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Trump’ s Vietnam transshipment tariff puzzles US trade community

By Eric Johnson

How the Trump administration defines and regulates transshipment in the aftermath of a proposed trade deal with Vietnam will have major implications for the top Asia sourcing alternative to China.

While US President Donald Trump’ s announcement on July 2 clarified new tariff levels of 20 % on imports from Vietnam, his statements on applying a 40 % tariff on goods that originate in China but are transshipped via Vietnam have confused some in the US trade community.

The uncertainty centers on how Trump defines transshipment and how US Customs officials would crack down on violations. At issue is the extent to which goods with a Vietnam country of origin designation are actually just disguised China-origin goods.

Most importers define transshipment as the process of a container connecting from the port of origin to the port of destination via a third port. But the Trump administration appears to be attaching a trade compliance element to transshipment that draws considerations such as country of origin, minimum local content and substantial transformation, trade experts told the Journal of Commerce.

“ On the face of it, the transshipment tariff makes no sense,” said Robert Khachatryan, CEO of forwarder Freight Right Global Logistics, noting that at 40 %, it would still be lower than the 55 % duty on direct imports from China.

Chinese goods transshipped via Vietnam could be hit with a 40 % US import tariff. Loner Nguyen / Shutterstock. com

“ I think the language in the announcement is referring to something else.”

One possibility is that the administration will deem that a minimum requirement of inputs into the shipped goods must come from Vietnam, said Paul Diedrich, compliance officer at forwarder Ardent Global Logistics.

“ While this hasn’ t been clearly defined, it would make logical sense,” he said.

‘ We don’ t know’

The White House, the US Trade Representative( USTR), and US Customs and Border Protection( CBP) have yet to clarify how they define transshipment. Even CBP officials are struggling to understand what the new approach means for their monitoring and inspections and await the text of the agreement rather than just the announced framework, according to a trade compliance officer at a major forwarder who asked not to be identified.

“ We don’ t know if there’ s going to be a regional content component,” the source said.“ Let’ s say 100 % of the product is manufactured in Vietnam, but 100 % of the components come from China. Is that going to qualify for the agreement? In the framework, they’ ve agreed to the level of the tariff, but not to the content. The short answer is no one has a clue how this is going to turn out.”

The source said it’ s clear that the intention of the proposed deal with Vietnam is to disincentivize goods being manufactured in China and then moved across the land border to Vietnam to get a lower tariff treatment. It may end up being less costly to source in China and pay higher tariffs depending on the freight rate differential from China.

“ The framework adds scrutiny for goods with ambiguous or Chinese-origin inputs that most brands wouldn’ t have visibility into,” Amy Morgan, head of trade compliance at supply chain software provider Altana AI, wrote in a July 7 blog post about the Vietnam tariffs.“ Brands relying on Vietnam as a final assembly point for Chinese-made components may face 40 % duties if they can’ t substantiate that Vietnam is the country of origin.”

Khachatryan said he expects the 40 % tariff would apply to“ Chinese components that undergo a substantial transformation and would hitherto be treated as Vietnamese-origin imports.

“ This is also evidenced by a sudden increase in export inspections in Vietnam where Vietnamese customs are reportedly scrutinizing‘ Made in Vietnam’ claims,” he added.

How much of this transshipment is behind the rise of US imports from Vietnam is unclear. But the long-term volume growth clearly reflects the conventional thinking that Vietnam has generally been the best hedge against dependence on China sourcing. Shipments from Vietnam accounted for 9.9 % of US laden container imports in 2024, up from just 3.9 % a decade prior, according to PIERS, a sister company of the Journal of Commerce within S & P Global.

On July 7, Trump made a similar threat against South Korea, warning that Chinese goods“ transshipped” through South Korea would be subject to additional tariffs beyond the 25 % level.

email: eric. johnson @ spglobal. com

28 Journal of Commerce | August 4, 2025 www. joc. com