Transshipments drew attention earlier this month after the US announced tariffs on imports from Vietnam and 23 other trading partners. US President Donald Trump warned that imports diverted through Vietnam would face a 40 per cent tariff – double the 20 per cent levy on goods made in the Southeast Asian nation.
“Of course, [Southeast Asian authorities] would check the country of origin for products,” said Dong He, chief economist at the Singapore-based Asean+3 Macroeconomic Research Office (AMRO), on Tuesday, adding that some already have agreements with the US to do so.
Chinese officials should also “encourage their firms to become more deeply ingrained or integrated with local economies” in the Association of Southeast Asian Nations (Asean), He said.
While the Chinese government seeks to protect its exports, businesses should have the autonomy to make long-term decisions about their role in local economies, which would also protect them from unpredictable tariff rates, he added.
Imports from China face an average tariff rate of 42 per cent, according to Morgan Stanley estimates, while other Asian countries face rates of 25 to 40 per cent starting August 1.
