Morale was low in a WeChat group of roughly 250 Chinese language producers and e-commerce sellers late final April, when mixed tariffs on Chinese language imports to america sat at 145 p.c.
“That is it. The U.S.-China relationship is over,” stated one member within the Chinese language messaging app.
“If solely Kissinger have been alive,” stated one other.
By September 2025, exporters within the group have been feeling the results of the highest statutory tariff charges on U.S. imports in over 100 years.
The share of U.S. imports originating from China had plunged from a 2017 excessive of twenty-two p.c to only 9 p.c by July 2025, a low not seen since China’s accession yr to the World Commerce Group 1 / 4 of a century earlier.
Steven Lu, chief govt of Shenzhen Topology, a consultancy that helps Chinese language e-commerce sellers enter abroad markets, administers the group chat.
Trump introduced “reciprocal tariffs” on April 2, 2025 – so-called “Liberation Day.” However Lu’s shoppers, unbiased distributors and producers who provide purchasing platforms like Shein and Temu, had already begun shifting provide chains to Southeast Asia earlier than then, he stated.
“U.S. tariffs don’t finish Chinese language exports. They reroute them,” stated Lu in an interview in January 2026.
New knowledge launched final week exhibits that over $8 billion of Chinese language exports have been rerouted via Vietnam to america within the first three quarters of 2025, as Chinese language exporters sought avenues to bypass tariffs, in keeping with evaluation by a bunch of lecturers at Harvard, Duke and Academia Sinica, a Taiwanese analysis institute.
The determine, which marks a reversal after a two-year decline in rerouting, gives a uncommon glimpse into how Chinese language exporters are transiting items via a commerce companion with a tariff differential. The tactic exposes blind spots in U.S. President Donald Trump’s tariff regime which have lengthy vexed U.S. officers.
“Anytime there’s a niche between nation of origin-specific tariffs, you create an impetus for some transshipment to occur,” stated Ebehi Iyoha, an assistant professor at Harvard who shared the information in a memo in January forward of updates to a 2025 working paper she co-authored with lecturers Edmund Malesky, Jaya Wen, and Sung-Ju Wu.
The authors outline rerouting, one other time period for transshipment, as the method of exporting to america items that have been produced solely in China and cross via Vietnam “with out substantial transformation or worth added.”
Final yr, tariff charges on Chinese language exports exceeded one hundred pc at occasions, although ranges have since eased to between 20 and 30 p.c on most items. Vietnamese exports are topic to a 20 p.c tariff.
“Our knowledge counsel that there was substantial transshipment final yr when this hole existed, particularly provided that some Chinese language-owned institutions in Vietnam have been already set as much as benefit from the chance,” Iyoha stated.
To determine rerouting instances, the authors tracked merchandise imported from China right into a Vietnamese province after which exported from that province to america throughout the identical quarter.
Nonetheless, the estimates should not designed to find out the legality of transshipment instances, Iyoha stated.
William Reinsch, a senior advisor on the Heart for Strategic and Worldwide Research and former beneath secretary of commerce for export administration in the course of the Clinton administration, stated transshipment is an “elastic idea.”
“It hasn’t been outlined within the varied U.S. agreements that point out it,” he stated.
Some transshipment, similar to mislabeling a rustic’s origin, is outright fraud, whereas different instances rely on the way you outline the time period, he famous.
“For instance, a metal slab produced in China is exported to South Korea, the place it’s rolled right into a sheet, strip, or wire. Below worldwide customs guidelines, that may be a substantial transformation that has created a sheet, strip, or wire – a product of South Korea. However some individuals would argue that as a result of the slab originated in China, it’s truly a Chinese language product being transshipped,” stated Reinsch.
U.S. Customs and Border Safety defines transshipping because the “means of transferring items from one mode of transportation to a different (usually from one vessel or port to a different) throughout their journey from origin to vacation spot,” a “frequent” observe that turns into unlawful when used deceptively to evade tariffs.
Edmund Malesky, a professor of political financial system at Duke, stated that the method for figuring out what qualifies as a considerable value-added transformation may be extremely complicated.
For some imports similar to semiconductors, inputs and exports share the identical 8-digit product code, he famous.
“Intel imports semiconductors after which dyes them in Vietnam. And though dyeing is a value-added step, it doesn’t truly change the product code,” he stated.
Trump administration officers have invoked the unlawful transshipment of Chinese language items via third international locations as a neat clarification for a report slide in Chinese language exports to america and a surge in Vietnamese shipments final yr.
In 2025, China’s exports to the U.S. fell by 20 p.c, in keeping with China customs knowledge. In the meantime, Vietnam’s exports to america. rose 28 p.c year-on-year in keeping with Vietnam commerce knowledge.
Peter Navarro, one in all Trump’s advisers who has been vocal about cracking down on transshipment, stated Vietnam is “primarily a colony of communist China” in an April Fox Information interview.
In July, beneath the commerce deal negotiated with Vietnam’s authorities to scale back the Liberation Day tariffs, Trump introduced that items “transshipped” to america via Vietnam would face a punitive 40 p.c tariff. That’s double the speed for normal imports from Vietnam, a measure meant to crack down on rerouting.
A decline in Chinese language exports and an increase in Vietnamese imports to america doesn’t show fraudulent transshipment.
Nonetheless a 2025 report by economists at Harvard and Dartmouth discovered that items through which Vietnam noticed its largest development in exports to america, similar to lower-end electronics like headphones, mirror intently these through which China noticed reductions, elevating the query of rerouting.
An worker at a Shenzhen-based headphone producer who requested anonymity stated that there are downsides to totally relocating manufacturing and meeting to Vietnam and different lower-tariff international locations.
“Our firm is certainly opening up factories in Vietnam as a result of tariffs, nevertheless it’s a really lengthy course of,” she stated.
“In Vietnam, that you must perceive how one can arrange and talk with native staff. Manufacturing in China is necessary for us to scale back manufacturing prices.”
That stated, the inconvenience of shifting provide chains to Vietnam has not stopped billions of {dollars}’ price of products from being redirected to america. Furthermore, no matter their legality, import knowledge exhibits that transshipment strategies proceed to go away america extremely dependent on Chinese language-made items.
Davin Chor, an economist at Dartmouth and a co-author of the aforementioned paper, stated Trump’s tariffs are finest understood as a transfer to curb dependence on China.
“At coronary heart, the deeper causes of concern are associated to nationwide safety and provide chain resilience,” he stated, including that each pure rerouting or legally relocating manufacturing to 3rd international locations are causes of concern for U.S. officers.
“The Trump administration is principally saying ‘you may go forward and measure how a lot of the worth of those items is in the end of Chinese language origin. We predict it’s a excessive quantity. And we’re simply gonna go forward and shut it down.’”
