It took about a year for the reversal to show up in order books. When the United States raised tariffs on Chinese goods, the logic of moving production to Vietnam, Indonesia or Thailand looked straightforward: the same order, a lower duty rate, less political risk. That logic is now being re-run, and it is not producing the same answer.
Reuters reported on 14 September that some of the companies that shifted production and sourcing out of China are bringing it back. U.S. retailer Target has moved some orders back to Chinese suppliers, and the fast-fashion retailer Shein is scaling back some of its operations in Vietnam. A metal casting company in Dandong lost a major U.S. customer to India, then won the orders back after the customer ran into problems there.
There is an important caveat before you rewrite a supplier list on the back of this. There is no hard data yet showing how much sourcing is actually returning to China, and investment in Southeast Asia is continuing. What has changed is the arithmetic, and the arithmetic is something you can check for yourself.
The Tariff Gap That Started the Shift
The relocation wave was never only about tariffs, but tariffs were the entry point. The figures most often cited come from the Economist Intelligence Unit, which estimated effective U.S. tariff rates in July: China faced about 20 percent, against 6.1 percent for Vietnam, 13.4 percent for Indonesia and 4.5 percent for Thailand.
It matters what kind of number that is. An effective tariff rate is what importers actually pay across a country's real export mix, after exemptions, product carve-outs and sectoral duties are taken into account. It is not the headline reciprocal rate, and for the same country the two can look very different.
The key part of that estimate was not the size of the gap but its direction. As Washington extended tariffs to a wider range of countries, the advantage that came from leaving China narrowed. For a Chinese manufacturer weighing an overseas plant, the tariff saving got smaller while the execution risk stayed exactly where it was.
What Went Wrong Offshore
Equipment and Components Still Came From China
One exporter in Hangzhou opened a workshop in Ho Chi Minh City in 2024 and shut it this year. Labour cost was not the problem. He could not find the equipment he needed locally, and he was still importing basic inputs from China, down to the screws and the moulds for cup holders. When he added up the full cost, the total was not far enough from the Chinese option to justify the extra complexity of running production in two countries.
Power Reliability Moved From Footnote to Deal-Breaker
Stable electricity access was treated as a detail in most early relocation plans. After the Middle East crisis tested the energy reliability of manufacturing bases, it moved up the list. Advisers who work with manufacturers describe the power supply in Vietnam and Indonesia as unstable and not continuous, a problem that gets more expensive in a year when energy prices are volatile.
Skilled Labour and Supplier Depth
A single factory can be replicated. An industrial cluster is harder. Buyers who moved orders offshore report the same gap again and again: the depth of nearby component makers, tooling shops and finishing subcontractors that lets a Chinese factory solve a problem inside a week instead of a quarter.
What Buyers Are Actually Doing Now
The pattern in the reporting is not a wholesale return. It is selective, and in many cases it is a hedge rather than a reversal:
- · Partial re-shoring: moving specific products or specific orders back while leaving others offshore
- · Dual sourcing: keeping a Chinese supplier as the primary and a Southeast Asian supplier as the backup, or the reverse
- · Capacity as insurance: holding a share of capacity abroad, sized so it can be expanded if tariff policy turns hostile again
- · Cost re-testing: re-quoting old offshore orders against Chinese quotes with current freight and duty included
- · Mixed demand: not all exporters report returning U.S. orders, and some describe competition as too intense to read the shift as a recovery
One company quoted in the reporting keeps roughly one eighth of its total capacity in Vietnam, explicitly as a hedge it could expand again if tariffs spike. That is a useful model for most importers, because the question is rarely which country to use. It is how much of your volume should sit in each.
Run the Math Before You Re-Shore Anything
Offshoring failed for a specific reason in most of these cases: the decision was made on unit price and tariff rate, and the costs that actually determined the outcome were somewhere else.
A comparison between two countries is only meaningful if the same cost lines appear on both sides:
- · Unit cost at the quantity you will really order: not the sample price, and not the price at a volume you have never placed
- · Tooling and set-up: moulds, fixtures and packaging artwork, including whether they are amortised into the unit price or paid up front
- · Minimum order quantity: the real MOQ, and what it does to the cash you tie up in stock
- · Freight and lead time: port to port, plus the inland leg, plus the buffer you need for the delays that always happen
- · Duty at the actual classification: use the effective rate for your product and origin, not the headline rate
- · Quality and rework cost: inspection fees on one side, and the cost of what inspection catches after the goods have shipped on the other
- · Qualification cost: the internal work of approving a new supplier, new documentation and new packaging
- · Risk premium: how much you are willing to pay to avoid depending on a single country
Two cautions before you put a spreadsheet together. First, do not compare a mature Chinese quote with a first-year offshore quote. The offshore supplier is still on its learning curve and the gap usually narrows. Second, do not treat the country as the variable. Inside Vietnam or Indonesia, the difference between a strong factory and a weak one is larger than the average difference between two countries.
Our guide to shipping from China sets out the freight and clearance lines in more detail, and our pre-shipment inspection guide covers how to put a number against quality risk before the container is loaded.
What to Watch on 24 September
The next data point is a meeting, not a statistic. President Trump and President Xi Jinping are expected to meet in Washington on 24 September, their third face-to-face meeting in the past year.
On 10 September, Commerce Ministry spokesperson Huang Ling said negotiators are working to implement reciprocal tariff reductions on $30 billion worth of goods at an early date. Xinhua reported that the $30 billion applies to each side.
The likely shape of any deal is narrower than the headline suggests:
- · Scope: the two sides are looking at equivalent amounts of non-sensitive goods rather than a broad settlement
- · Deadline: the current tariff truce expires on 10 November, which sets a practical limit on how long an announcement can wait
- · Asymmetry: $30 billion is a far larger share of U.S. exports to China than of Chinese exports to the U.S., so the direct benefit is not symmetrical
- · Limited trade effect: because bilateral volumes have already fallen, the commercial impact of any reduction is smaller than the same number would have carried two years ago
For a buyer, the practical read is that broad liberalisation looks unlikely and a targeted reduction looks possible. Neither outcome justifies a supplier list that depends on a single country.
How This Changes Your Supplier List
The relocation question has quietly changed from where to source into how much to concentrate.
- · Keep China in the mix deliberately: the reason orders are returning is capability, not sentiment, and capability is worth paying for where it protects a launch date
- · Treat Southeast Asia as a hedge rather than a replacement: size the offshore share so it can be expanded, not so it becomes structural
- · Re-test offshore quotes every year: the tariff landscape has changed annually since 2024, and so has the cost base in every competing hub
- · Separate the products: for some categories the cost gap is decisive, for others speed and component availability are the deciding factors
- · Plan the timing as carefully as the country: if your order depends on production after the Lunar New Year break, our 2026 and 2027 sourcing calendar covers the shutdown windows you need to work around
FAQ
Is China Plus One over?
No. The strategy is being re-sized rather than abandoned. Investment in Vietnam, Indonesia and India continues, and no published data yet shows the scale of what is coming back. What has changed is the assumption that leaving China automatically lowers cost.
Should I move my sourcing back to China?
Not automatically, and not all of it. The useful question is which products, and how much volume. Run the full cost stack for your own order, then decide whether the offshore share should be smaller, larger or held as a hedge. A Chinese quote that wins on unit price can still lose once tooling, freight and lead time are included.
Will the September summit change tariff rates quickly?
Probably not across the board. Negotiators are working on reciprocal reductions covering $30 billion of goods on each side, focused on non-sensitive categories, with the current truce expiring on 10 November. Targeted reductions are the more likely outcome, and importers should plan for tariffs to remain a live variable rather than a settled one.
Build a Supplier List That Survives the Next Round
Trade policy in 2026 has rewarded buyers who can move volume over buyers who picked a side. The exporters who benefit from that are the ones with real production capacity, verifiable quality and the flexibility to take a small first order.
Easy Buy China works with overseas retailers and e-commerce sellers across China's main export hubs, with low MOQ flexibility, video-based quality inspection before shipment, consolidation for multi-supplier orders and a $0 consultation fee. The background on how the tariff environment reached this point is in our 2026 sourcing trends report, and small first orders are covered in our guide to sourcing for small retailers.
Contact us with the products you are comparing and we will quote the Chinese side of the comparison.