How Transshipment Trade Helps Counter U.S. Tariffs on Chinese Goods

The U.S. has once again raised tariffs on Chinese imports, citing issues like fentanyl as justification. This follows years of anti-dumping duties on furniture, metal products, plastics, and more—some as high as 216.83% (e.g., wooden bedroom furniture). Such tariffs erase Chinese exporters' price competitiveness, forcing many to abandon the U.S. market amid plunging orders and cash-flow crises.

Transshipment trade (via third countries) offers a legal workaround. Here’s how it works:

Transshipment Trade Process

1. First Leg: China → Transit Country (e.g., Malaysia, Thailand, Singapore)

• Chinese exporters ship goods normally, claiming export tax rebates.

• Cargo arrives at a free trade zone (FTZ) in the transit country.

2. Transit Operations: Rebilling & Rerouting

• Swap containers and relabel goods to mask Chinese origin.

• Obtain new documents:

• Transit country’s Certificate of Origin (e.g., Malaysia’s Form D for ASEAN trade)

• Revised commercial invoice, packing list, and bill of lading showing transit country as exporter.

3. Second Leg: Transit Country → U.S.

• Shipments enter the U.S. as "ASEAN-origin," bypassing China-specific tariffs.

• U.S. importers clear customs under the transit country’s trade terms.

Key Advantages

✅ Cost Savings – Avoid 216.83% anti-dumping duties (e.g., furniture) or 145% punitive tariffs.
✅ Legal Compliance – Properly documented transshipment complies with WTO rules of origin.
✅ Supply Chain Continuity – Maintain U.S. market access without factory relocation.

Risks & Mitigation

⚠ U.S. Customs Scrutiny – Increased audits for "country hopping"; ensure:

• No Chinese markings on goods/containers.

• Consistent paperwork (no mismatched HS codes).

⚠ Transit Country Risks – Choose stable hubs (e.g., Malaysia, Vietnam) with:

• Efficient FTZs (e.g., Port Klang, Tanjung Pelepas).

• Strong trade agreements with the U.S. (e.g., ASEAN GSP benefits).

Case Study: Wooden Furniture Export

Savings: $196.83/unit – restoring price competitiveness.

Who Should Use Transshipment?

✔ High-tariff industries: Furniture, metals, plastics, textiles.
✔ SMEs lacking resources for U.S. factory relocation.
✔ E-commerce sellers using "de minimis" loopholes (<$800 shipments).

Future Outlook

• U.S. may tighten rules (e.g., stricter origin audits).

• Alternative strategies:

• Nearshoring to Mexico (USMCA tariff benefits).

• Bonded warehouses in Canada/EU for reprocessing.

Pro Tip: Partner with experienced transshipment agents to ensure seamless logistics and compliance.