America continues to import much more than it exports...
The U.S.'s trade deficit in 2025 was a staggering $902 billion. But that's down slightly, from $904 billion in 2024.
During that period, America's deficit with China also shrank. In fact, China's shipments to the U.S. fell by about 30% last year.
But now, other Asian countries are stepping in to fill that gap...
Vietnam has surged into the spotlight, overtaking China in some technology categories for the first time.
On the surface, that sounds like a win for Washington... Production appears to be moving away from China and toward a friendlier trading partner.
But, as we'll explain, that shift has done far less to weaken China's manufacturing grip than President Donald Trump intended.
Vietnam has surpassed China as the leading supplier of laptops and tablets to the U.S...
China shipped 74 million of these devices (worth $32.6 billion) to the U.S. in 2024. And Vietnam shipped 22 million units, valued at $13.4 billion, to the U.S.
By 2025, the trend had flipped... These Chinese exports to the U.S. fell to 23 million units ($8.6 billion)... Vietnam's exports jumped to 56 million units ($29.8 billion).
But the origin of these products hasn't really changed... Many of the electronics "made" in Vietnam still have mostly Chinese parts.
Chinese manufacturers just shifted the low-skill final assembly process across the border while keeping core production on the mainland.
Packaging and assembly costs are about 25% lower in Vietnam... And labor is about 50% cheaper. All told, China is rerouting more than $8 billion worth of Chinese exports through Vietnam.
Companies like Foxconn's Vietnam subsidiary Fukang Technology show us how this is playing out...
Fukang exported $8.6 billion worth of MacBooks, iPads, and motherboards in 2025. At the same time, the company imported $7.9 billion worth of components from China, South Korea, and Taiwan.
At most, only 8% of the "export value" of Fukang's products originated in Vietnam.
China's high-tech company BYD has followed a similar playbook...
Its factory (located outside Hanoi) exported $5.1 billion worth of iPads and other tech products while importing $4.9 billion worth of components.
So only 4.5% of the export value of BYD's products originated in Vietnam. Meanwhile, 61% of the company's parts came from China.
The U.S. may have reduced direct tech imports from China. But China has preserved its central role in the supply chain.
Vietnam's booming trade with the U.S. has turned it into a tariff target...
The U.S. lost $51 billion worth of Chinese products last year. But imports from Vietnam, India, and Mexico added a total of $49 billion.
Now, the Trump administration wants to impose a 20% tariff on Vietnamese imports.
The goal is to penalize Vietnam for slapping the "Made in Vietnam" label on Chinese goods and enforce reciprocal trade with China's neighbor.
But the U.S. tariff policy is murky right now... The Supreme Court struck down most of Trump's earlier tariffs – on Canada, Mexico, and China – on February 20.
Still, the administration seems committed to widening trade investigations across Asia.
One year after 'Liberation Day' (April 2, 2025), America's trade map with China still looks a lot like it did before the tariff push...
Moving away from Chinese imports involves more than just shifting purchase orders to neighboring countries.
Now, Vietnam has become a valuable alternative for global tech manufacturers. Although it produces just a fraction of China's output, Vietnam offers enough product diversity to satisfy consumer demand.
What it hasn't done is break China's hold on original product manufacturing.
Washington wanted tariffs to reduce U.S. dependence on Chinese imports. In reality, it has just rerouted one aspect of product assembly.
That's why we're not betting on a lasting boom in Vietnam's exports... or much of a shift in the trade route between China and the U.S.
Regards,
Joel Litman
April 9, 2026
