Fake Routes, Real Damage”: U.S. Loses $600M in One Week to Southeast Asia Transshipment Fraud

Economic

Summary:

As Trump’s steep tariffs trigger a flood of illegal trade practices, Chinese exporters increasingly route goods through Southeast Asia to avoid duties...

Rising Tariffs, Rising Fraud

Since President Trump reinstated sweeping import tariffs—some as high as 145%—Chinese firms and American importers have turned to dubious schemes to evade taxes. Thousands of solicitations offering “legal” loopholes flood inboxes and social media platforms like TikTok. The most common offer? Shipping goods through third countries like Malaysia or Mexico, disguising their Chinese origin.This deceptive maneuver, called transshipment, allows firms to pay lower tariffs. A garment made in China might be relabeled as “Made in Cambodia” and shipped to the U.S. under a 10% tariff rather than 145%. While sellers claim legality, U.S. customs experts call it a clear violation.

Illegal Tactics Go Mainstream

Chinese logistics firms offer to falsify invoices, underreport declared values, or manipulate origin documents—services promoted via slick videos or WhatsApp messages. Some even promise “fixed 10% duty, zero risk,” and “paperwork guaranteed.”From April to May 2025, direct shipments from China to the U.S. dropped by 21%, while exports from China to Southeast Asian nations spiked. The numbers align almost perfectly—evidence that goods are merely rerouted, not locally manufactured. Analysts estimate over 3,000 firms in Mexico now rely on Chinese components for 75% of their supply chains, many of which are fronts for re-export into the U.S.

Impact on Honest U.S. Businesses

Firms like Charlotte Pipe and Foundry and Plews & Edelmann are fighting to stay competitive while playing by the rules. Leslie Jordan, a veteran apparel maker in Oregon, has faced repeated offers to manipulate customs filings—offers she refuses. Yet she pays tens of thousands in legitimate duties while fraudulent competitors slash costs and undercut her in the market.“This has become systemic,” said Jordan. “When good businesses are punished and cheats profit, trust in the system collapses.”

Government Response: Whac-a-Mole Enforcement

The Trump administration has declared trade fraud a top DOJ priority, and U.S. Customs and Border Protection (CBP) collected over $630 million from 2,000 flagged shipments in just one week in May. However, staffing shortages and shifting political priorities have undermined enforcement. Many trade officers were reassigned to immigration tasks, and fraudulent shippers quickly rebrand as new shell companies when caught.As one executive put it, “It’s like Whac-a-Mole. You shut one down, and another pops up across the street.”

To shield U.S. firms from liability, Chinese suppliers now offer Delivered Duty Paid (DDP) terms, where the foreign seller retains ownership through customs, pays the duties, and transfers the goods only upon U.S. delivery. This makes tracing and prosecuting fraud nearly impossible, as the responsible party is often a phantom entity abroad.Trade attorney John Foote warns, “Even with DDP, if the deal only works because of customs fraud, you’re still liable.”

Congress Urged to Step In

While Trump’s trade strategy aims to punish unfair foreign practices, industry leaders say tariffs without structural reform only breed fraud. Executives are calling for systemic legislative solutions, including: Greater CBP funding, Real-time trade data sharing, Stiffer criminal penalties for fraud, Revised customs laws for third-country transshipment.

Brad Muller of Charlotte Pipe supports tariffs but urges Congress to replace “shoot-first” policies with long-term strategic reforms. “Both parties have ignored this problem for too long,” he said. “We need coordinated enforcement, not reactionary chaos.

As trade fraud surges under the pressure of triple-digit tariffs, the U.S. is hemorrhaging revenue and sacrificing fair competition. Southeast Asia has become the preferred detour, and Washington’s enforcement tools are lagging behind. Without comprehensive reform, the price of evasion will only rise—not just in lost taxes, but in weakened industry and trust in the rule of law.

Source: The New York Times

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Glendon

Economic

Forex

Bitcoin could be on the verge of a massive breakout, according to popular crypto analyst Doctor Profit, who predicts a potential price surge of up to 170% in the coming months. With a Golden Cross formation, key support near $100K, and a pivotal CPI inflation report just days away, the market may be heading for explosive gains.

Bitcoin Eyes Breakout as Key Resistance Is Tested

At the start of June, Bitcoin was trading at $104,588.85, but briefly dipped 4.10% between June 3–5. However, it bounced back sharply from $100,400 on June 6, rising 2.74% in a single day. Since then, BTC has gained another 5.07%, currently sitting around $106,663.68.

Doctor Profit shared on X (formerly Twitter) that Bitcoin is attempting to break a diagonal resistance line—a move he believes could launch BTC into a new all-time high soon.

“A confirmed Golden Cross and strong $100K support signal a bullish breakout. BTC could rise 70–170% if macro factors align,” he wrote.

Why CPI Inflation Data Could Make or Break BTC Rally

All eyes are on the U.S. Consumer Price Index (CPI) data release scheduled for June 11, 2025. In April, CPI rose from 319.799 to 320.795 points. This month, it's projected to reach 321.9, according to TEForecast.

More importantly, the U.S. inflation rate, which dropped to 2.3% in April, is expected by Wall Street to rise slightly to 2.5%. However, Doctor Profit believes the number could surprise to the downside—possibly between 2.1% and 2.3%. A lower-than-expected CPI could spark optimism, increasing chances of a Fed rate cut—a bullish catalyst for Bitcoin.

Next Bitcoin Price Target: $108K–$110K?

Doctor Profit also notes a liquidity cluster between $108K and $110K, which may be BTC's next short-term target before a bigger breakout. If Bitcoin pushes through that zone, it could open the path for a sustained rally.

Source: CryptoSlate

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Michelle

Economic

Forex

The European Central Bank is likely to continue cutting interest rates in the second half of 2025, according to analysts at Barclays.

Despite President Christine Lagarde’s signal that the current monetary easing cycle may be nearing its end, Barclays expects two additional 25-basis-point reductions at the ECB’s September and December meetings. This would bring the deposit facility rate down to 1.5% by year-end.

At its June meeting, the ECB lowered policy rates by 25 basis points, citing lower inflation projections.

However, Lagarde struck a more hawkish tone than expected, stating, “We are getting to the end of the monetary policy cycle,” and dismissed inflation undershoots in 2026 as largely driven by energy prices and currency effects.

Barclays analysts believe that, despite the rhetoric, a majority on the Governing Council will support further easing based on current economic and inflation data.

Headline inflation dropped to 1.9% year-on-year in May, below the ECB’s 2% medium-term target. Core inflation also eased, falling to 2.3% from 2.7% the previous month.

Services inflation saw a notable decline, partly reversing holiday-related price spikes. Barclays’ inflation tracker projects headline inflation will stay below target through 2026, bottoming at 1.4% in early 2026 and settling at 1.7% later that year. This path is broadly consistent with updated ECB staff forecasts.

On the growth front, euro area GDP expanded 0.6% quarter-on-quarter in the first quarter, but this figure was inflated by a 9.7% surge in Irish GDP, which reflects multinational activity rather than domestic demand.

Excluding Ireland, the euro area grew 0.3%. Barclays noted that the boost from U.S. firms’ front-loading purchases ahead of tariffs, which temporarily lifted exports, is already fading.

Recent data suggest a slowdown in activity. April industrial production declined across Germany, France and Spain, while factory orders in Germany rose only on the back of strength in two volatile sectors.

Services and retail data were more stable, and the unemployment rate fell slightly in April. Still, Barclays sees overall momentum as weak.

Barclays also questioned the ECB’s baseline growth assumptions, which remain unchanged for 2025 at 0.9% and were revised only slightly downward for 2026.

Analysts said these appear optimistic in light of persistent economic headwinds and delays in fiscal stimulus, especially in Germany, where tax reforms and infrastructure spending are expected to have more impact after 2027.

While the ECB maintains a meeting-by-meeting approach, Barclays sees sufficient evidence for continued policy easing.

Analysts argue that the projected inflation undershoot, combined with fragile growth, supports further rate cuts even if the central bank refrains from signaling them in advance.

Source: Investing

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Gerik

Economic

China–U.S. Trade War

Strategic Urgency: Why the U.S. is Betting Big on Domestic Shipbuilding

President Trump and a bipartisan group in Congress are pushing for a full-scale revival of the U.S. shipbuilding industry, aiming to counter China's overwhelming dominance in global ship production. China has delivered nearly half of all commercial ships over the past decade, while the U.S. has built only 37.

Reviving this sector will require more than policy—it demands a long-term commitment to investment. A key testing ground is the Hanwha Philly Shipyard in Philadelphia, recently acquired by South Korean industrial giant Hanwha. CEO David Kim insists the facility is ready to scale up, but only if it gets consistent orders and government support.

Policy Moves: Heavy Subsidies, Penalties for Foreign Ships, U.S.-First Mandates

Trump recently signed an executive order aimed at restoring American shipbuilding, pledging massive spending. The U.S. Trade Representative's office followed up with rules penalizing Chinese-built vessels and requiring certain commercial ships to be built domestically.

Congress is drafting a major bill to subsidize a 250-vessel “Strategic Commercial Fleet,” built in the U.S. and crewed by Americans, which could be deployed for national defense logistics. The bill also offers financial incentives to offset the high cost of U.S. labor and production, aiming to both stabilize orders and encourage industrial growth.

David vs. Goliath: America's Late Start Against China's Shipyard Juggernaut

In sheer numbers, the U.S. is trailing badly. Chinese shipyards delivered 6,765 commercial vessels over the past decade, while the U.S. managed fewer than 40. Even Japan and South Korea remain far ahead. Hanwha’s shipyard in Philadelphia, for example, produces just 1.5 ships a year, while its South Korean facilities build one per week.

Cost disparities are staggering. A Jones Act-compliant container ship built in the U.S. costs roughly $330 million, versus $70 million in Asia. The Jones Act requires vessels transporting goods between U.S. ports to be American-built, but critics argue this inflates costs without creating competitive scale.

Revival Dreams Meet Labor Reality

Even if Hanwha can transfer advanced technology to its U.S. shipyard, finding skilled labor is a major bottleneck. The company hopes to double its workforce from 1,500 in less than 10 years, and increase apprentices to 240 next year. But worker retention remains a serious issue—many leave within their first year.

Union leaders and defense officials support training programs to build a long-term maritime workforce. Maritime officers on U.S. international routes can earn over $200,000 per year and retire after two decades, making it a potentially lucrative career. Still, attracting and retaining workers in this demanding industry is a hurdle.

Not Just Business—A National Strategy

Supporters argue this is more than an economic initiative—it’s a national security imperative. With China subsidizing its shipbuilding at scale, U.S. policymakers see domestic shipyards as critical infrastructure. New Trump-era rules will require an increasing share of LNG carriers to be U.S.-built in the coming years, adding urgency.

While critics suggest outsourcing to allies like Japan or South Korea would be more cost-effective, Hanwha’s Kim contends that outsourcing has weakened American industry. “This is about more than business,” he said. “It’s about national priorities, labor, and strategic choices.”

America’s attempt to rebuild its shipbuilding capability from near collapse is a massive undertaking—financially, industrially, and politically. With China advancing at high speed, the U.S. is betting on protectionism, patriotism, and persistence. Whether this strategy pays off remains uncertain, but Washington has made it clear: losing the seas is not an option.

Source: The New York Times

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Gerik

Economic

China–U.S. Trade War

Industry Panic Echoes Pandemic-Era Disruptions

Global automakers are facing their third major supply chain crisis in five years. After the COVID-19 pandemic and the semiconductor shortage, China’s tightening of rare-earth exports has now sparked what executives describe as full-blown panic. Car factories across Europe are already pausing production due to a shortage of rare-earth magnets—essential components used in electric motors and a wide range of vehicle systems.

Frank Eckard, CEO of German magnet supplier Magnosphere, reported desperate calls from automakers seeking alternative magnet sources, some warning of factory shutdowns as early as July. With Beijing holding a near-monopoly over global rare-earth refining and magnet production, many fear the industry is once again at the mercy of geopolitics.

China's Grip on Rare Earths Paralyzes Global Production

Rare-earth elements like neodymium, praseodymium, and dysprosium are critical for producing permanent magnets, used in everything from EV motors to braking sensors and speakers. China controls about 70% of global mining, 85% of refining, and 90% of magnet production, according to AlixPartners. This dominance leaves the automotive sector extremely exposed.

Although President Trump claimed a recent agreement with President Xi would allow rare-earth shipments to the U.S. to resume, the global situation remains tense. Hundreds of export permit applications are under review in China, and with limited transparency, many auto suppliers are in the dark about when or whether critical shipments will resume.

Auto Supply Chains Remain Vulnerable Despite Past Lessons

Despite lessons from the COVID-19 and chip crises, the sector has not made meaningful structural changes. Just-in-time inventory strategies—while cost-efficient—have left automakers with little buffer. Frank Eckard criticized the industry for its lack of preparedness: “Nobody has learned from the past.”

The European Association of Automotive Suppliers (CLEPA) confirmed that multiple plants have already been forced offline. CLEPA’s Secretary-General warned that the impact will “confront everyone” as magnet shortages ripple through the broader industry.

Race for Rare-Earth Alternatives Gains Momentum

Some manufacturers have accelerated R&D efforts to create rare-earth-free motors and magnets. BMW, GM, ZF, and BorgWarner are developing alternatives, but most are still years away from large-scale, cost-effective production. U.S.-based Niron Magnetics, which raised $250 million from Stellantis, Magna, and GM, plans to launch a rare-earth-free magnet factory in 2029. Warwick Acoustics is introducing rare-earth-free speakers in luxury cars later this year.

However, these developments won’t solve the immediate crisis. European magnet recycling efforts remain underutilized—Heraeus’ facility is running at just 1% capacity and faces closure next year due to low sales and competition from cheaper Chinese products.

Short-Term Solutions: Hoarding and Partial Production

With viable near-term alternatives lacking, automakers are reverting to crisis playbooks developed during the chip shortage. Some companies are considering producing vehicles without certain components and stockpiling them until parts arrive. Mercedes-Benz, among others, is negotiating with suppliers to build magnet stockpiles.

The European Union’s Critical Raw Materials Act aims to reduce dependency on China, but experts like Noah Barkin of Rhodium Group say efforts have been too slow to respond to current bottlenecks.

Geopolitical Risk Spills into Broader Raw Materials

Rare earths are only part of the broader strategic materials problem. The European Commission warns that China controls over 50% of global supply for 19 critical raw materials, including graphite, aluminum, and manganese. Andy Leyland of SC Insights sees China’s actions as a “warning shot” that any of these resources could be used for future leverage.

The rare-earths crisis exposes the fragile foundation of today’s global auto supply chains. Despite efforts to regionalize or diversify sourcing after the pandemic and chip disruptions, the reliance on Chinese production for key inputs remains alarmingly high. Without accelerated investment in alternative magnet technologies and localized supply chains, the industry risks deeper disruptions in the face of future geopolitical tensions.

The scramble for rare earths is not just a supply hiccup—it’s a strategic reckoning.

Source: Reuters

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Blue River

Forex

Technical Analysis

GBP/USD is attempting a fresh increase above the 1.3500 resistance. EUR/GBP declined steadily below the 0.8440 and 0.8430 support levels.

Important Takeaways for GBP/USD and EUR/GBP Analysis Today

● The British Pound is attempting a fresh increase above 1.3515.

● There was a break above a key bearish trend line with resistance at 1.3535 on the hourly chart of GBP/USD.

● EUR/GBP is trading in a bearish zone below the 0.8450 pivot level.

● There is a connecting bullish trend line forming with support at 0.8415 on the hourly chart.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD, the pair declined after it failed to clear the 1.3615 resistance. The British Pound even traded below the 1.3575 support against the US Dollar.

Finally, the pair tested the 1.3500 zone and is currently attempting a fresh increase. The bulls were able to push the pair above the 50-hour simple moving average and 1.3540. There was a break above a key bearish trend line with resistance at 1.3535.

The pair tested the 50% Fib retracement level of the downward move from the 1.3616 swing high to the 1.3507 low. It is now showing positive signs above 1.3540.

On the upside, the GBP/USD chart indicates that the pair is facing resistance near 1.3575 and the 61.8% Fib retracement level of the downward move from the 1.3616 swing high to the 1.3507 low.

The next major resistance is near 1.3590. A close above the 1.3590 resistance zone could open the doors for a move toward 1.3615. Any more gains might send GBP/USD toward 1.3650.

On the downside, immediate support is near the 1.3515. If there is a downside break below 1.3515, the pair could accelerate lower. The first major support is near the 1.3500 level. The next key support is seen near 1.3450, below which the pair could test 1.3420. Any more losses could lead the pair toward the 1.3350 support.

EUR/GBP Technical Analysis

On the hourly chart of EUR/GBP, the pair started a fresh decline from well above 0.8460. The Euro traded below the 0.8440 and 0.8430 support levels against the British Pound.

The EUR/GBP chart suggests that the pair even declined below the 0.8420 level and tested 0.8415. It is now consolidating losses and trading below the 50-hour simple moving average. However, there is a connecting bullish trend line forming with support at 0.8415.

The pair is now facing resistance near the 50% Fib retracement level of the downward move from the 0.8442 swing high to the 0.8416 low at 0.8430.

The next major resistance could be 0.8440. The main resistance is near the 0.8450 zone. It coincides with the 1.236 Fib extension level of the downward move from the 0.8442 swing high to the 0.8416 low.

A close above the 0.8450 level might accelerate gains. In the stated case, the bulls may perhaps aim for a test of 0.8480. Any more gains might send the pair toward the 0.8500 level.

Immediate support sits near 0.8415. The next major support is near 0.8405. A downside break below the 0.8405 support might call for more downsides. In the stated case, the pair could drop toward the 0.8380 support level.

Source: FXOpen

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Glendon

Economic

Forex

China's export growth slowed to a three-month low in May as U.S. tariffs slammed shipments, while factory-gate deflation deepened to its worst level in two years, heaping pressure on the world's second-largest economy on both the domestic and external fronts.

U.S. PresidentDonald Trump'sglobaltrade warand the swings in Sino-U.S. trade ties have in the past two months sent Chinese exporters, along with their business partners across the Pacific, on a roller coaster ride and hobbled world growth.

Underscoring the U.S. tariff impact on shipments, customs data showed that China's exports to the U.S. plunged 34.5% year-on-year in May in value terms, the sharpest drop since February 2020, when the outbreak of the COVID-19 pandemic upended global trade.

Total exports from the Asian economic giant expanded 4.8% year-on-year in value terms last month, slowing from the 8.1% jump in April and missing the 5.0% growth expected in a Reuters poll, customs data showed on Monday, despite a lowering of U.S. tariffs on Chinese goods which had taken effect in early April.

"It's likely that the May data continued to be weighed down by the peak tariff period," said Lynn Song, chief economist for Greater China at ING.

Song said there was still front-loading of shipments due to the tariff risks, while acceleration of sales to regions other than the United States helped to underpin China's exports.

Imports dropped 3.4% year-on-year, deepening from the 0.2% decline in April and worse than the 0.9% downturn expected in the Reuters poll.

Exports had surged 12.4% year-on-year and 8.1% in March and April, respectively, as factories rushed shipments to the U.S. and other overseas manufacturers to avoid Trump's hefty levies on China and the rest of the world.

While exporters in China found some respite in May as Beijing and Washington agreed to suspend most of their levies for 90 days, tensions between the world's two largest economies remain high and negotiations are underway over issues ranging from China's rare earths controls to Taiwan.

Trade representatives from China and the U.S. are meeting in London on Monday to resume talks after a phone call between their top leaders on Thursday.

China's imports from the U.S. also lost further ground, dropping 18.1% from a 13.8% slide in April.

Zichun Huang, economist at Capital Economics, expects the slowdown in exports growth to "partially reverse this month, as it reflects the drop in U.S. orders before the trade truce," but cautions that shipments will be knocked again by year-end due to elevated tariff levels.

China's exports of rare earths jumped sharply in May despite export restrictions on certain types of rare earth products causing plant closures across the global auto supply chain.

The latest figures do not distinguish between the 17 rare earth elements and related products, some of which are not subject to restrictions. A clearer picture of the impact of the curbs on exports will only be available when more detailed data is released on June 20.

China's May trade surplus came in at $103.22 billion, up from the $96.18 billion the previous month.

Other data, also released on Monday, showed China's imports of crude oil, coal, and iron ore dropped last month, underlining the fragility of domestic demand at a time of rising external headwinds.

Beijing in May rolled out a series of monetary stimulus measures, including cuts to benchmark lending rates and a 500 billion yuan low-cost loan program, aimed at cushioning the trade war's blow to the economy.

China's markets showed muted reaction to the data. The blue-chip CSI300 Indexclimbed 0.29% and the benchmark Shanghai Composite Indexwas up 0.43%.

DEFLATIONARY PRESSURES

Producer and consumer price data, released by the National Bureau of Statistics on the same day, showed that deflationary pressures worsened last month.

The producer price index fell 3.3% in May from a year earlier, after a 2.7% decline in April and marked the deepest contraction in 22 months.

Cooling factory activity also highlights the impact of U.S. tariffs on the world's largest manufacturing hub, dampening faster services growth as suspense lingers over the outcome of U.S.-China trade talks.

Sluggish domestic demand and weak prices have weighed on China's economy, which has struggled to mount a robust post-pandemic recovery amid a prolonged property slump and has relied on exports to underpin growth.

Retail sales growth slowed last month as spending continued to lag due to job insecurity and stagnant new home prices.

Businesses have also had to adapt to the falling prices. U.S. coffee chain Starbuckssaid on Monday it would lower prices of some iced drinks by an average of 5 yuan in China.

While the core inflation measure, excluding volatile food and fuel prices, registered a slightly faster 0.6% year-on-year rise, from a 0.5% increase in April, Capital Economics' Huang said the improvement looks "fragile".

She still expects "persistent overcapacity will keep China in deflation both this year and next."