US tariffs are accelerating the shift of manufacturing from China to emerging hubs in Thailand, India, and Vietnam, driven by lower costs and favorable policies.
As US tariffs continue to impact global trade dynamics, companies are increasingly diversifying their manufacturing bases beyond China. Emerging hubs in Thailand, India, and Vietnam are attracting attention due to lower labor costs, favorable trade policies, and strategic locations, though challenges like infrastructure gaps remain.
US tariffs drive manufacturing diversification
In response to ongoing US tariffs, companies are rapidly diversifying their manufacturing bases beyond China. According to a recent report by the Boston Consulting Group, over 60% of surveyed firms have either relocated or are considering relocating some production to alternative hubs in Asia.
“The tariffs have been a wake-up call for many businesses,” said Linda Lim, a professor of international business at the University of Michigan. “While China remains dominant, the risks of over-concentration are now clear.”
Thailand emerges as a key player
Thailand has seen significant investment growth in its manufacturing sector. The country’s Board of Investment reported a 35% increase in foreign direct investment applications for electronics and automotive parts manufacturing in the first quarter of 2025.
Powerlogic, a major electronics manufacturer, recently announced plans to expand its Thai operations by building two new facilities in Chonburi province. “Thailand offers excellent infrastructure and a skilled workforce,” said CEO Mark Chen in a company press release.
Challenges in new manufacturing hubs
While these emerging hubs offer advantages, challenges remain. Infrastructure gaps, regulatory complexity, and supply chain fragmentation are common issues. A recent World Bank report highlighted that Vietnam’s logistics costs remain 20-30% higher than in China.
“The transition isn’t simple,” noted supply chain expert Rajiv Sharma. “Companies need to carefully evaluate total cost of ownership, not just labor rates.”
