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Sam Beltran

Southeast Asian exporters may soon face a heavier burden of proof to show they are not helping Chinese goods dodge US tariffs after the White House named nine countries in the region as part of what it called a global “Shadow Transshipment Network”.
The warning came in a White House report titled “The Great Transshipment Scam”, which alleged that Chinese-origin goods were being routed through lower-tariff jurisdictions and re-entering the US market under new national identities.
Analysts said the report could create fresh uncertainty for Southeast Asian economies that had benefited from “China plus one” manufacturing, in which companies shift parts of their supply chains from China to countries such as Vietnam, Malaysia, Thailand and Indonesia.
But they also warned that Washington risked blurring the line between deliberate tariff evasion and legitimate supply-chain diversification.
A supply chain touching China is different from illegal transshipment
Barrett Bingley, trade specialist
“A supply chain touching China is different from illegal transshipment, and we cannot let [Peter] Navarro gaslight the region on this,” said international trade specialist Barrett Bingley, Asia regional director at the Asia-Pacific Foundation of Canada, referring to the White House trade adviser who led the report.
“A multinational corporation moving production to Vietnam, Malaysia, Thailand or Indonesia can be doing real diversification, not just slapping a new label on Chinese goods.”
The 25-page report claims the United States loses “tens of billions of dollars” a year to the illegal transshipment of goods from higher-tariff countries routed through more than 40 lower-tariff jurisdictions, with much of this activity involving “Chinese-origin goods”.
It said Chinese exporters increasingly routed goods through third countries, where limited assembly, finishing, repackaging, relabelling or documentation changes “could create the appearance of a different national origin”.

Among the countries named were many of Washington’s major allies and trade partners, including nine Southeast Asian economies.
Vietnam, Malaysia, Thailand and Indonesia were flagged as among the countries with the industrial scale, logistics capacity and integration into China-linked supply chains to move large amounts of China-linked goods into US-bound trade flows.
Other regional nations – namely Singapore, Cambodia, Laos, Myanmar and the Philippines – were grouped in a lower category of risk due to lower absolute transshipment volumes, but the report identified them as “attractive opportunistic targets”, citing factors such as free zones, preferential US access and limited customs enforcement capacity.
Several members of this latter group – alongside Bangladesh and Sri Lanka – were labelled “micro-hubs” for allegedly facilitating the relabelling and re-export of China-linked goods, as well as providing light assembly and export-processing services.
Singapore was separately described as a “developed logistics platform” offering advanced customs, ports, trading houses, bonded warehouses and global re-export systems to the “network”.
Burden of proof
Illegal transshipment refers to the re-routing of goods through third countries with little or no processing, typically to hide their true origin and gain better market access.
This differs from legal transshipment, which allows for the necessary loading, unloading and transfer of cargo within custom-controlled zones, as well as activities to preserve the goods’ condition.
But there is “insufficient appreciation” of a third category, according to trade specialist Julia Tijaja, a non-resident fellow at the Centre for Strategic and International Studies in Indonesia: goods that had gone through “substantial transformation to claim a new country of origin”.
International trade law provided little clarity on this distinction, she said, currently offering “only a general rule of thumb with no agreed non-preferential rules of origin in detail”.

For countries that had “attracted substantial Chinese investment in recent years and rely heavily on imported industrial input”, the new US report created “significant uncertainty”, said economist Ahmed Albayrak, a research associate at the Lowy Institute’s Indo-Pacific Development Centre.
Nor is Washington’s proposed roll-out of AI-powered enforcement likely to resolve the ambiguity, according to Tijaja.
“The administrative burden of meeting the origin verification requirements will likely be high, both for the US and the exporting countries, and especially so for small and medium enterprises,” she said.
“While the potential of technology significantly reducing the verification cost is high, the core issue remains unaddressed, which is [defining] what the US means by transshipment.”
Bingley said Washington needed to be “much more responsible” in making a clearer distinction between deliberate attempts to flout the rules and “companies genuinely restructuring supply chains because of tariffs, costs or geopolitical risk”.
“If Washington treats every diversified supply chain as circumvention by default, it ends up penalising the economies it wants as alternatives to China,” he added.
Forced to choose?
Observers said the report represented another effort by the Trump administration to justify steep tariffs against members of the Association of Southeast Asian Nations and other trade partners while attempting to reduce dependence on China – though they pushed back against the idea of a full decoupling.
Kevin Chen, an associate research fellow at the S. Rajaratnam School of International Studies who tracks US-Asean trade relations, pointed to reports of a draft US State Department letter demanding that countries choose between membership in the US-led Pax Silica coalition and the Chinese-led World AI Cooperation Organisation.
“This is part of a broader push by Washington to force Asean governments to choose between them and Beijing,” he said, referring to the recent White House report.
Given China’s cost-competitiveness and the entrenched nature of its investments in regional supply chains, Chen said serious doubts remained about the feasibility of this drive – though he predicted it “will not stop Washington from trying, and it also gives US trade officials issues to pressure their trade partners on”.

Bingley called the report “less a serious decoupling effort” than an attempt by Washington to rebuild its “tariff revenue wall against the whole world and checking harder for holes in it, albeit with a special focus on China”.
It also appeared designed to build leverage ahead of Chinese President Xi Jinping’s planned visit to Washington in September, he added.
Albayrak said trade diversion had enabled some decoupling, as reflected in rising investment in Asean, but “full separation remains extremely difficult”.
“China’s earlier rare earth export restrictions underscored how deeply the two economies remain connected,” he said. “Supply chains take years to build and any meaningful decoupling will take just as long.”


For Southeast Asian governments, Bingley said the best response to the US report would be to close “genuine customs and logistics enforcement” gaps by introducing stronger customs systems, credible rules of origin and the ability to show where value was actually being added.
Tijaja urged Asean member states to speak with one voice in the face of US pressure, despite Washington’s preference for bilateral deals rather than negotiating with the bloc as a collective.
“This is a shared concern for the region that is not going away any time soon,” she said. “But it should not stop Asean countries from coordinating with each other to arrive at a consistent shared position, including also with other partners many of whom are also implicated by the report.”
She said Asean needed to demonstrate its commitment to policing illegal transshipment while at the same time clearly communicating “that just because the exports contained China-linked goods, it does not automatically mean there are illegal transshipments”.
“It is important for Asean to work together on this so as not to end up with fragmented or variable rules of origin that would defeat Asean’s own regional economic integration agenda,” Tijaja said.


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A container lifter is used to organise goods containers at a port in Jakarta, Indonesia. Photo: AP

A container ship is seen near the Hai Phong International Container Terminal in Vietnam. Photo: Reuters

Workers pack furniture for export to the United States at a factory in Malaysia last year. Photo: AP

White House trade adviser Peter Navarro, who led “The Great Transshipment Scam” report, speaks to reporters on August 11. Photo: EPA

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Analysts say a report accusing nine Southeast Asian nations of helping China skirt tariffs conflates cheating with legitimate trade


Analysts say a report accusing nine Southeast Asian nations of helping China skirt tariffs conflates cheating with legitimate trade.


US transshipment ‘scam’ claims put Asean exporters in a bind

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Analysts say a report accusing nine Southeast Asian nations of helping China skirt tariffs conflates cheating with legitimate trade

Analysts say a report accusing nine Southeast Asian nations of helping China skirt tariffs conflates cheating with legitimate trade