On 2 April 2025, with the stated aim of addressing trade imbalances, US President Donald Trump signed an Executive Order on Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits, imposing “country-specific reciprocal tariffs” with a baseline duty of 10%. China was the most affected, facing tariffs as high as an additional 145% across most goods, until agreement was reached on 11 May 2025 on a temporary rollback. Given the high tariffs, some exporters were, reportedly, already attempting to evade these high tariffs through ‘origin washing’, a practice referring to the misrepresentation of a product’s origin. In response to such fraudulent practices, certain Member States of the Association of Southeast Asian Nations (hereinafter, ASEAN), notably Malaysia and Viet Nam, tightened their controls over the issuance of certificates of origin. This article examines the implications of ‘origin washing’ amid the current trade tensions, the regulatory responses by affected countries, and the commercial implications for exporters.
Determining the origin of goods and the practice of ‘origin washing’
Rules of origin refer to the legal framework used by countries to determine the economic nationality of goods for the application of Customs tariffs and related measures, or other trade policy measures. A good is typically considered ‘originating’ if it is entirely produced or obtained in a specific country, or if it has undergone substantial transformation, in terms of form, use, or value, in that country. To attest that a good originates from a particular country, a proof of origin is required, which may take the form of a certificate of origin issued by the Customs administration of the exporting country or may be issued by the exporters themselves in contexts of self-certification.
Circumvention of the applicable rules of origin occurs when exporters attempt to evade tariffs or other trade policy measures by misrepresenting the origin of goods. A form of such misrepresentation, often referred to as ‘origin washing’, involves the rerouting or relabelling of goods to conceal their actual origin and, thereby, unlawfully benefitting from certain preferential treatment, such as lower or no tariffs.
The US-China tariff war and the rise of ‘origin washing’
The US’ concerns over China’s growing industrial dominance and perceived national security threats have persisted across successive administrations, culminating in President Trump’s second term with the adoption of ‘reciprocal’ tariffs. On 2 April 2025, the US Administration announced that China would be subject to an additional ‘reciprocal’ tariff of 34% imposed on all goods. China countered by imposing a tariff of 34% on all imports from the US. In response to China’s countermeasure, the US increased its tariff on Chinese imports to 84%, prompting China to implement a corresponding increase. On 9 April 2025, the US Administration paused the country-specific ‘reciprocal’ tariffs for 90-days for all trading partners, except for China. Due to China’s retaliatory tariffs, the US further increased the tariff on imports from China to 125%, which was again mirrored by China.
On 11 May 2025, the US and China reached a temporary agreement for the US to reduce its ‘reciprocal’ tariff from 34% to the baseline 10% and to revoke the additional retaliatory tariffs imposed earlier this year. Imports from China remain subject to the 20% tariff linked by the US Administration to the “national fentanyl emergency”, referring to the flow of illicit drugs into the US, and certain products remain subject to product-specific tariffs, namely a 25% tariff on steel, aluminium, automobiles, and automobile parts. As part of the Agreement, China lowered its retaliatory tariffs from 125% to 10%. These concessions apply for 90 days from 14 May 2025.
The prohibitively high tariffs for imports into the US from China had reportedly caused some exporters in China to already resort to ‘origin washing’ in order to bypass the US’ additional tariffs. Notably, goods are being transhipped through third countries, especially through Viet Nam or Malaysia, where only minimal processing or repackaging occurs, before the goods being falsely declared as originating in those countries. US online sellers have reported a surge in unsolicited offers to re-label Chinese goods with misleading “Made in Viet Nam” or “Made in Malaysia” labels. Advertisements on Chinese social media platforms also promoted services that facilitate the re-export of goods through third countries.
Therefore, ‘origin washing’ has become a critical issue for the US, with President Trump identifying “transhipping to evade tariffs” as one of the alleged forms of non-tariff trade fraud undermining the American economy. The US Senior Trade Advisor, Peter Navarro, specifically referred to Viet Nam, asserting that “China uses Viet Nam to trans-ship to evade the tariffs”, citing this practice as one of the main reason for imposing a 46% ‘reciprocal’ tariff on Viet Nam.
Curbing ‘origin washing’ and enforcing trade rules
The WTO Agreement on Rules of Origin requires WTO Members to ensure that their rules of origin are transparent; administered in a consistent, uniform, impartial and reasonable manner; and do not themselves create restrictive, distorting, or disruptive effects on international trade. A WTO Member could arguably be found in violation of its commitments under the Agreement on Rules of Origin if it were to permit systematic ‘origin washing’ by, inter alia, not properly administering the applicable rules of origin, not properly verifying claims, or failing to implement proper enforcement mechanisms.
Stricter oversight on certificates of origin for exports from ASEAN to the US
In response to the concerns relating to ‘origin washing’, on 15 April 2025, Viet Nam’s Ministry of Industry and Trade (hereinafter, MoIT) issued Directive 09/CT-BCT to prevent the illegal transhipments of goods. The Directive requires officials from the Ministry of Industry and Trade, the Customs Department, and other relevant units and agencies to implement stricter controls regarding the issuance and post-verification of certificates of origin, including through inspections of imported goods. The Directive further calls for stricter oversight of “Made in Viet Nam” labels to prevent origin misrepresentation of goods, both for export documentation and for consumer-facing labelling. Decision No. 103/QD-BCT, issued on 21 April 2025, permanently revoked the authorisation granted to the Viet Nam Chamber of Commerce and Industry (VCCI) to issue certificates of origin and certificates of non-manipulation, transferring these responsibilities directly to the MoIT.
Similarly, on 6 May 2025, Malaysia’s Ministry of Investment, Trade and Industry (hereinafter, MITI) announced that, effective immediately, the issuance of certificates of origin for exports to the US would be centralised under MITI, replacing the previous system, under which such certificates were issued by business councils, chambers, or associations appointed by MITI.
Centralising the issuance of certificates of origin under government control represents a concrete step by Viet Nam and Malaysia to address the increased scrutiny from the US and to reduce the risk of further trade tensions. This regulatory shift is intended to enhance the oversight regarding exports to the US, reducing the risk of or discrepancies and of ‘origin washing’.
Implications for exporters
The trade tensions between the US and China exposed certain regulatory shortcomings in the administration of rules of origin, evident from the widespread resort to ‘origin washing’ by Chinese exporters. The related concerns present an important opportunity for Viet Nam, Malaysia, and other ASEAN Member States, which are considered as key transshipment hubs, to intensify efforts to avoid further punitive measures from the US.
For compliant exporters, these regulatory responses are likely to enhance their credibility and trustworthiness in the eyes of their US counterparts. Yet, it may also result in longer processing times due to stricter verification processes, including audits and production site inspections. For instance, the President of the Malaysian International Chamber of Commerce & Industry, Christina Tee, expressed support for MITI’s move to centralise the issuance of certificates of origin for exports to the US within MITI, but also raised concerns on whether MITI’s system would be able to handle the increased workload. She warned of potential delays in the issuance of certificate for exports to other countries, which may affect shipment schedules and contract performance.
Exporters are advised to maintain detailed origin documentation and prepare for possible audits.
