US Southeast Asia Transshipment Claims Built on Weak Data — SkimNews
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- The US report "The Great Transshipment Scam" (August 13) places Indonesia, Malaysia, Thailand and Vietnam in Tier 2, citing "significant illegal transshipment volumes" and China-linked supply chain integration, but discloses no numerical threshold, country score or Indonesia-specific estimate that would allow outside reproduction of the classification.
- Indonesia rejected Washington's characterization, while Vietnam stressed both its opposition to origin fraud and willingness to address US concerns; the dispute now extends beyond customs enforcement, with anti-evasion commitments written into the February US-Indonesia trade agreement.
- US Customs and Border Protection's 2024 EAPA determination found substantial evidence that Chinese-origin xanthan gum was transshipped through Indonesia and entered the US without applicable antidumping duties — a concrete benchmark involving a specific product, importer and shipment trail, but the author notes a single proven case does not validate the broader country classification.
- The Council of Economic Advisers' statistical screen — falling Chinese share of US imports, rising Chinese share of a third country's imports and rising third-country share of US imports — cannot distinguish a factory that legally imports Chinese intermediates, adds domestic value and exports to the US from one that merely reroutes finished goods, since both produce identical patterns.
- The report's five estimates of transshipment range from roughly $40 billion to $303 billion and are explicitly described as not directly comparable, yet the tier language becomes firmer when countries are grouped; Vietnam-focused research showed estimates dropping from 16.5% at the national product level to 6.5% by province and 1.7% at the firm level.
- A 2025 IMF working paper separated rerouting from reallocation across six Asian connector economies using domestic and Chinese value added, foreign investment and counterfactual trade patterns, and found results inconclusive for five economies including Indonesia, while Vietnam showed increased domestic content consistent with production reallocation rather than one-stop transshipment.
- In 2025, Indonesian trade ministry, customs and Batam administration officials accompanied US CBP investigators to five factories producing solar cells, solar panels and cryptocurrency mining equipment to examine origin claims — a model the author says should become routine, with auditable records of inputs, capacity, processing and certificates of origin.
Why it matters: If Washington enforces tariff treatment based on Tier 2 classifications built on undisclosed thresholds and aggregate trade correlations rather than firm-level evidence, legitimate Southeast Asian manufacturers using Chinese intermediate inputs could face punitive measures for conduct that current US origin rules may not classify as evasion.
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