Theoretically, transshipment trade can partially circumvent Section 301 tariffs. Section 301 primarily imposes additional tariffs on products imported from specific countries. Transshipment trade involves exporting goods to a third country or region first, where they undergo some processing or repackaging, and then re-exporting them to the target market, thereby changing the "country of origin" labeling.
For example, Chinese products could first be shipped to Malaysia, undergo minor processing there, and obtain a local certificate of origin before being exported to the U.S. This might allow them to avoid the Section 301 tariffs on Chinese goods.
However, several precautions must be taken: First, choose an appropriate transshipment location that has a free trade agreement or preferential trade arrangement with the target market. Second, ensure the processing of goods complies with origin rules to avoid being flagged as an evasion tactic. Third, maintain compliance in logistics and documentation processes. Nevertheless, transshipment trade carries risks. If customs in the importing country determine it’s intentionally evading tariffs, the company could face hefty fines, cargo seizures, or other penalties.
Professional consultant answers
James LiuYears of service：10Customer Rating：5.0
Foreign trade tax refund consultantConsult
Theoretically, transshipment trade can partially circumvent Section 301 tariffs. Section 301 primarily imposes additional tariffs on products imported from specific countries. Transshipment trade involves exporting goods to a third country or region first, where they undergo some processing or repackaging, and then re-exporting them to the target market, thereby changing the "country of origin" labeling.
For example, Chinese products could first be shipped to Malaysia, undergo minor processing there, and obtain a local certificate of origin before being exported to the U.S. This might allow them to avoid the Section 301 tariffs on Chinese goods.
However, several precautions must be taken: First, choose an appropriate transshipment location that has a free trade agreement or preferential trade arrangement with the target market. Second, ensure the processing of goods complies with origin rules to avoid being flagged as an evasion tactic. Third, maintain compliance in logistics and documentation processes. Nevertheless, transshipment trade carries risks. If customs in the importing country determine it’s intentionally evading tariffs, the company could face hefty fines, cargo seizures, or other penalties.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
Transshipment trade to circumvent Section 301 involves risks. While it can alter the apparent origin of goods, customs in importing countries enforce strict oversight. If caught deliberately using transshipment to evade tariffs, a company’s reputation and finances could suffer, potentially leading to import bans. Caution is advised.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
If executed properly, transshipment trade can partially circumvent Section 301. However, it involves multiple steps, and documentation, logistics, etc., must align seamlessly. Any discrepancies, such as inconsistent logistics records, could raise customs suspicions.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
In practice, circumventing Section 301 through transshipment trade has become more difficult. Customs authorities worldwide are enhancing cooperation and information sharing, making it increasingly challenging to deceive them with simple transshipment. Companies must carefully weigh risks and costs.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
The key to circumventing Section 301 via transshipment lies in selecting the right transshipment location. Smaller countries may offer flexible policies but might lack credibility or robust oversight, while larger economies provide stability but have higher entry barriers. A balanced approach is needed.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
Even if transshipment trade avoids Section 301 tariffs, the overall costs must be calculated. Expenses like warehousing, processing, and transportation during transshipment, along with risk costs, might offset the tariff savings.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
For companies using transshipment trade to circumvent Section 301, legal compliance is non-negotiable. Thorough research into the trade laws of relevant countries is essential; otherwise, the legal repercussions could far outweigh the benefits.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
Circumventing Section 301 through transshipment trade requires professional expertise. Areas like logistics planning and documentation handling are best managed by specialists to minimize risks and improve success rates.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
When using transshipment trade to circumvent Section 301, long-term market impacts must also be considered. If many competitors adopt this approach, it could trigger stricter oversight from importing countries, affecting the entire industry’s export environment.