US Transshipment Claims Lack Evidence for ASEAN Tier 2
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- United States released The Great Transshipment Scam report on August 13, classifying Indonesia, Malaysia, Thailand and Vietnam in Tier 2 based on alleged significant illegal transshipment volumes and deep integration with China-linked supply chains.
- Indonesia rejected the US characterization of systemic transshipment, while Vietnam emphasized its opposition to origin fraud and willingness to address concerns, signaling diplomatic friction over the report’s broad country-level claims.
- US Customs and Border Protection documented a 2024 case involving Chinese-origin xanthan gum transshipped through Indonesia without antidumping duties, providing one verified instance but not proof of widespread evasion in the country.
- The Council of Economic Advisers used statistical patterns—declining Chinese imports and rising third-country exports—to flag transshipment risks, though the method cannot distinguish rerouted goods from legitimately transformed products made with Chinese inputs.
- Research on Vietnam showed transshipment estimates dropped from 16.5% at the national level to 1.7% at the firm level, illustrating how aggregated data may overstate evasion by conflating legitimate production with suspicious trade flows.
- A 2025 IMF working paper found inconclusive evidence of transshipment in five Asian economies including Indonesia, while Vietnam showed increased domestic content, suggesting real production shifts rather than mere rerouting.
- Indonesian officials accompanied US CBP investigators to five factories in 2025 to verify origin claims for solar cells and mining equipment, offering a model for evidence-based verification that ASEAN could adopt for high-risk sectors.
Why it matters: The US risks misallocating enforcement resources by treating statistical correlations as proof of evasion, potentially triggering trade tensions with ASEAN nations that are cooperating on verification but face unsubstantiated country-level accusations affecting future tariff treatment.
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