The introduction of President Donald Trump’s broad new tariffs on Thursday did not immediately trigger strict enforcement against transshipped goods according to regional officials.
The administration has announced that goods which use third countries to avoid tariffs especially Chinese products sent through Vietnam or Thailand will face a 40% duty increase. The administration has not provided specific definitions for illegal transshipment activities while maintaining existing customs guidance.
Thai and Vietnamese trade officials declared that exporters will maintain their current origin rules which permit labeling products based on the country where substantial transformation takes place. The process of repackaging alone does not meet the requirements but assembling components could potentially qualify.
The unclear regulations have caused significant concern among regional manufacturers who rely on Chinese components for their operations. Exporters should take steps to minimize risks by ensuring their products contain at least 40% local content before shipping to the U.S.
The executive order from last week established a system to create new watchlists for countries and facilities which will lead to potential future penalties. The current enforcement strategy focuses on prevention rather than actual enforcement actions.
The analysts predict that transshipment enforcement will become more stringent after definitions become clear and political forces intensify.
