Supply Chain and Logistics

We know that these trade deals aren’t final. But any deal with tariffs will spawn a lot of transshipment activity. The question always is how much value added is put there in the new country?

The goods may be just moved through the country. This creates a tariff avoidance scheme. This happens even if the goods nominally change hands. Sometimes they don’t even get out of the container.

On the other hand, the goods may be more like intermediate supplies for manufacturing, and be assembled into something else before being exported again. These products may qualify for the lower tariff.

All gradations of these extremes are possible. Each individual transfer must be evaluated for transformation in the new country.

The point of the article below is a good one. Underlying it all is a theory of what tariffs hope to accomplish.

If it’s to reshore manufacturing to the US, that probably won’t happen; instead firms will try to run around the tariffs via transshipment. That has happened for hundreds of years, perhaps thousands. There will be a lot of reshoring talk, to stroke Trump’s ego. There will be a few US investments that may or may not last. But the US economy has developed beyond the manufacturing stage. No one truly wants manufacturing jobs— to get workers, wages will need to be so high that it wouldn’t be cost effective to make most stuff here.

The United States became a maritime power in the 1770-1820 time period by deliberately offering shipping to goods that were trying to evade tariffs and other rules set by European countries.

The trade constraints didn’t work in the long run then and won’t now. People will find a way.

Nick Savvides, Europe correspondent

July 3, 2025

https://www.seatrade-maritime.com/containers/transhipment-key-to-us-vietnam-trade-deal