Recently, US President Donald Trump signed a new trade agreement with Vietnam, one of the key provisions being the imposition of a high 40% tariff on transshipped goods.
Export transshipment is a trade strategy used by countries to circumvent tariffs and other trade barriers. Typically, products from one country are shipped to another and undergo minimal processing, repackaging, or relabeling to make them appear as if they were produced in the second country.
For years, the Chinese authorities have been utilizing vessels from Vietnam and other countries to transport their goods, avoiding trade restrictions imposed by the US. Through transshipment, China effectively avoids higher tariffs.
Robert Khachatryan, CEO of Freight Right Global Logistics based in California, told Epoch Times, “One of the most common tactics used by China is transshipment.”
“When the US imposed tariffs under Section 301 on billions of dollars of Chinese goods, Chinese manufacturers did not just sit back and accept the additional tariff cost,” he explained.
Earlier in 2025, Trump signed an executive order to impose comprehensive tariffs on all Chinese goods entering the US, in response to national security concerns and the fentanyl crisis. While partial trade agreements were reached between the two countries in June, the tariffs under the Section 301 provision remained in effect.
Although predictions vary, US officials estimate a significant value of goods rerouted from China through other countries.
Peter Navarro, White House trade advisor, estimated that one-third of goods exported from Vietnam to the US are disguised Chinese products. China ships a substantial amount of domestic goods, including clothing, electronics, and furniture, to Vietnam. They are then labeled as “Made in Vietnam” before being shipped to the US.
Navarro stated in an interview with Fox News in April, “For every $1 of goods we export to Vietnam, they export $15 back to us, of which approximately $5 are Chinese goods that entered Vietnam, are relabeled as Vietnamese, and then shipped to the US.”
Howard Lutnick, Secretary of Commerce, mentioned during a Senate Appropriations Committee hearing in June that Vietnam is just one of the routes for Chinese goods entering the US.
Transshipment commonly occurs via sea routes, but goods can also be rerouted through major air cargo hubs. Additionally, intermodal transshipment can involve various methods like shipping, rail transport, and trucking for transporting goods.
While Hanoi is a major focus for export transshipment, Vietnam is not the only transshipment source for China, making trade negotiations more complex.
Marty Bauer, Director of Sales and Partnerships at Omnisend e-commerce marketing platform, noted, “Wherever there are ports and free trade agreements, transshipment centers emerge.”
It is widely known that Chinese authorities also utilize countries like Cambodia, Indonesia, Laos, Taiwan, and Thailand, as well as Mexico, for transshipping car parts, electronics, machinery, and various other goods. While countries like Canada, Israel, and Sri Lanka are minimally involved in China’s transshipment activities.
Bauer pointed out that the more the US attempts to combat China on this issue, the more companies may establish secondary bases.
“If the government cracks down on transshipment, there may be short-term chaos but it could also accelerate Chinese investment in Southeast Asia and Latin America,” he stated.
A recent analysis of trade data by the Brookings Institution showed a significant increase in China’s exports to Southeast Asia before the US imposed tariffs, prompting the Trump administration to make transshipment a crucial part of trade negotiations.
Trump posted a message to trade partners on the social media platform “Truth Social,” stating, “Goods transshipped through other countries to avoid higher tariffs will face increased duties.” In this scenario, Laos will face a 40% tariff rate, while Cambodia and Thailand will be hit with 36% tariffs.
Senior analyst Ipek Ozkardeskaya from Swissquote Bank mentioned in an email to Epoch Times, “Taxations on some Asian countries are evidently targeting China due to transshipment issues.”
Therefore, countries involved in transshipment will need to assess whether it is worth continuing such operations under increased US tariffs and delicate diplomatic situations.
Experts note that even if transshipped goods contribute minimally to the domestic value, Vietnamese enterprises can still benefit economically by providing customs services, logistics, and warehousing services related to handling and redistributing goods.
Documents reviewed by Reuters show that the Vietnamese government has been cracking down on transshipment activities to the US and other trading partners. Trade and customs officials, as well as other agencies, are required to conduct strict inspections of factories and supervise the “Made in Vietnam” labels.
Meanwhile, Vietnam may benefit from abandoning transshipment, thanks to tariff advantages and foreign companies shifting their businesses towards the Southeast Asian market. In fact, Vietnam has become a primary manufacturing and assembly center in recent years.
Following the announcement of the US-Vietnam trade agreement, Finance Minister Nguyen Van Thang stated in a cabinet meeting on July 2, “This is an important negotiation outcome, bringing hope and prospects for Vietnamese businesses.”
It remains to be seen whether other countries around the world will accept these trade terms as Vietnam has.
Khachatryan mentioned that if the White House enforces more stringent regulations in bilateral trade agreements through mandatory origin audits, supply chain traceability requirements, or pre-shipment verifications, China could face significant obstacles.
“Many US exporters rely on these tactics to maintain competitiveness in the US market,” he explained. “Disrupting these channels could trigger a true offshoring wave—moving manufacturing entirely out of China or causing supply chain contraction, impacting the entire Southeast Asia region.”
Moreover, US domestic companies planning to continue purchasing foreign goods will need to overcome various obstacles.
If the Trump administration intensifies efforts against transshipment, US importers will be forced to rigorously review their supply chains to avoid inadvertent violations. Stricter enforcement will also increase costs and lead to delivery delays.
Khachatryan noted, “Businesses are already stepping up preparations in import operations, ranging from requiring factory audit records to utilizing IoT devices for location-based visibility tracking.”
“If transshipment enforcement becomes a political priority once again, it will not only affect China but also have a chain reaction throughout the import ecosystem,” he added.
Data from the Office of the US Trade Representative shows that in 2024, Vietnam exported approximately $137 billion worth of goods to the US, marking a more than 19% increase from 2023.
Reuters contributed to this report.