Scenario: a Chinese furniture maker ships semi-finished components to its Vietnamese subsidiary, which assembles, packs and labels the goods ‘Made in Vietnam’ before exporting to the US. Under the 2 July 2025 US–Vietnam trade framework, goods Washington deems illegally transshipped face a 40% tariff instead of 20% — and the US Department of Commerce can open anti-circumvention inquiries that freeze the entire business model mid-stream.
The 40% is not a tariff schedule — it is an enforcement risk
On 2 July 2025, the US announced a preliminary trade deal with Vietnam: 20% tariffs on Vietnamese-origin goods, 40% on goods deemed transshipped through Vietnam, in exchange for duty-free US access to Vietnam’s market. The critical detail for investors is that the 40% rate is not automatic on any good passing through Vietnam — it targets goods Washington determines were illegally transshipped, i.e. rerouted with little or no real value added in Vietnam.
The practical risk sits one level below the headline: US Customs and the Department of Commerce apply circumvention doctrines developed in anti-dumping and countervailing-duty cases — minor alteration, third-country assembly, and false origin declarations can each trigger inquiries, retroactive duties and importer penalties.
Vietnam is tightening origin enforcement on its own side
To keep the deal, Vietnam committed to cracking down on origin fraud. Reuters reported on 10 July 2025 that the government was preparing a new decree prescribing additional sanction levels for origin fraud, with intensified inspections focused on exports to the US — particularly products at risk of trade fraud and Chinese-origin goods subject to US and EU trade defense measures.
For investors this means double exposure: US-side enforcement plus Vietnam-side inspections and sanctions. A ‘relabel in Vietnam’ strategy now fails on both ends.
What a defensible Vietnam export platform looks like
- Real manufacturing substance: production in Vietnam must meet applicable rules of origin — substantial transformation or regional value content thresholds — not mere repackaging.
- Documented supply chains: import declarations for inputs, production records, bills of materials and cost accounting that prove Vietnamese value added.
- Valid certificates of origin: issued through proper channels (the Ministry of Industry and Trade’s authorized bodies and VCCI), matching the actual production process.
- Circumvention audit: review the product against US DOC circumvention precedents before scaling — especially where inputs come from countries already under US trade defense orders.
Frequently asked questions
1. Does every shipment through Vietnam face 40%?
No. The 40% applies to goods the US determines were illegally transshipped; genuine Vietnamese-origin goods face 20% under the announced framework.
2. What counts as illegal transshipment?
Typically: goods substantially made elsewhere, shipped to Vietnam and relabeled as Vietnamese with no or minimal real processing — distinct from legitimate use of foreign components under origin rules.
3. Can US authorities investigate after import?
Yes — anti-circumvention inquiries can reach back, with retroactive duty liability and penalties for false declarations.
4. What is Vietnam doing domestically?
Preparing stricter origin-fraud sanctions and intensifying export inspections, per the July 2025 government documents reported by Reuters.
5. Is using Chinese components in Vietnamese assembly automatically transshipment?
No. Using foreign inputs in compliance with rules of origin is normal trade; transshipment means evading duties through false origin. Confusing the two creates unnecessary risk.
This article has been quality-reviewed by the FLAW AI Legal Council