Trump pressures Vietnam over Chinese transshipment to avoid tariffs
Vietnam scrambles to satisfy U.S. demands as Trump targets Chinese supply chains rerouted through Southeast Asia.
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| Workers use sewing machines at the Thai Son S.P. Co. garment factory in Binh Thuan province, Ho Chi Minh City, Vietnam, on April 10, 2025. Photo by Linh Pham/Bloomberg |
By Alana Salsabila and Widya Putri
Inside a cluster of corrugated metal warehouses on the outskirts of Ho Chi Minh City this month, China’s vast logistics network pulsed with energy. Hundreds of Vietnamese workers packed boxes with cosmetics, clothing, and footwear bound for Shein, the Chinese fast-fashion behemoth. Outside, recruiters scrambled to hire hundreds more. A similar bustle echoed through a nearby industrial park operated by Cainiao, Alibaba’s logistics arm, where trucks moved in and out in a relentless rhythm.
Vietnam, once seen as the chief beneficiary of U.S. tariffs on China, now finds itself in a precarious position. President Donald Trump’s revived trade war in 2025 is forcing Washington to take a much closer look at how companies may be sidestepping U.S. tariffs through transshipment — rerouting Chinese goods through Vietnam. And for Vietnam, the very supply chain activity that has powered its export growth is now under intense scrutiny.
U.S. demands tougher action from Hanoi
In response to mounting pressure, Vietnamese officials rushed to Washington this month for a second round of high-stakes trade talks with Trump administration officials. With just weeks left before a 90-day pause on proposed 46 percent tariffs expires in early July, Vietnam is racing against the clock to prove that its exports are genuinely produced domestically — not merely Chinese goods with a new label.
The U.S. is demanding that Hanoi crack down harder on transshipment practices. While the traditional definition of transshipment focuses on finished goods being rerouted, the Trump administration has adopted a much broader interpretation. In its view, any significant input from China — even raw materials — could qualify, especially if the final product ends up in American ports.
“The priority for Trump is for Vietnam to fix the transshipment problem and make sure that the two countries can sign something that shows Vietnam is taking action,” said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi.
Vietnam’s supply chain links with China under scrutiny
Vietnam's rapid rise in the global manufacturing hierarchy was accelerated by the first wave of Trump-era tariffs on China. In 2017, its trade surplus with the United States stood at $38.3 billion. By 2024, that figure had soared to $123.5 billion. But this growth came with a catch: Vietnam has become increasingly dependent on China for raw materials and intermediate goods, particularly in the textile and apparel sectors.
"Without China, we cannot make products," said Tran Nhu Tung, vice chairman of the Vietnam Textile and Apparel Association. “Vietnam would have no material to produce the finished goods. And without the U.S., Vietnam cannot export the finished goods. So the Vietnamese government has to find a balance between China and the U.S., and it’s very difficult for them to do this.”
Trump calls Vietnam a 'colony of China'
As tensions mount, Peter Navarro, a key trade adviser to Trump, added fuel to the fire by describing Vietnam as a “colony of China.” His remarks underscore a deeper concern within the administration: that China’s influence on global trade has not waned, but simply morphed through indirect exports.
Beijing and Washington temporarily agreed to reduce some tariffs last month. Still, Vietnamese imports from China reached $15 billion in April, while its exports to the U.S. stood at $12 billion — a disparity that reinforces American suspicions. At least some of these imports, critics argue, are finished goods sent through Vietnam to evade the stiff levies on Chinese products.
“There is little data on exactly how much of Vietnam’s exports to the U.S. are actually transshipped Chinese goods,” said Priyanka Kishore, founder of Asia Decoded, a trade consulting firm based in Singapore. “But by some estimates, the figure rose to 16.5 percent of total exports after Trump’s first-term tariffs.”
Vietnam launches task force to fight fraud
Under growing scrutiny, Vietnam announced a new task force this month to crack down on trade fraud and smuggling. The government also opened discussions with U.S. Customs and Border Protection, hoping to establish a shared data system that could verify the origin of exported goods.
But for Trump administration officials, those moves are not enough. Navarro has doubled down, insisting that any product with even a trace of Chinese origin should not be considered Vietnamese.
"China uses Vietnam to transship to evade the tariffs," Navarro said. “We’re putting a fence around China’s exports.”
Chinese companies relocate, muddying the waters
Amid this political and economic standoff, Chinese firms are continuing to pour money into Vietnam. Shein, for instance, has launched a large-scale hiring campaign in the southern province of Long An. The company is reportedly subsidizing its suppliers to shift production from China to Vietnam.
One local recruiter, Huy Phong, posted job ads on a fence outside a Shein facility offering between $385 and $578 per month for warehouse work. Yet even with thousands of positions open, he said the company had only managed to fill about half of them.
Duong Minh Giang, a job seeker, walked away from an interview discouraged. “The salary is low,” he said. “And it involves handling raw materials from China like thread and dye to store and send to nearby factories.”
Such anecdotes reflect the growing complexity of verifying supply chains. Even if final assembly occurs in Vietnam, tracing the origin of every component remains a daunting task.
Is decoupling from China realistic?
While cracking down on illegal transshipment is one thing, trying to completely untangle global supply chains from China is another. Deborah Elms, head of trade policy at the Hinrich Foundation, questions the feasibility of the U.S. strategy.
“Most of the things that Americans buy have raw materials from China — whether it’s the plastic in their children’s toys, the rubber in their shoes, or the thread in their shirts,” she said. “Asian governments are being asked to redefine supply chains to something that might be decades in the making, in exchange for what? It’s a little unclear.”
Vietnam’s textile industry, for example, imports roughly 60 percent of its fabric from China. Even sectors like electronics and machinery depend heavily on Chinese inputs. Moving production is not as simple as flipping a switch — it requires new suppliers, training, logistics, and often years of transition.
Vietnam offers concessions, but risks remain
In a bid to avoid U.S. tariffs, Vietnam has offered several concessions. These include buying more American agricultural products and aircraft, and tightening inspections on goods labeled “Made in Vietnam.” Yet the sheer scale of Chinese investment in the country — and its deep integration into Vietnam’s export machinery — may hinder these efforts.
For Trump, whose trade strategy is rooted in reducing America’s reliance on China, Vietnam’s role as a middleman has become a major sticking point. As the July deadline looms, Hanoi’s balancing act grows more treacherous.
What began as a windfall for Vietnam from Trump’s first wave of tariffs may now evolve into a diplomatic and economic liability. And as the world watches whether the U.S. will move forward with punishing new duties, Vietnam faces a fundamental question: can it redefine its place in the global supply chain without alienating either Washington or Beijing?
One thing is clear — the next round of talks could determine whether Vietnam’s economic miracle is sustained, or if it’s about to hit a geopolitical wall.
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