US companies are moving their supply chains from China to neighboring countries. This follows the 25 per cent duties the US has levied on Chinese imports. Companies in sectors such as technology, clothing and footwear are exporting more goods from emerging giants including Vietnam and Malaysia. Exports of computers and electronics from Vietnam to the United States have grown 71.6 per cent in the first five months of 2019. Even before the trade war, US companies had been reducing their dependence on China because of increasing production costs and elevated transport expenses compared with other Asian countries. The trade war has only sped up those moves.

At the same time, the shift has exposed murkiness of trade export rules. In attempting to avoid having to pay 25 per cent, companies are violating US rules against transhipments, the routing of China-made goods through other countries to evade tariffs. Also, shifting production outside of China to other Asian centers is not necessarily a panacea. Many of these countries lack the roads, airports and other vital infrastructure China has. Retailers are more likely to stop producing goods with very low profit margins than to incur additional costs by moving production out of China.