The Peterson Institute for International Economics (PIIE) argues that the next round of Trump tariffs could achieve the opposite of their stated goal: instead of pulling supply chains out of China, they may drive companies straight back to it.

That is the counterintuitive conclusion at the center of the institute's new analysis, which examines how the structure of prospective US tariff measures — not simply their level — determines where buyers place their orders. The piece carries direct commercial weight for importers, forwarders and carriers that spent the past several years re-routing Asia–US volumes through Vietnam, Mexico, India and elsewhere in response to the first Trump-era tariff waves.

Why would higher tariffs favor China again?

The institute's core argument is that blanket, across-the-board tariffs erase the cost advantage that made alternative sourcing hubs attractive in the first place. When every supplier faces a similar tariff wall, buyers have little incentive to pay the premiums — in freight, lead time, tooling and quality control — that come with shifting production out of China.

Diversification away from China, in other words, was never purely a tariff story. Companies moved because targeted duties on Chinese goods made specific lanes temporarily cheaper through third countries. Broad measures that treat all origins alike collapse that calculus back toward China's structural strengths: scale, component depth, logistics density and factory flexibility.

What does this mean for shippers and carriers?

For shippers, the analysis implies that the next tariff cycle could reward waiting rather than relocating. Importers that front-run policy by locking in alternative-origin capacity may find they have paid for a hedge that broad tariff design removes.

For carriers and forwarders, the stakes are trade-lane specific. Any reversal of the post-2018 shift would push transpacific volume back toward established China–US services and away from the newer routings through Southeast Asian gateways that absorbed displaced cargo. Port-level exposure follows: facilities that grew on China-plus-one flows would feel the pinch first.

The policy design question

PIIE's piece is ultimately an argument about design, not just magnitude. Tariffs aimed precisely at China created the incentive to leave; tariffs applied indiscriminately can create the incentive to stay. The institute suggests that policymakers who want lasting supply-chain realignment need to think about how measures differentiate between origins — and about the second-order effects that layered, escalating rounds of duties produce once companies adjust once and then adjust again.

The analysis lands at a moment when sourcing desks are already hedging across multiple tariff scenarios for the next administration's trade agenda, and when each new announcement has moved ocean rates and booking patterns on Asia–US lanes within days.

The Peterson Institute's warning is that the freight market should not assume tariffs and China-decoupling move in lockstep. If the next measures are written broadly enough, the most likely direction for many US import supply chains could be a return trip east across the Pacific.

By Elena Vasquez