Vietnam cracks down on trade fraud to comply with US tariff deal

Vietnam is set to introduce stricter penalties aimed at combating trade fraud and the illegal transshipment of goods, particularly focusing on Chinese imports, as part of efforts to meet commitments made under a recent trade deal with the United States. According to a report by Reuters, the country is intensifying inspections and enforcement measures on goods that are suspected of being transshipped through Vietnam to circumvent US tariffs.

In a preliminary agreement reached last week with US President Donald Trump's administration, Vietnam secured a reduction in the US tariff rate on its imports to 20 per cent, down from the 46 per cent initially threatened in April. However, goods that are found to be illegally transshipped via Vietnam could face a heavy 40 per cent tariff, further pressuring the country to ensure that its exports to the US comply with trade regulations.

The US has long accused Vietnam of being used as a transit point for Chinese goods, which are labelled as “Made in Vietnam” after receiving little or no additional value. This practice allows Chinese exporters to bypass US duties on Chinese goods by using Vietnam’s lower tariff rates. The new measures are seen as critical for Vietnam to maintain its favourable standing with the US and avoid additional trade penalties.

Stricter inspections and sanctions

In response to mounting international pressure, Vietnam’s government is preparing to issue a decree that will enforce stricter regulations on trade fraud, with a particular focus on fraudulent certifications of origin and the import of counterfeit goods. The decree will also tighten the procedures for companies self-certifying the origin of their products and enhance the scrutiny of traded goods.

A document from Vietnam’s trade ministry, dated July 3, indicates that the focus of inspections will include products at risk of trade fraud, such as wooden furniture, bicycles, steel machine parts, and electronic products like wireless headphones and batteries. The ministry also outlined instances of fraudulent practices, such as the use of fake origin certificates and forged export documentation.

While the new decree does not yet specify penalties, sources suggest these will be introduced in subsequent revisions or separate legal texts. Vietnam’s ongoing efforts to regulate its trade activities come as the country experiences a surge in exports to the US, which have nearly tripled since the start of the US-China trade war in 2018. However, this growth has been accompanied by a parallel increase in imports from China, raising concerns about the legitimacy of some of the goods being shipped to the US.