News / China+1 acceleration as tariffs drive supply chain rerouting

US department store chain Kohl’s is working closely with suppliers and vendors to tweak its inventory strategy, a choreography of real-time adjustments in response to demand shifts and a reduction of exposure to origins facing elevated US tariffs.

This effort leverages a diverse mix of sourcing countries to order goods, based on pricing elasticity analysis and “a collaborative strategy to proactively manage challenges in the supply chain”, Kohl’s CFO Jill Timm told analysts in a recent earnings call.

According to the latest Quarterly Supply Chain Poll, published by West Monroe and which canvassed 250 business leaders, it suggests 89% of US businesses made adjustments to their sourcing, manufacturing, or transport activities in the first quarter, with 20% citing tariff policy as a key issue.

And in the 2025 WTW Global Supply Chain Risk Survey, 63% of respondents reported that supply chain losses were higher than expected.

Given the fluidity of the situation, with tariffs on goods and origins changing or suspended, many cargo owners have bolstered their capacity to play for time.

In the West Monroe poll, 78% of respondents reported augmented inventory levels and several logistics providers observed increased use of bonded warehousing or foreign trade zones.

Given the current uncertainty and the time needed to shift sourcing, few companies have initiated such changes. But some firms have shown willingness to move in this direction, if they can establish more resilient supply chains, one forwarder observed.

Bryann Lim, sales and marketing executive at Taiwan-based forwarder Dimerco, regards some moves as “part of the accelerating China+1 strategy, where companies are actively diversifying their supply chains due to ongoing trade tensions and rising costs in China. Most of these companies look into South-east Asia as an alternative. And some South-east Asia countries have seized the opportunity, offering attractive incentives to foreign investors looking to set up manufacturing”, he said.

“Several of our customers moved in this direction, but there are challenges, such as freight capacity, sourcing inbound materials, and navigating local customs compliance. Since Dimerco has a local network in South-east Asia, we help them move and navigate the challenges,” he said.

One such client, a tech product manufacturer, set up a factory in Penang, and to deal with the limited airfreight capacity there, Dimerco moves cargo via cross-border trucking to Kuala Lumpur and Singapore airports for more capacity options to connect to the US and Europe.

Mr Lim added: “On the customs side, we supported a solar equipment manufacturer relocating from China to Malaysia to avoid China-origin tariffs. Our Malaysia team advised them on local duties, compliance regulations, and how to leverage Malaysia’s free trade zones.”

Air cargo flows and routings indicate a corresponding shift from China to South-east Asia origins. While China-US freighter flights plummeted after the end of de minimis exemption for China-origin e-commerce, new services are springing up. In April, FedEx launched a non-stop B777F flight from Singapore to Anchorage.

The service, which targets sectors like aerospace, healthcare, industrial, hi-tech and semiconducting materials produced across South-east Asia, runs six days a week, with one weekly return flight set to expand to five this summer. Shipments from Malaysia, Singapore, and Thailand reach the US a day earlier than they used to, according to the integrator.

April also saw charter flights for Apple, from India to the US, carrying some 600 tons of iPhones – 1.5 million units – after the company stepped up production there in an effort to beat US tariffs, according to a report by Reuters.