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Executive capture

Tariffs as a Tool of Deliberate Chaos: Transshipment

Active disruption
Case Dossier FED-TRD-002
STATUS
Active disruption
SEVERITY
High
DATE
2025-08-01
DOMAIN
Executive Capture
SUBDOMAIN
Trade Weaponization
CAPTURE VECTOR
Governance by chaos
TAGS
trade tariffs china supply-chain executive-order uncertainty transshipment
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President Trump issues an executive order imposing a 40% tariff on 'transshipped' goods, creating immense uncertainty for global supply chains. The order's vague 'rules of origin' and the administration's oscillating stance on China maximize executive leverage over multinational corporations.

Summary

On August 1, 2025, President Trump signed an executive order imposing a sweeping 40% tariff on goods “transshipped” through third countries, aimed primarily at Chinese products routed through Southeast Asia and Mexico. The order creates a new category of imports subject to punitive taxes if they do not undergo “substantial transformation” in the intermediary country. However, the administration left the critical “rules of origin” undefined for weeks, creating immediate panic across global supply chains.

Capture Mechanism: Concentration via Chaos

This policy weaponizes ambiguity.

  • The Stick: A massive 40% penalty on top of existing tariffs.
  • The Fog: By delaying the technical definitions (“rules of origin”), the administration forces every multinational corporation to lobby the White House directly for clarity or exemptions.
  • The Flip-Flop: The administration’s stance on China oscillates wildly—imposing these tariffs one week, then reversing bans on AI chip exports the next. This unpredictability prevents businesses from adapting to a stable rule of law, making them dependent on executive favor.

Analysis

The transshipment order is less about economic efficiency than political control. As noted by trade experts, enforcement is “likely to be challenging” for Customs and Border Protection. The real utility lies in the uncertainty. It transforms trade policy from a system of rules into a system of discretionary leverage, where the Executive Branch can selectively punish or reward companies based on their political alignment and lobbying efficacy.