US transshipment claims in Southeast Asia rest on thin data

Washington’s August 13 report, The Great Transshipment Scam, puts Southeast Asia at the center of a widening US campaign against tariff evasion worldwide. Indonesia, Malaysia, Thailand and Vietnam are all placed in the report’s Tier 2, a category the White House says combines significant transshipment volumes with deep integration into China-linked supply chains.

Indonesia has rejected Washington’s characterization, while Vietnam has stressed both its opposition to origin fraud and its willingness to address US concerns. The dispute now extends beyond customs enforcement as Washington writes anti-evasion commitments into new trade arrangements with ASEAN economies. That was seen in its February agreement with Indonesia.

The United States has a legitimate problem to solve: tariff differentials create incentives to reroute goods, alter paperwork or perform only minimal processing in lower-tariff jurisdictions, often to make goods made in China appear as though they were produced in Southeast Asia.  

US Customs and Border Protection has already documented such conduct involving Indonesia. In 2024, it found substantial evidence that Chinese-origin xanthan gum had been transshipped through the country and entered the US without the applicable antidumping duties.

The EAPA determination provides a concrete benchmark: a specific product and importer, a shipment trail, evidence on production capacity and origin claims, and a final administrative finding.

However, a single proven case involving one product and importer does not validate or justify the report’s broader country classifications. The case is useful for flagging risk, but less persuasive as proof that illegal transshipment is systemic in any particular country.

The US Council of Economic Advisers screens products subject to Section 301 tariffs for which China’s share of US imports falls, China’s share of a third country’s imports rises and that country’s share of US imports also rises.

The pattern warrants scrutiny, but it does not by itself establish that the same goods merely passed through and were not significantly produced in the third country. A factory can expand production, import Chinese intermediate inputs, add domestic value and export a legally transformed product to the US while producing exactly the same statistical pattern.

The report itself notes that the post-2018 shift in sourcing does not establish that all displaced Chinese trade was illegally transshipped; some reflects legitimate changes in production, investment and sourcing.

Its five estimates range from roughly $40 billion to $303 billion and are explicitly described as not directly comparable. Yet its language becomes firmer when countries are grouped into tiers.

The report describes Tier 2 as combining “significant illegal transshipment volumes” with deeper China-linked economic integration, although it does not disclose a numerical threshold, country score, weighting formula or Indonesia-specific estimate that would allow an outside reader to reproduce that classification.

Moreover, the estimate changes sharply with the unit of analysis. Research on Vietnam using eight-digit product data found that 16.5% of US-bound Vietnamese exports in 2021 appeared to be rerouted at the national product level.

The estimate fell to 6.5% when flows were matched within provinces and to 1.7% when they were matched within individual firms. The firm-level measure may undercount coordinated rerouting, but the result shows how aggregation can mistake legitimate production by one company for rerouting by another.

The report also applies a more granular test. The US Commerce Department’s Office of Trade and Economic Analysis uses transaction-level data to flag an exact HS8 product imported from China and exported to the US from the same local region in the same quarter. Matching the product, place and timing provides a stronger signal, but the published estimate covers Mexico, India and Vietnam, not Indonesia.

For Indonesia, the report highlights the Bekasi-Batam corridor and plastic packaging under HS 392310. But the public document does not disclose a firm-level shipment trail, evidence of local value added, details of the manufacturing process or proof of a false origin claim sufficient to turn that corridor-level risk signal into a proven violation.

US origin rules focus on what happened to the product, not simply where its inputs came from. When goods contain inputs from multiple countries, country of origin can depend on whether they undergo substantial transformation: a fundamental change in form, character or use through meaningful processing or manufacturing.

Repackaging normally does not qualify; assembly sometimes does, depending on its complexity. Chinese components, ownership, financing or supplier relationships may therefore justify scrutiny, but none automatically makes a finished ASEAN product a Chinese-origin one.

A 2025 IMF working paper separates rerouting from reallocation across six Asian connector economies using domestic and Chinese value added, foreign investment and counterfactual trade patterns.

Its findings are inconclusive for five economies, including Indonesia, while Vietnam shows increased domestic content consistent with production reallocation rather than significant one-stop transshipment.

That does not prove ASEAN is clean. Rather, it shows why bilateral trade correlations are not enough to sufficiently determine transshipment. ASEAN governments would thus be wise to answer Washington with evidence rather than blanket denials.

In 2025, officials from Indonesia’s trade ministry, customs authorities and Batam administration accompanied US CBP investigators to five factories producing solar cells, solar panels and cryptocurrency mining equipment to examine claims of Indonesian origin.

That model should become routine for high-risk products across the region, with auditable records of imported inputs, production capacity, domestic processing and certificates of origin. Washington, in turn, should make its country tiers reproducible.

If they influence enforcement priorities or future tariff treatment, the US should publish the thresholds behind each tier, distinguish statistical exposure from verified evasion, disclose validation rates for proprietary screening tools where security permits and reserve country-level findings of illegality for evidence that connects products, firms and origin determinations.

ASEAN governments, meanwhile, can standardize origin records and share targeted customs data without exposing confidential business information. Credible enforcement should identify genuine tariff evasion quickly and clear legitimate shipments just as quickly.

That would protect US tariff policy without allowing integration with Chinese supply chains to substitute for evidence of origin and transshipment.

Irvan Maulana is a Jakarta-based independent policy analyst.