ASEAN Transshipment and US Tariffs – Balancing Opportunity and Risk

The United States broadened its tariff policy in 2025, shifting from a China-specific approach to a wider protectionist framework that targets entire value chains in strategic sectors such as electric vehicles, lithium-ion batteries, solar components, steel, aluminum, and semiconductors. Tariffs on Chinese electric vehicles reached 100 percent, duties on solar cells climbed to 50 percent, and lithium-ion batteries were taxed at 25 percent in 2024. Under the revised Section 301 measures, semiconductor imports will face tariffs of up to 50 percent in 2025.

The forthcoming Foreign Trade Enhancement Act, expected to take effect in late 2025, will further expand these controls to include clean-energy inputs, battery materials, and semiconductor assemblies sourced from third countries. Alongside the United States Trade Representative’s broadened Section 301 review, these steps point to a long-term realignment of global trade structures.

As manufacturers adapt, ASEAN has become a key production base for companies aiming to maintain access to Western markets. In 2024, US goods imports from ASEAN reached US$352.1 billion, underscoring the region’s growing importance in diversified supply chains. However, ASEAN’s trade agreements and port systems now support transshipment only when genuine value is added, and origin rules are verifiable. The era of simple rerouting to bypass tariffs is effectively over.

From China-specific duties to global tariff escalation

The 2025 framework represents a clear move from selective enforcement to systemic protectionism. Together, the updated Section 301 and 232 measures now cover more than US$350 billion in imports, extending tariff exposure to exporters in Vietnam, Malaysia, Thailand, and Mexico — countries that were previously shielded from China-focused trade actions.

Supply chains that continue to rely on Chinese components remain vulnerable. To maintain tariff advantages, manufacturers in ASEAN must now demonstrate substantive transformation, meaning the production process must alter a product’s essential character or change its tariff classification.

This shift is pushing the region toward genuine manufacturing growth, replacing what was once a pattern of administrative re-exports with deeper industrial capability.

Rising US scrutiny of ASEAN-routed exports

The US Customs and Border Protection (CBP) has intensified its circumvention probes under the Enforce and Protect Act, reflecting Washington’s tougher stance on trade compliance. The number of cases involving ASEAN economies rose from 6 in 2021 to 20 in 2024, highlighting the region’s growing scrutiny. In April 2025, the US Department of Commerce issued anti-dumping and countervailing-duty rulings on solar modules from Cambodia, Malaysia, Thailand, and Vietnam, with some duties exceeding 100 percent.

CBP now cross-checks rules-of-origin declarations against databases tracking forced labor and supply-chain integrity, creating a far more stringent verification system. Minimal assembly or relabeling no longer qualifies as a substantial transformation and can result in retroactive duties.

To adapt, manufacturers are integrating traceability tools that log every production stage — making compliance an integral part of their operating systems rather than a post-production requirement.

ASEAN’s policy response to a changing trade environment

Governments across ASEAN are moving quickly to reinforce investor confidence.

Singapore and Malaysia have introduced digital systems for origin certification and strengthened oversight in free zones. Thailand and Vietnam are upgrading customs databases to align with RCEP standards, while negotiations on the ASEAN Digital Economy Framework Agreement — expected to conclude in 2025 — aim to harmonize digital trade rules and standardize documentation across the region.

The ASEAN Customs Transit System (ACTS), which already connects Singapore, Malaysia, Thailand, and Laos, continues to expand, enabling paperless cross-border cargo movements. Mutual-recognition arrangements now support electronic validation of RCEP certificates, streamlining regional logistics.

Under RCEP’s cumulation rules, inputs sourced from multiple member states can qualify for origin status, though they must still undergo a measurable transformation to retain tariff benefits.

Firms that build these provisions into their production models gain both preferential tariff access and faster customs clearance across the bloc.

ASEAN relies on openness to trade, so this is an important issue for ASEAN, one that many countries in the region are taking seriously.

It is not just about complying with US policy, it is also about building strong frameworks for regulation and maintaining investor confidence. ASEAN doesn’t want to become the go-to destination for circumvention of global controls, as this erode confidence of trade partners and create potential regulatory issues — Kyle Freeman, Partner at Dezan Shira & Associates

Evolving roles of regional hubs

ASEAN’s logistics and industrial centers now compete on compliance readiness as much as cost. The region’s ports process more than 170 million TEUs annually, with Singapore, Malaysia, Thailand, and Vietnam handling over 70 percent. Major investment is transforming these gateways into traceable export platforms able to meet US and EU origin standards.

Singapore – Efficiency and regulatory integrity

Singapore remains the world’s leading transshipment hub. In 2024, PSA handled about 41.1 million TEUs, a new record that contributed 7 percent to GDP. The Tuas Megaport, under phased expansion through the 2030s, will raise capacity to 65 million TEUs. The government has committed S$15 billion (US$11 billion) to automation, energy-efficient berths, and blockchain-based customs systems.

TradeNet and the National Single Window connect 40 agencies and provide clearance in under ten minutes. Electronic certificates of origin are mandatory for all re-exports, supporting more than US$50 billion in shipments during 2024.

Malaysia – Dual logistics and light manufacturing model

Port Klang processed 14.64 million TEUs in 2024 and will reach 18 million by 2030. The Free Commercial Zone near Westports allows partial assembly and packaging that meet transformation requirements. The Penang Free Industrial Zone and Bayan Lepas cluster exported electronics worth US$7 billion in 2024, supported by US$12 billion in manufacturing investment.

The National Trade Blueprint aims to halve documentation time by 2026, positioning Malaysia as a mid-value compliance hub linking industrial estates with port facilities.

Thailand – Integrated industrial corridors

Laem Chabang handled 9.46 million TEUs in fiscal 2024 and anchors the US$45 billion Eastern Economic Corridor, covering 3,000 hectares of industrial estates. Logistics contributes about 14 percent of GDP, with throughput expected to exceed 12 million TEUs by 2028. Integrated zones enable calibration, software installation, and assembly before export, creating verifiable transformation at scale.

Indonesia – Industrial ports driving export diversification

Tanjung Priok and Patimban ports handle over 8 million TEUs annually. Investment of (US$9 billion) in 2024 supports automation, bonded logistics, and rail connectivity. Dwell time will drop from 3.5 days to under 2 by 2026.

Patimban serves as a hub for automotive and nickel-battery shipments, supported by the upgraded National Single Window integrating customs, tax, and investment systems for instant RCEP verification.

Vietnam – Rapidly scaling export capacity

Ho Chi Minh City, Hai Phong, and Cai Mep ports together handled about 23.4 million TEUs in 2024. The government invested (US$4 billion) to expand capacity and digitalize customs. Exports exceeded (US$350 billion) in 2024.

Electronic certificates of origin under RCEP and CPTPP have reduced clearance times by more than 40 percent, strengthening Vietnam’s role as a high-tech manufacturing base.

Cambodia – Upgrading for compliance-based trade

Sihanoukville Autonomous Port handled about 1 million TEUs in 2024, up strongly year on year. With US$150 million in Japanese and World Bank support, Cambodia is developing blockchain customs and logistics systems. The National Logistics Master Plan aims to cut logistics costs from 26 percent to 18 percent of GDP by 2030.

Philippines – Digital reforms and port modernization

Manila’s container terminals handled about 5.5 million TEUs in 2024, contributing to a total national container volume of around 7.8 million TEUs. Capacity expansion at Batangas Port, now approaching 2 million TEUs, and automation investments worth US$2 billion, supported by the Build Better More program’s US$4.5 billion allocation through 2026, have helped modernize the Philippines’ customs and logistics systems.

With 96 percent of customs declarations processed electronically, the country is emerging as a mid-tier hub for electronics and automotive components that qualify under RCEP’s rules of origin.

Across ASEAN, upgraded port networks now form the physical backbone of regional trade, but infrastructure alone no longer defines competitiveness. For investors, the next frontier lies in integrating compliance systems capable of functioning across multiple regulatory regimes while meeting the audit and transparency standards required by US and EU partners.

Designing compliant transshipment strategies

Building tariff resilience in ASEAN requires country-specific approaches.

The region’s wide differences in trade rules, customs systems, and digital readiness mean investors must balance production depth, documentation quality, and regional sourcing across multiple regulatory frameworks. The most effective transshipment models now blend logistics and compliance planning, combining trade design, technology, and regulatory foresight into a single operational strategy.

ASEAN’s customs modernization is uneven. Vietnam and Malaysia are advancing with electronic certification and Authorized Economic Operator (AEO) programs, while Indonesia and the Philippines continue to rely more heavily on manual procedures. Locating final assembly or testing in economies with digitized customs environments enables faster clearance and lowers the risk of origin disputes.

Free-trade and bonded zones offer flexibility, but they function effectively only when transformation is genuine. In Malaysia, testing and calibration processes qualify as transformation under RCEP rules, whereas in Indonesia, exporters must also satisfy local-content requirements. These distinctions make compliance an operational decision rather than an administrative task. Increasingly, investors are embedding customs advisory teams within production planning to anticipate how rules of origin will apply to specific goods long before shipments take place.

Balancing cost and documentation intensity

Integrating compliance adds between 0.3 and 0.8 percent to total manufacturing cost but significantly lowers audit exposure. Singapore’s automated verification systems keep average processing costs at around (US$120) per shipment, while manual checks in Indonesia can exceed (US$250). For high-volume exporters, the difference can affect annual profitability.

Firms must weigh whether to centralize documentation within one high-compliance hub or distribute processes across several ASEAN members to capture RCEP cumulation benefits. Centralization ensures control and speed, while distributed operations help qualify for origin status by increasing regional value content. The right approach depends on each company’s mix of tariff exposure, product complexity, and logistics flow.

Integrating sustainability into trade design

Environmental and labor standards now shape trade access as much as tariff rules. The European Union’s Carbon Border Adjustment Mechanism and US forced-labor laws have made sustainability part of customs compliance. Thailand and Vietnam have linked carbon and emissions data to their customs systems, while Indonesia will integrate ESG reporting into its National Single Window by 2026.

Investors who align sustainability documentation with origin data gain smoother access to Western markets. For manufacturers in sectors like palm oil, electronics, and metals, establishing traceable ESG reporting systems also reduces the risk of supply-chain audits or product bans. Compliance is shifting from a back-office task to a market-entry condition.

Managing multi-jurisdictional rules of origin

RCEP, CPTPP, and bilateral free-trade agreements often overlap, but their transformation rules differ. A laptop assembled in Vietnam with Malaysian components may qualify under RCEP but not under CPTPP if its chipsets originate from China. Indonesia still requires separate local-content certification even when regional rules are met.

Exporters are now using origin-mapping software that cross-references tariff codes, component sources, and certification pathways to identify the most efficient production route. This technology-driven approach reduces human error and enables firms to decide where to locate each transformation step to maximize compliance and minimize duty costs.

Leveraging digital trade platforms for traceability

ASEAN’s push for digital integration is reshaping compliance itself. The ASEAN Single Window links nine members through the electronic exchange of certificates of origin. The forthcoming Digital Economy Framework Agreement (DEFA) will further expand interoperability to include e-invoicing, shipping documents, and customs data.

Platforms such as Singapore’s TradeTrust, Malaysia’s National Trade Blueprint, and Vietnam’s e-CO system have cut verification times from days to hours. Automation ensures consistency and provides customs authorities with real-time audit trails, improving predictability for exporters. For investors, digital traceability is becoming the central safeguard against penalties or retroactive investigations.

Structuring intra-ASEAN supply chains for tariff optimization

The region’s most successful transshipment models combine complementary advantages across countries. Thailand’s Eastern Economic Corridor connects with Vietnam’s northern manufacturing belt to form an integrated electronics chain, while Malaysia’s free zones pair with Indonesia’s mineral-processing hubs for battery and EV production.

By locating final transformation stages in jurisdictions with both digital infrastructure and high regulatory credibility, companies can secure tariff exemptions while reducing inspection delays. Regional coordination not only supports compliance but also diversifies geopolitical risk, allowing firms to pivot production quickly in response to policy changes in the US or EU.

Mitigating enforcement and audit risk

Regulatory oversight is intensifying. US Customs applies advanced analytics to detect circumvention patterns, while ASEAN customs agencies have expanded random inspections. Exporters should maintain full traceability records for at least five years and conduct internal pre-audits that replicate official inspection procedures.

Malaysia and Vietnam now offer advance-ruling mechanisms that confirm tariff classification and origin eligibility before shipment. Obtaining these rulings builds a compliance buffer and demonstrates due diligence in the event of future audits.

For multinational producers, developing a shared compliance dashboard across ASEAN operations helps track every certification, declaration, and audit outcome in real time.

Industry shifts in practice

ASEAN’s evolving trade landscape is now visible in the behavior of its key export industries. As compliance requirements tighten and digital verification becomes standard, manufacturers are redesigning where and how value is created within the region. The following sectors illustrate how tariff exposure, origin rules, and sustainability standards are reshaping investment flows, supply-chain geography, and production strategies across ASEAN.

Electronics and semiconductors

Electronics account for over one-third of ASEAN’s exports to the United States. Vietnam and Malaysia have attracted investment exceeding US$40 billion since 2022, as global producers diversify from China. Firms such as Samsung and Infineon are expanding testing and packaging capacity to ensure products meet transformation requirements under RCEP and US rules. By emphasizing local wafer-level testing and system integration, ASEAN producers are creating a genuine transformation that supports both tariff compliance and technology upgrading.

Electric vehicles and batteries

Indonesia, Thailand, and Malaysia are aligning incentives for EV assembly and battery-cell production. The region’s cumulative investment exceeds US$25 billion, driven by Korean, Japanese, and Chinese firms. ASEAN’s nickel, manganese, and cobalt reserves underpin a vertically integrated EV supply chain, while final assembly plants in Thailand and Indonesia ensure compliance under ASEAN-origin rules. Governments and automakers are building capacity aggressively, with Indonesia and Thailand targeting substantial EV output growth toward 2030.

Solar modules and renewable-energy components

Cambodia, Vietnam, Malaysia, and Thailand exported solar modules US$12 billion in 2024. To avoid US circumvention penalties, producers are relocating wafer-cutting and cell-assembly operations to ASEAN so that transformation occurs within the region. Vietnam’s solar exports to the US rose 18 percent in 2024 after these adjustments. The region is also investing in polysilicon processing to deepen value addition and ensure compliance through physical transformation rather than paper documentation.

Textiles and apparel

Textile exports from ASEAN to the US US$40 billion in 2024, led by Vietnam, Indonesia, and Cambodia. CBP audits under the Uyghur Forced Labor Prevention Act have accelerated the shift of weaving, dyeing, and finishing processes into ASEAN. Factories that previously relied on imported Chinese fabric now source regionally or perform key finishing steps locally to meet transformation requirements. Investments in traceable cotton and fiber certification systems are strengthening ASEAN’s position as an ethical and compliant sourcing base.

Furniture and wood products

Vietnam’s furniture exports exceeded US$9 billion in 2024, supported by continued relocation from China. US enforcement against wood-origin circumvention has increased documentation requirements for exporters. Firms are now investing in FSC-certified timber sourcing and integrated manufacturing zones where cutting, shaping, and assembly occur on-site to establish a verifiable origin. ASEAN’s compliance advantage lies in coupling low-cost production with credible traceability and sustainability certifications.

Medical equipment and precision instruments

Singapore, Malaysia, and Thailand jointly exported medical devices worth US$25 billion. in 2024. The region has evolved from assembly into precision finishing, sterilization, and calibration — activities that qualify under transformation tests while also meeting Western regulatory standards. ASEAN’s medical-device clusters benefit from strong logistics and digital certification systems, making the region a preferred site for final processing before export to the US and EU.

Agrifood and processed goods

ASEAN’s processed-food exports total about US$55 billion annually, led by Thailand, Indonesia, and Vietnam. Global buyers increasingly demand sustainability and deforestation-free sourcing, particularly for palm-oil derivatives, seafood, and canned fruit.

Investors are using bonded agro-processing zones to consolidate sourcing, processing, and packaging while maintaining RCEP eligibility.

Integration of ESG and origin data has become a precondition for access to high-value Western retail markets.

Turning compliance into competitive advantage

ASEAN’s transshipment role is evolving from logistics convenience to a compliance-driven manufacturing ecosystem. Under the 2025 tariff environment, investors who integrate legal, operational, and sustainability frameworks within regional supply chains will maintain market access and build long-term competitiveness.

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