USMCA review targets transshipment risks and supply chain visibility

As U.S. tariffs continue to impact goods imported from China, businesses are increasingly exploring 'China+1' manufacturing strategies to mitigate exposure. This involves moving parts of the production process to countries such as Vietnam, Cambodia, or Malaysia. However, experts warn that simply rerouting, repackaging, or relabeling goods in a third country does not necessarily change the legal country of origin, creating significant regulatory and legal risks for importers.

A recent analysis by the Center for Strategic and International Studies (CSIS) highlights a growing visibility gap in North American trade. The report suggests that the upcoming review of the United States-Mexico-Canada Agreement (USMCA) provides an opportunity to address Chinese transshipment and industrial overcapacity. To combat the obscuring of component paths, the CSIS proposes implementing more sophisticated tracing systems using artificial intelligence, large-scale data analytics, trusted-trader programs, and digital product passports. Such measures would allow for more accurate determination of product content and origin, which is increasingly critical as tariffs are tied to specific component inputs rather than just final assembly locations.