US zeroes in on Trump‑tariff cheats, putting China square‑ly in the crosshairs

Trump’s Tariff Drive Targets “Transshipping” by Chinese Firms

The White House is tightening tariff threats on U.S. trading partners, focusing on a tactic Chinese companies use to dodge fees—moving goods through third countries. The practice, called transshipping, lets products pass through a country to avoid harsher trade barriers elsewhere, a maneuver Washington has accused Chinese firms of.

Missing a Back Door: The Dilemma of Rules‑of‑Origin Games

On Monday, President Donald Trump warned in letters that “goods transshipped to evade a higher tariff will be subject to that higher tariff.” The message follows a recent trade pact with Vietnam that promises steeper duties for the same goods.

• Barath Harithas, senior fellow at the Center for Strategic and International Studies, said the clause is less about Vietnam per se and more about signaling that rules‑of‑origin games across the broader Asian production network will attract a premium penalty.
• He told AFP that the White House is making two points at once: closing a back door to China and putting the rest of Asia on notice.
• Harithas noted Vietnam was “the single biggest winner from Chinese supply‑chain diversion since the first Trump tariffs in 2018.” The administration is keen to avoid a repeat of this situation.
• Ten of the 14 countries first to receive Trump’s tariff letters this week were in Asia—southeast countries that sit between Chinese component suppliers and Western consumer markets.

Whack‑a‑Mole: How Transshipment Keeps Clocks Running

Robin Brooks, a senior fellow at the Brookings Institution, said it’s clear that transshipment of Chinese goods this year is massive.

• While direct exports from China to the U.S. have dropped, this is “more than offset by” trade shifts elsewhere.
• Brooks noted Chinese exports to both Thailand and Vietnam surged “anomalously” in early 2025 as Trump threatened widespread tariffs.
• He cast doubt on whether domestic demand in those countries rocketed right around the time Washington imposed fresh duties, saying tariffs tend to bog down global trade due to uncertainty.
• Similarly, Chinese exports to the European Union also rose markedly in early 2025.

Brooks described the situation as “a little bit like whack‑a‑mole.” As long as Washington maintains different tariff rates for different countries, business will try to take advantage of the lowest levels, which may be why U.S. inflation remains muted despite wide‑range duties, including a 10 percent rate on almost all U.S. trading partners, and levels of up to 50 percent on sector‑specific imports like steel and aluminum.

Complexity of Origins: An Uncertain Landscape

Defining product origins is difficult. While Washington may object to Chinese‑headquartered companies moving production facilities to third countries, many firms genuinely export components for value‑added manufacturing.

• In Vietnam, raw materials from China— the world’s second biggest economy— are lifeblood of manufacturing industries.
• There is massive uncertainty over how an incoming 40 percent U.S. tariff on goods passing through Vietnam—double the 20 percent rate applied to Vietnamese goods—might be applied.

Minerva Strategy: Simplifying a Complex Web

Emily Benson, head of strategy at Minerva Technology Futures, said the Trump administration appears to be trying to simplify an otherwise complex web of legal definitions.

• Whether or not that will work for other trading partners remains to be seen.
• She believes the White House’s intentions stretch beyond Beijing.
• They are trying to load a bunch of negotiations onto this reciprocal (tariffs) vehicle, and they want other countries to play by the rules.