Jakarta. The US is accusing Jakarta of helping China evade its high tariffs by disguising the origin of its products when entering the American market.

The White House recently released a report titled “The Great Transshipment Scam”. It alleged that China has been systematically rerouting its goods via lower-tariff countries such as Indonesia, including via relabeling while leaving the Chinese content intact.

The report even claimed that the products made largely in China were only “lightly touched abroad” before being exported to the US “under new identities”. Washington even called this scheme “China’s Shadow Transhipment Network”.

US President Donald Trump has been trying to exert pressure on trading partners via tariffs since his return to power in 2025. The 24-page report sees the US putting Indonesia, as well as Malaysia and Vietnam, on the “Tier 2” for the violation. This category groups countries that Washington finds to have “significant illegal transshipment volumes with deeper integration into China-linked supply chains and input sourcing”.

“Given their proximity to China, it is hardly surprising that many Southeast Asian countries play an important role in the network, from Cambodia, Indonesia, and Malaysia to Thailand and Vietnam,” the report wrote.

Washington also pointed fingers at the Batam-Bekasi corridor, even calling it one of the “ugly sisters of modern zero-sum global trade”. The rising handling of China-linked goods — particularly on plastic boxes and crates — has put packaging suppliers in Houston, Lake Charles, Beaumont, and Tulsa under pressure, the document claimed.

The US complained of having lost tens of billions of dollars each year from this practice. It is also betting on the reciprocal trade deals to fix the problem. 

In February, Jakarta and Washington shook hands on a trade agreement meant to ease Trump’s tariff wrath.

One of the terms that Jakarta had signed up for was on “establishing rules of origin necessary” to prevent third countries from benefiting from the tariff cuts. For context, rules of origin determine where the goods have been produced, not where they have been shipped from.

Jakarta has not released a statement on the recent transshipment scam accusations.

China has been largely driving Indonesia’s trade and investment inflows. China-Hong Kong’s combined investment totaled around $11.5 billion in the first half of 2026. Imports from mainland China neared $49 billion over the same period. Hong Kong imports totaled around $1.2 billion.

Indonesia’s US-bound goods are currently facing a 10% tariff following a probe that accused Jakarta of failing to stop imports of goods associated with forced labor. 

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