, we saw trade between the two nations drop off while US imports from Vietnam and Mexico increased. This level of resilience is a strong indication that leading Chinese firms and stocks are adaptable enough to secure growth in hostile trade environments."

What This Looks Like on the Ground

China's artificial intelligence capabilities have reached the point where Silicon Valley companies like Airbnb reportedly favor cost-effective models created by Southeast Asian innovators over pricier US counterparts.

Beyond AI software, China is emerging as a key manufacturer of physical components like semiconductors and electronics that power artificial intelligence systems. Given that the US maintains high tariffs on metal imports from China, Malaysia serves as an increasingly vital rerouting destination.

The numbers back this up. According to Loo Lee Lian, CEO of state government investment promotion agency InvestPenang, more than 350 foreign-invested companies have established operations in Penang, with particular focus on semiconductor and electronics sectors.

More than 50 of those companies that arrived in Malaysia last year came from China. That figure has likely increased since the announcement of the Trump administration's Liberation Day tariffs.

Rerouting Works on Both Ends

The rerouting phenomenon isn't just transforming the beginning of supply chains for Chinese firms. It's also reshaping destinations on the other side of the Pacific Ocean.

Chinese intermediate goods used in manufacturing can bypass US tariffs by heading to Canada and Mexico first. Legally, imports to these nations that undergo substantial transformation and lead to production of new goods are considered made in that country when exported. This helps pave the way for products to enter the United States under USMCA zero tariffs or at the WTO MFN tariff rate, depending on regulatory requirements.

The Bigger Picture

While a trade deal has helped cool relations between the United States and China, plenty of major Asian exporters remain wary of the economic hit that comes with directly shipping goods to the United States.

The rules surrounding rerouting can be murky at best. But they point to something important: the level of resilience that major Chinese manufacturers have developed to maintain their status as the world's largest exporters.

Given their demonstrated ability to adapt to changing geopolitical conditions, China's trade surplus will likely continue growing into 2026. Tariffs create friction, but they haven't stopped the flow of goods. They've just made the route more interesting.

Back to Stock Market News

How Chinese Exporters Are Getting Creative With Tariff Workarounds

MarketDash Editorial Team
10 hours ago
Major Chinese firms are rerouting shipments through Malaysia and other third countries to avoid hefty US tariffs. With China's trade surplus topping $1 trillion and effective tariff rates still hovering near 30%, exporters are finding creative solutions to keep goods flowing and profit margins intact.

Here's something fascinating about global trade: even when countries throw up tariff walls, goods have a funny way of finding alternate routes. While the recent trade deal between the United States and China grabbed headlines, Chinese exporters are quietly perfecting the art of creative shipping solutions to minimize costs and avoid tariff headaches.

When the Trump administration announced reciprocal tariffs in April 2025, it sent shockwaves through China's massive export machine. And we're talking genuinely massive here. In 2024, China's total exports hit $3.58 billion, crushing second-place United States by more than $1.5 billion.

The numbers get even more impressive. China's trade surplus with the world topped $1 trillion for the first time this year, with forecasts suggesting it could climb to $1.23 trillion by the end of 2025. That's the kind of export prowess that doesn't disappear overnight, even when tariff rates get uncomfortable.

But here's the thing: despite these strong export numbers, Chinese companies remain nervous. Heightened US trade tariffs and an uncertain political landscape create real concerns about future profit margins. China's economic recovery is still a work in progress, with the government rolling out stimulus packages to support growth. In this environment, more companies are viewing trade challenges as opportunities to get creative with rerouting.

The Tariff Math That's Driving This Shift

The recent trade deal between the United States and China brought President Trump's Liberation Day tariff down to 10%, which sounds like good news. But research from Oxford Economics tells a more complicated story. The effective tariff rate on Chinese goods entering the US currently sits at 29.3% as of November 2025.

That's better than the 37.1% rate before the trade agreement, sure. But it's still enough to put serious pressure on exporters' bottom lines.

The situation gets worse for certain products. Steel and aluminum products, along with their derivatives, remain at a punishing 50% rate. Copper faces the same treatment. Other goods like inorganic chemicals and animal and vegetable products get slapped with a 25% levy on top of base rate tariffs.

Faced with these numbers, exporters are doing what businesses always do when confronted with expensive obstacles: finding workarounds. The solution? Bypass US tariffs by rerouting shipments through third countries, which helps mask the origin of goods and opens the door to considerably lower tariff rates.

Major Chinese firms are actively eyeing nations like Malaysia as rerouting hubs. The process is straightforward: ship goods to Malaysia, obtain a new certificate of origin, then send products on to the United States.

Malaysia has become particularly attractive for this purpose. The Trump administration lowered Malaysia's base tariff rate from 25% to 19% in July. Even better, many Malaysian exports are completely exempt from tariffs, including semiconductors, steel, pharmaceuticals, critical minerals, aluminum, automobiles, copper, consumer electronics, lumber, and polysilicon.

"Rerouting exports is a grey trade practice for Chinese firms seeking to recapture efficiency when it comes to exporting to the United States," explained Iván Marchena, Senior Economist at global brokerage brand Just2Trade.

"During the earlier trade war between China and the United States during Trump's first presidency, we saw trade between the two nations drop off while US imports from Vietnam and Mexico increased. This level of resilience is a strong indication that leading Chinese firms and stocks are adaptable enough to secure growth in hostile trade environments."

What This Looks Like on the Ground

China's artificial intelligence capabilities have reached the point where Silicon Valley companies like Airbnb reportedly favor cost-effective models created by Southeast Asian innovators over pricier US counterparts.

Beyond AI software, China is emerging as a key manufacturer of physical components like semiconductors and electronics that power artificial intelligence systems. Given that the US maintains high tariffs on metal imports from China, Malaysia serves as an increasingly vital rerouting destination.

The numbers back this up. According to Loo Lee Lian, CEO of state government investment promotion agency InvestPenang, more than 350 foreign-invested companies have established operations in Penang, with particular focus on semiconductor and electronics sectors.

More than 50 of those companies that arrived in Malaysia last year came from China. That figure has likely increased since the announcement of the Trump administration's Liberation Day tariffs.

Rerouting Works on Both Ends

The rerouting phenomenon isn't just transforming the beginning of supply chains for Chinese firms. It's also reshaping destinations on the other side of the Pacific Ocean.

Chinese intermediate goods used in manufacturing can bypass US tariffs by heading to Canada and Mexico first. Legally, imports to these nations that undergo substantial transformation and lead to production of new goods are considered made in that country when exported. This helps pave the way for products to enter the United States under USMCA zero tariffs or at the WTO MFN tariff rate, depending on regulatory requirements.

The Bigger Picture

While a trade deal has helped cool relations between the United States and China, plenty of major Asian exporters remain wary of the economic hit that comes with directly shipping goods to the United States.

The rules surrounding rerouting can be murky at best. But they point to something important: the level of resilience that major Chinese manufacturers have developed to maintain their status as the world's largest exporters.

Given their demonstrated ability to adapt to changing geopolitical conditions, China's trade surplus will likely continue growing into 2026. Tariffs create friction, but they haven't stopped the flow of goods. They've just made the route more interesting.