Trump Slaps 40% Tariff on Goods Rerouted Through Third Countries—Trade Wars Escalate

Trade tensions reach boiling point as the Trump administration targets supply-chain loopholes with a sweeping 40% penalty.

The Tariff Hammer Drops

No more sneaky detours—Washington’s new policy cracks down on goods bypassing direct trade routes. Analysts warn of inflationary ripple effects, while logistics firms scramble to reroute (again).

Who Gets Hit?

Export hubs like Vietnam and Mexico brace for impact as the U.S. clamps down on transshipment. ‘Creative accounting’ won’t save you now—just ask the CFOs sweating over their Q3 projections.

The Cynical Take

Wall Street shrugs: ‘Another day, another arbitrary tax to pass along to consumers.’ Meanwhile, crypto traders stack stablecoins—because even a 40% tariff can’t stop a decentralized ledger.

Southeast Asian countries stuck waiting for clarity

This gap in clarity has left many Southeast Asian countries in a holding pattern. Places like Vietnam, Thailand, Cambodia, Indonesia, and Malaysia have become key exporters to the U.S. since Trump’s earlier trade war pushed firms to shift operations out of China. But most of those companies still rely on Chinese parts, raising questions about whether their exports will now be hit with the 40% penalty.

Chantawit Tantasith, Thailand’s Deputy Minister of Commerce, said Friday that Thailand’s 19% tariff keeps the country competitive with others in the region, but added that the U.S. still hasn’t clarified what it will count as a local product.

“We must await further clarification from the US regarding the negotiation process and rules of origin,” Chantawit said in a statement. Thailand’s Finance Minister Pichai Chunhavajira said separately that products made in Thailand need to include more than 40% local content to qualify as Thai-made, but confirmed that no agreement had yet been reached with Washington.

The unspoken focus of this policy is China, even though the country wasn’t named directly in the statement. TRUMP has repeatedly blamed Chinese imports for hollowing out U.S. manufacturing and said transshipment is just another way for China to bypass tariffs. With the current tariff truce between the U.S. and China set to expire in two weeks, this new policy adds another obstacle to any ongoing talks.

Trump holds firm as confusion grows

Trump made his position clear on Wednesday, posting, “THE AUGUST FIRST DEADLINE IS THE AUGUST FIRST DEADLINE — IT STANDS STRONG, AND WILL NOT BE EXTENDED. A BIG DAY FOR AMERICA!!!” But despite that hard line, a White House official told CNBC-TV18 on Friday that the so-called ‘reciprocal’ tariffs would not kick in until August 7.

In the updated directive, the U.S. also said that any country not listed in the latest tariff schedule would face a 10% additional duty. These changes modify the earlier executive order from April, which set up the structure for the new tariff strategy. Thursday’s update added the specific 40% rate for rerouted goods.

Some trade experts are already warning this will have little effect unless enforcement is airtight. Leah Fahy, chief economist at Capital Economics, said in a note Friday, “It is still not clear how this will be implemented in practice.”

She added that even if direct rerouting drops, trade diversion, the practice of sending products through friendly countries, will likely continue. “Even if outright rerouting is reduced, trade diversion will continue to dampen the impact of US tariffs on China’s aggregate export performance,” Leah wrote.

Stephen Olson, a former U.S. trade negotiator now working at the ISEAS-Yusof Ishak Institute in Singapore, said the MOVE is likely to make negotiations with China worse. “China will correctly perceive the transshipment provisions as directed against its interests,” Stephen said. “And it will inevitably spill over into its ongoing trade negotiations with the US.”

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