What: US tariffs on Chinese goods are driving a surge of low-cost Chinese imports into Southeast Asia, intensifying competition for local retailers and prompting regulatory responses.

Why it is important: The influx of Chinese goods is accelerating retail transformation in Southeast Asia, challenging local players and prompting new trade and compliance strategies.

The imposition of US tariffs on Chinese imports has triggered a significant diversion of Chinese merchandise into Southeast Asia, fundamentally altering the region’s retail dynamics. As Chinese goods, particularly through e-commerce platforms like Shopee, TikTok, and Temu, flood Southeast Asian markets, local manufacturers and retailers face mounting competitive pressures. Governments in countries such as Vietnam and Indonesia are responding with regulatory measures, including bans, tax reforms, and stricter import controls, to defend domestic industries and maintain market balance. This shift has transformed Southeast Asia from a trans-shipment hub to a major end-market for Chinese products, with consumers benefiting from lower prices while local businesses struggle to compete. The evolving regulatory landscape, shaped by new trade agreements and complex tariff structures, is forcing both global and regional retailers to rethink supply chain strategies and pricing models. As the region absorbs the excess of Chinese exports, the competitive environment intensifies, driving innovation and adaptation among Southeast Asian retailers.

IADS Notes: Recent developments confirm that Southeast Asia’s retail sector is being reshaped by the influx of Chinese goods diverted by US tariffs. In December 2024, Vietnam suspended Temu and Shein operations to protect local businesses, while Indonesia and Malaysia introduced new tax and import controls. BCG’s July 2025 analysis highlights the complexity of new bilateral trade agreements and tariffs, which are forcing retailers like Walmart to adapt pricing and supply chain strategies. The rise of e-commerce and regulatory responses across the region underscore the mounting pressures on local players and the need for continuous adaptation in a rapidly evolving market.

Tariff collateral: Southeast Asia swimming in Chinese goods