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View all search resultsSoutheast Asian exporters brace for US transshipment crackdown
Though not yet enacted, experts see a threatened 40-percent tariff on transshipped goods as a serious risk given Southeast Asia’s deep connection with Chinese manufacturers.
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A vehicle moves past stacked cargo containers on July 7 at the Jakarta International Container Terminal of Jakarta's Tanjung Priok Port. (AFP/Bay Ismoyo)
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outheast Asia’s export-driven economies are bracing for renewed uncertainty stemming from the United States’ trade war with China, as Washington cracks down not just on goods made in China but also those made elsewhere with significant Chinese input.
Beijing is the main target of the duty on transshipments, which will apply to all redirected Chinese goods, irrespective of the country they are shipped to the US from, but Southeast Asia could face much of the fallout because of the region’s supply chains are highly integrated with Chinese manufacturers, experts say.
There were no clear guidelines from US Customs and Border Protection (USCBP) on what is considered transshipment, Martin Schaefermeier, a US trade lawyer at Cassidy Levy Kent, said on Aug. 12 during an online webinar titled ASEAN Tariff Finder.
US President Donald Trump’s executive order currently states that, if the CBP “determines an article has been transshipped to evade applicable duties under section 2 of this order,” it will face a 40 percent penalty tariff with no option for fines to be reduced.
US Commerce Secretary Howard Lutnick told Fox Business on Aug. 7 that the levy could apply to goods containing more than 30 percent third-country content.
Read also: ASEAN cracks under Trump’s ‘divide and conquer’ tariff
Country of origin typically depends on the product: for electronics, it is where the printed circuit board is made; for machinery and motors, it is the stator; and for tables, the tabletop, making compliance a complex exercise.
