The mechanism: Since April 2025's "reciprocal tariff" executive order (EO 14257) and its subsequent country-by-country modifications, Washington has been negotiating tariff rates nation-by-nation rather than sector-by-sector — Vietnam at roughly 20%, Cambodia near 19%, Indonesia around 32%, each the product of a separate bilateral framework. That structure creates a durable arbitrage: apparel importers whose supply chains sit concentrated in one country absorb whatever rate that country negotiates, while importers spread across several countries can shift order volume toward whichever jurisdiction currently has the lower rate. Rules-of-origin enforcement (the "substantial transformation" test, now under scrutiny after transshipment penalties like Vietnam's 40% rate on re-routed Chinese goods) makes this a sourcing-design problem, not a paperwork trick — and it rewards companies that built multi-country manufacturing years before tariffs made it valuable.
Who cashes in: