Trump’s Transshipment Crackdown Threatens 70% of China’s US Exports—Here’s Why It Matters

The hammer drops—hard. Trump’s latest trade maneuver takes direct aim at China’s supply chain loopholes, with a staggering 70% of exports to the US now in the crosshairs.

No more backdoor plays. The crackdown targets transshipment—the age-old trick of rerouting goods through third countries to dodge tariffs. Suddenly, factories in Vietnam or Malaysia aren’t looking so ‘neutral’ anymore.

Supply chains scramble. Expect shipping lanes to twist into knots as exporters play whack-a-mole with customs forms. Meanwhile, Wall Street shrugs—another day, another geopolitical risk to price in (between martini lunches).

Game theory in action. China’s export machine either adapts or bleeds. Either way, someone’s profit margins are about to get ‘optimized’—just not the way CFOs hoped.

Indirect shipments from China will face tougher actions

The WHITE House has signaled tougher action on what it sees as indirect shipments of Chinese goods. In recent weeks, U.S. officials sent letters to multiple governments warning that, unless new bilateral trade pacts are struck by August 1, they will face higher levies on products transshipped from China.

While the letters gave few details, they suggest the administration may widen the net to cover many more Chinese‑made items entering the U.S. under the flag of other nations.

Mexico and Vietnam top the list of countries China uses to funnel goods into the U.S., with the EU also serving as a major pathway. Those links could reshape upcoming U.S. negotiations with partners. For instance, the U.S.–U.K. trade agreement signed earlier this year includes clauses aimed at securing supply chains and limiting foreign control in sensitive areas.

Still, the Bloomberg team notes that it remains unclear how strictly Washington can enforce new transshipment rules. The U.S. government’s definitions of what counts as locally made goods are vague, and methods for verifying origin have not been spelled out.

China’s rare earth exports to the US jumped by 660%

In the meantime, China’s rare earth magnet exports to the US jumped dramatically in June, following a breakthrough trade pact between the two sides. Data from China’s General Administration of Customs showed outbound shipments of these critical minerals ROSE to 353 metric tons last month, a 660% increase compared with 47 metric tons in the month prior.

The surge came after Washington and Beijing reached agreements in June to sort out bottlenecks around rare earths and magnet exports. As part of those talks, chipmaker Nvidia has said it will resume H20 AI chip sales.

China, which supplies over 90 percent of the world’s permanent magnets, had added several of these items to an export control list in early April in response to US tariffs. Overall, Chinese firms shipped 3,188 tons of permanent magnets around the globe in June, an increase of 157.5 percent from May’s 1,238 tons, though that total remained 38.1% below the 5,160 tons exported in June 2024.

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