In March, Lao Zhou, who makes stainless steel tableware in Ningbo, called me with a problem. His US customer had pushed prices below his cost line. The customer's exact words: "The tariff is at 145% now. If I keep ordering at the old price, I'm basically working for you." After twelve years in foreign trade, it was the first time Zhou seriously considered transshipment — ship the goods to Vietnam first, get a certificate of origin there, and only then send them on to the United States. He asked me: can this route actually work? I could not give him a guarantee, but I laid out the cases I have seen with my own eyes over the past two years — the ones that worked and the ones that blew up — and let him judge for himself. By the end of the call he was quiet for a long moment, which I took as progress.
Transshipment is nothing new, but the rules changed in 2026
The old transshipment playbook is simple: do not ship directly to the US. Send the goods to a third country first, swap the certificate of origin, relabel, and re-export. Plenty of people did exactly that during the trade wars of 2008 and 2018, and many of them made real money doing it. But 2026 is a different game. US Customs set up its anti-circumvention task force back in 2019, and it has been watching Vietnam, Mexico, and Malaysia closely ever since, building case files on exporters in each of them. In October 2025, the US Department of Commerce issued an anti-circumvention ruling on certain steel products from Vietnam, pushing tariffs to 456% — that number is not clickbait, and it is a preview of what happens to shortcuts. The bare-bones approach — "drop the goods in Vietnam, stamp a certificate, and leave" — is basically asking to be caught. The window for the old tricks closed quietly, and most exporters only found out when their containers started getting pulled.
Vietnam: lowest barrier to entry, hardest scrutiny
Vietnam's advantages are out in the open: manufacturing wages run about $300 to $400 a month, foreign factory setup is fast, a company registration plus a factory lease can be completed in four to six weeks, and the country's export volume to the US means supply chains are mature and suppliers are everywhere — in Ho Chi Minh City alone you can source almost any component within a day. The bad news is that US scrutiny of Vietnamese shipments is rising, and the checks get deeper every season. To route through Vietnam, you need at least three things: a factory with real investment behind it, not a rented warehouse with two old machines; a value-added ratio above 30%, which is a hard requirement in Vietnam's rules of origin; and the key production steps actually completed inside Vietnam — sewing on a label or sticking on a tag does not count. If you ship with just a swapped certificate, getting caught means fines, back taxes, and three years locked out of the US market.
A friend of mine in small appliances tested the waters in Vietnam in early 2025. His goods arrived at Ho Chi Minh City port, where customs demanded equipment lists, factory lease contracts, and worker social security records. It took three months to release the shipment, and storage plus agency fees came to nearly 40,000 yuan. He was not ignorant of the rules — he simply underestimated how fine-grained the checks have become, and how little patience the inspectors have for paperwork that does not line up.
Mexico: the USMCA dividend and its price
Mexico has a clear advantage: under the US-Mexico-Canada Agreement, compliant transshipment looks more respectable than the Vietnam route — for categories like autos and appliances, the regional value content requirements are spelled out precisely, usually 62.5% or higher. The price is just as clear. Manufacturing wages in Mexico run about $4 to $6 an hour, more than double Vietnam's. Capacity is already spoken for: in 2025, vacancy rates at industrial parks along the US-Mexico border were under 3%, and finding factory space means joining a waiting list and paying a premium on top. Chinese companies that set up in Mexico typically use a "front store, back factory" model — take orders in the US, produce in Mexico, and issue certificates of origin from Mexico. That model requires real, serious investment. Small orders can never spread the cost. Anyone who tells you Mexico is a cheap fix has not priced the labor, the leases, and the compliance work yet.
Last year I accompanied a client in auto parts on a trip to Monterrey. Local brokers quoted factory rents of $8 to $10 per square meter, with a six-month deposit up front. A colleague warned him that USMCA checks focus on "how much of the regional value content was actually created in Mexico" — if the books do not add up, the dividend turns into a trap. It is advice I would repeat to anyone heading south.
If you are serious about transshipment, get these five things done
First, register a legal entity in the target country and sign contracts under the local company's name — personal proxy arrangements get filtered out in the first round of scrutiny. Second, do real processing and calculate your value-added ratio in advance; keep machine purchase invoices, payroll records, and utility bills, because these are your defense when auditors come calling. Third, get certificates of origin through legitimate channels; do not buy the cheap ones for a few hundred yuan. Fourth, prepare your full set of documents in advance to answer US Customs inquiry letters, most commonly CBP Form 28 and Form 29. Fifth, run the total numbers: the extra freight, processing, and miscellaneous costs of the detour must save you more than 30% compared with paying the tariff directly — and even then, only if your product genuinely passes the processing test. Otherwise you are just working for the logistics companies. The whole point of the exercise is to keep more of the gross margin, and that only survives a customs audit if every link in the chain holds.
Do not leave your document package to the last minute. I have seen too many factories scrambling for invoices only after an inquiry letter arrives, then paying an agent to patch the paperwork — money spent, and credibility damaged along the way.
Which way did Lao Zhou go?
Zhou ran the numbers and, in the end, skipped Vietnam. His stainless steel tableware: one container, goods worth $60,000. Paying the 145% tariff directly would cost $87,000. The transshipment detour — freight, processing, and miscellaneous fees — would run about $12,000, which looks like a serious saving. But his US customer was only willing to pay 5% more for the transshipped goods, leaving the difference on Zhou's own books. Worse, his products were OEM goods: the key production steps happened in Dongguan, so the "substantial transformation" test failed, and a certificate of origin obtained by force would just be a time bomb waiting for the first audit. He ended up doing two things: cutting prices on part of his inventory to clear it, and starting serious research into a joint venture in Mexico. Transshipment is not impossible — you just have to get your own math straight first, and know where the line between legitimate processing and bare circumvention is drawn. The lesson is not that transshipment is dead; it is that the survivors treat it as a manufacturing decision, not a paperwork trick.
FAQ
Q1: What happens if my transshipment is caught by the US?
At the light end: cargo held, back taxes, and fines. At the heavy end: an anti-circumvention investigation, punitive tariffs, and lasting damage to your entire US export business — costs that dwarf the tariff itself.
Q2: Can I just get a Vietnamese certificate of origin (Form E) easily?
No. Form E requires genuine shipping documents and processing records, and Vietnamese authorities conduct random checks. Once backdating or falsification is verified, the certificate is void, taxes are recovered, and your freight forwarder and customs broker are dragged in too.
Q3: Is transshipment suitable for small orders?
No. Transshipment carries fixed costs — registration, labor, logistics. Below $50,000 in shipment value, the tariff savings rarely cover the detour.
Q4: Vietnam or Mexico — which one should I choose?
It depends on the product. Auto parts and appliances fit Mexico, where USMCA rules are clear; textiles, furniture, and hardware fit Vietnam, with lower costs and complete supply chains. Either way, real processing is non-negotiable.