Transshipment has been a sticking point in the ongoing talks on reciprocal trade between Vietnam and the United States. Transshipment involves routing goods through a third country, often with minimal processing, to disguise where they were made. This has become especially sensitive as companies move production out of China to avoid U.S. tariffs. For those companies the challenge is no longer just finding new suppliers, but proving their products’ origin.  

Apple is moving almost all final assembly of U.S.-bound iPads, Macs, Apple Watches, and AirPods to Vietnam. Other examples of multinationals that have expanded their production in Vietnam include Samsung and Nike. Chinese firms themselves are also heavily investing in Vietnam, particularly in electronics and auto manufacturing. This is part of a broader shift. In a survey of more than 1,000 businesses, 43 percent had shifted outsourcing locations in 2025. These moves are driven by tariffs, as well as labor costs and supply chain diversification.

As a result of these changes, U.S. imports from Vietnam soared from about $38 billion in 2015 to nearly $194 billion in 2025. Local suppliers have multiplied throughout Vietnam, though the country still depends heavily on imported inputs. 

Washington, however, suspects that some goods sold as “Made in Vietnam” are Chinese products that have been relabeled. In August, a White House report named more than 40 countries as presenting elevated risks for illegal transshipment. Vietnam was listed in “Tier 2,” which the report defined as countries that “combine significant illegal transshipment volumes with deeper integration into China-linked supply chains, input sourcing, manufacturing platforms, logistics systems, or regional rerouting channels.” 

Companies are under increasing pressure to show that goods produced in their new locations are genuinely made there. Country-of-origin rules vary by product and trade regime, often depending on the origin of key inputs and whether local processing meets the applicable requirements. Obtaining this information often depends on relationships with local sub-suppliers. Unfortunately, visibility beyond first-tier suppliers is often limited.

Technology can play an important role in improving product traceability. DNA barcoding, isotope testing, and blockchain records are examples of technology that can be used to verify a product’s origin. DNA or isotope testing, for example, can provide evidence about a raw material’s physical origins, while blockchain can preserve records of transactions and custody. Effectively using those technologies, however, depends on relationships. Suppliers may need to agree to utilize the technologies, share records, provide samples, and identify their own sub-suppliers.

Even in established supply chains, these relationships can be weak. McKinsey’s 2025 supply chain risk survey found that 95 percent of the surveyed companies had visibility into their first-tier supplier risks, but only 42 percent had visibility that extended deeper into the chain. Regular contact with second-tier suppliers was relatively limited, in part because direct suppliers were reluctant to facilitate those connections. Relocation can further obscure supply chain visibility. Relationships with local sub-suppliers will need to be developed, and this will take time. 

With the increased focus on transshipment, buyers should treat traceability as a part of the decision to relocate. Complex products can make this challenging; a laptop, for example, can contain hundreds of components sourced from around the world. Buyers should prioritize the components that are the most consequential in determining origin, and build relationships that encourage suppliers to be open about their own suppliers. In turn, suppliers that can document where their components originate will be better placed to attract orders and investment.

Governments have a larger role to play. Vietnam is already tightening checks on origin fraud, but more is needed. Programs linking foreign manufacturers with local component providers would deepen the domestic supply base and help build the local relationships that traceability depends on. The Vietnamese government could also incentivize the creation of shared reference databases that help firms verify component origins. In addition to strengthening Hanoi’s position in talks with Washington, this could reassure investors that Vietnam’s origin claims will withstand scrutiny.

Washington must uphold a clear definition of illegal transshipment and its expectations on local content. Blunt or uneven enforcement risks penalizing genuine Vietnamese production. This could push investment to countries that face less attention and, in doing so, undercut the United States’ supply chain diversification strategy.

Transshipment concerns are turning product traceability into an economic and geopolitical imperative. This will have implications for market access, tariff exposure, and broader relations between Hanoi and Washington. Yet tariffs can also push production to new locales where companies have thin relationships. Just as governments are demanding more visibility, companies may lack the supplier relationships to provide proof of origin.

Shipping a product through Vietnam does not, by itself, make it Vietnamese in origin. A “Made in Vietnam” label will mean little if the firm behind it cannot convincingly identify the inputs to its product. Technology can be used to help produce that evidence, but investments in supplier relationships are what will make it work.