The United States has increased pressure on Southeast Asian countries to restrict transshipped exports; goods primarily originating in China . This since there is an ongoing tariff negotiations under President Donald Trump’s administration. The issue stems from U.S. allegations that Chinese companies have been using Association of Southeast Asian Nations (ASEAN) members, particularly Vietnam and Thailand, as intermediaries to bypass tariffs imposed during the U.S.–China trade war.
Since around 2020, many Chinese firms have established production bases in ASEAN nations to reexport goods to the U.S. market. They have been lured by tax incentives and relaxed trade policies. While this influx has boosted investment and industrial activity in Southeast Asia, it has also raised suspicions in Washington about mislabeling and false country-of-origin claims. Giving space to practices like relabeling Chinese goods as “Made in Vietnam” or conducting minimal processing in Thailand. Leading the U.S. officials to view the region as a key hub for tariff evasion.
Vietnam & Thailand Situation
Trade data showing parallel increases in Vietnam’s imports from China and its exports to the United States have further deepened U.S. distrust. Officials have warned that if transshipment is confirmed, tariffs could double, with Vietnam potentially facing rates of 40%. The Trump administration also seeks stricter rules of origin. They have proposed that at least 60% of a product’s value be locally produced to qualify as “made in Thailand”. This is a significant change compared to the 40% standard typical of free trade agreements.
These measures reflect Washington’s broader goal to exclude China from global supply chains. Other regions, including Japan and the European Union, have joined efforts to prevent illegal transshipment, tightening inspection systems and monitoring exports to maintain fair trade practices. In response, Thailand has increased its oversight of transshipped goods, while Vietnam has implemented stricter controls against false labeling.
Despite these moves, experts warn that without better coordination among trading partners, such as the U.S., Europe, and Japan, efforts may remain ineffective. The crackdown on illegal exports underscores the fragility of global trade relations and the risks of geopolitical rivalries disrupting supply chains.
ASEAN Nations need to develop their own industries
ASEAN countries have relied heavily on foreign investment to drive growth, offering low labor costs and manufacturing incentives to attract multinational companies. However, this strategy has left their domestic industries underdeveloped and vulnerable to external shocks. Analysts caution that without structural reform, these nations risk falling into the “middle-income trap”. Referencing when economic growth slows once low-cost advantages fade.
Thailand exemplifies this challenge. Once dubbed the “Detroit of Asia” under former Prime Minister Thaksin Shinawatra’s policies to boost domestic demand and industrialization, the country’s progress stalled amid political instability, coups, and delayed reforms. Today, with a shrinking workforce and aging population, Thailand’s growth has lagged behind its ASEAN peers.
Vietnam’s trajectory has been markedly different. After normalizing trade relations with the U.S. in 2001, Vietnam rapidly became a global manufacturing hub. Major companies such as Canon, Samsung, Apple suppliers, and Nike have established significant operations there. This has integrated Vietnam deeply into international supply chains. Yet, this success comes with risks: about 80% of Vietnam’s GDP now depends on exports, and 73% of those exports come from foreign companies.
According to the World Bank, this heavy dependence makes Vietnam’s economy highly sensitive to global fluctuations and decisions by foreign investors. Experts argue Vietnam and ASEAN as a whole must strengthen domestic demand, nurture local industries, and reduce overreliance on foreign capital and markets.
Reference
Fukasawa, Y. (2025, September 13). ASIA INSIDE REVIEW: U.S. pressures Southeast Asian nations to crack down on transshipped Chinese exports. The Japan News. https://japannews.yomiuri.co.jp/business/asia-inside-review/20250913-280440/