Media

The global trade compliance landscape is undergoing profound changes, with increasing scrutiny over transshipment activities. From more detailed requirements for certificates of origin to full-chain traceability of shipping routes, the international regulatory web is closing in on every link in the supply chain. These changes are undermining the viability of traditional transshipment strategies, compelling companies to reexamine the compliance foundation and execution capabilities of their global trade operations.

New US Customs Regulations: Tiered Traceability and Aggressive Penalties Now in Force

As of April 15, 2025, US Customs has implemented a new origin verification system that significantly upgrades the standards and procedures for determining country of origin. The system targets transshipment practices through countries like Vietnam, Malaysia, and Mexico, which are often used to bypass tariffs.

The new system mandates three tiers of supply chain traceability documents:

1. Manufacturing Process Flowchart
   This must clearly detail each production stage to help customs verify the authenticity of the manufacturing process.
2. Raw Material Purchase Invoices
   These documents must demonstrate the origin and cost of raw materials to ensure full traceability.
3. Energy Consumption and Factory Operation Records
   Including energy usage data and day-to-day operational records, these are used to help determine the legitimacy of manufacturing activities.

For high-risk countries such as Vietnam, Malaysia, Thailand, Indonesia, and Mexico, the US will implement stricter controls:

• Mandatory Inspection for Every Shipment: Each shipment from these countries will undergo detailed origin verification.
• 300% Penalty on Evaded Duties: Offenders will face fines amounting to three times the evaded tax.
• 10-Year Profit Recovery and Account Freezes: Violating companies may have to return profits earned over the past decade and could face account freezes.

Additionally, US Republican lawmakers are pushing a bill titled the “Protecting American Industries and Workers from International Trade Crimes Act”, which would introduce criminal liability and higher fines for companies found to be engaging in origin evasion practices.

Singapore’s Regulatory Stance: Zero Tolerance for Export Control Evasion

Singapore’s Customs and Ministry of Trade and Industry have jointly issued a statement stressing that some countries have recently implemented unilateral export controls on advanced semiconductors, semiconductor manufacturing equipment, and AI-related technologies. Singapore enforces its own export controls under the Strategic Goods (Control) Act and Import/Export Regulations.

Singapore’s government has made its position clear:

• No tolerance for attempts to use Singapore’s status to evade third-country export controls;
• Companies and individuals involved in such activities will face legal consequences and operational risks.

To strengthen internal compliance, Singapore Customs advises companies to:

1. Establish robust internal compliance programs, including KYC (Know Your Customer) and end-user screening procedures;
2. Develop order filtering mechanisms to flag suspicious shipping routes or customer behaviour;
3. Engage professional legal counsel when dealing with strategic or controlled technology transactions.

Southeast Asian Countries Step Up Simultaneously: Tighter Origin Verification in Full Swing

Thailand: 49 Export Categories Now Under Strict Monitoring

Thailand’s Director-General of the Department of Foreign Trade, Auramon Supthaweethum, stated that the US has imposed a 36% retaliatory tariff on Thai exports. In response, Thailand has taken the following measures:

• Designated 49 export categories to the US as priority items for strict monitoring, including solar panels, steel wheels, artificial stone slabs, and steel pipes;
• Required all exporters of these products to undergo origin verification before applying for a certificate of origin;
• Plans to expand the list of monitored items and track high-risk trade data;
• Deepened cooperation with US authorities to prevent foreign goods from being falsely labeled as Thai-made.

Vietnam: Developing a Transshipment Monitoring System to Prevent False Vietnamese Origin Claims

On April 10, 2025, Vietnam’s National Steering Committee 389 issued a directive to step up enforcement against origin fraud via land ports, seaports, and airports.

Key initiatives include:

• Prime Minister Pham Minh Chinh has proposed several compliance enhancement measures;
• A “China Goods Transshipment Monitoring System” is scheduled to launch in Q3 2025 to stop Chinese goods from falsely entering global markets via Vietnam;
• A ministerial-level task force has been formed to finalize the first round of tariff reform legislation and introduce a “Supply Chain Traceability System” by April 30, 2025.

South Korea: Dedicated Task Force Formed to Combat Origin Fraud

South Korea’s Customs Service has identified a growing trend of non-Korean products—primarily from China—being mislabeled as “Made in Korea” to evade US tariffs. In Q1 2025 alone, fraudulent goods worth KRW 29.5 billion (~USD 20.7 million) were detected, with 97% destined for the US.

A special enforcement task force has been launched to develop stricter regulations and penalties aimed at protecting domestic industries and maintaining international credibility.

Cambodia: Tightening Import Controls to Block Transshipment-Based Origin Fraud

Facing US retaliation tariffs as high as 49% on Cambodian exports, the government has accelerated trade reform efforts:

• Initiated trade talks with the US, led by Deputy Prime Minister Sun Chanthol;
• Established new procedures to strengthen import monitoring and prevent misuse of Cambodia as a transshipment hub;
• Proposed lowering tariffs on 19 key US export categories to 5%, including whiskey, meat, corn, and automobiles, as a gesture of goodwill to restore trade relations.

Business Action Plan: Three Strategic Responses to Minimize Risk

In light of this increasingly stringent global regulatory environment, companies should take the following immediate steps to mitigate compliance risks:

1. Suspend transshipment-based exports to the US, and conduct urgent legal reviews to ensure compliance with applicable laws;
2. Thoroughly audit supply chain documentation, ensuring all data is complete, authentic, and traceable to withstand external audits;
3. Reassess logistics and trade routes, optimizing transportation plans to reduce transshipment exposure and compliance risk.

Conclusion: Compliance Transformation is Urgent – Origin Control Must Be a Strategic Priority

With global trade compliance tightening, origin control is no longer just a logistics or documentation issue—it must be addressed as a core strategic concern. Companies that proactively build comprehensive compliance frameworks and enhance supply chain transparency will be best positioned to navigate this new era of trade regulation with resilience and agility.

If you need support with origin audits, supply chain risk assessments, or trade compliance strategies, feel free to contact us. Our team of professionals are here to provide tailored solutions that align with your business goals.