Uncertainty About Transshipment Definition Worries Trade Lawyers
How the Trump administration chooses to define transshipment has the potential to redefine the current trading system with Southeast Asian countries, trade lawyers said. The recent trade deal framework with Vietnam contained a 40% tariff rate for "transshipped" goods, which is a different approach than previously employed for transshipment (see 2507080028).
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Customs lawyer David Murphy of Grunfeld Desiderio said during a webinar hosted by Zencargo that, to him, and to the trade community at large, transshipment means illegally declaring a good as originating from a different country than the one in which it was produced. The policy the administration takes will depend on whether there is "going to be a definition of what they mean by transshipment. Does it have to be wholly obtained and produced in Vietnam, which is not going to work? Will there be a value content? It’s all speculation at this point," he said.
Even if they choose a value content approach, Murphy said, existing rulings mean that if a Vietnamese good has high Chinese-made content, "then you’ve got a bunch of issues." He interprets what the administration said as that what they are trying to achieve is "more like an antidumping circumvention idea of who owns the companies, what’s the value added, what exactly is being done, which would cause chaos. If that’s the way they’re gonna go."
Lenny Feldman of Sandler Travis was less pessimistic in an interview, but said that if the administration chooses to impose tariffs on goods that contain any amount of Chinese-origin components, then "that could be a problem if it's interpreted that way." Outside of the increased tariff rate, he said, the higher scrutiny of Chinese components shouldn't affect companies as much as the Uyghur Forced Labor Prevention Act tracing requirements because "companies should have their bills of materials ready to go."
Murphy said the best way for importers to stay ahead of the shifting trade landscape is to stay informed: "In January, I signed up for Truth Social just to keep on top of what's going on." He also recommended subscribing to a trade publication: "If you don't subscribe to something like that, it may be wise to keep up."