Trump's 40% Transshipping Tariff on Vietnam and Its Implications for Global Supply Chains

The U.S. trade landscape in 2025 has been reshaped by President Donald Trump's aggressive tariff policies, particularly the 40% transshipping tariff on Vietnam. This measure, enacted under Executive Order 14320, targets goods transshipped through Vietnam to evade U.S. duties. While the policy aims to curb circumvention of tariffs and enforce reciprocity, its ripple effects are accelerating nearshoring and reshoring trends. For investors, this creates opportunities in undervalued manufacturing and logistics stocks poised to benefit from the reconfiguration of global supply chains.

The Tariff's Mechanism and Strategic Rationale

The 40% transshipping tariff applies to goods determined by U.S. Customs and Border Protection (CBP) to have been routed through Vietnam to avoid higher U.S. duties. Vietnam's base tariff of 20%—a reduction from the earlier 46%—is now supplemented by this penalty for transshipped goods. The policy is part of a broader effort to counter perceived trade imbalances and secure national economic interests. By penalizing transshipment, the U.S. aims to force companies to either absorb higher costs or shift production closer to home.

The enforcement of this tariff includes strict monitoring, with the U.S. government publishing biannual lists of countries and facilities involved in circumvention schemes. This transparency aims to deter third-party logistics hubs like Vietnam from being exploited for tariff evasion.

Impact on Global Supply Chains

Industries in Vietnam reliant on transshipment strategies—textiles, electronics, and consumer goods—are particularly vulnerable. These sectors have historically leveraged Vietnam's lower labor costs and strategic location to route goods through the country. The 40% penalty increases costs for such practices, compelling companies to either localize production or seek alternative routes.

The result? A surge in nearshoring and reshoring initiatives. U.S. manufacturers are now incentivized to bring production back to North America or shift to nearby countries like Mexico and Canada to avoid the additional tariff burden. This shift is not just a response to tariffs but a broader recalibration of supply chains toward resilience and proximity.

Undervalued Stocks to Watch in 2025

1. XPO Logistics (XPO)

Market Cap: $9.5B (2024)
XPO Logistics is a prime beneficiary of nearshoring. Its focus on automation, AI-driven platforms, and less-than-truckload (LTL) services aligns with the need for efficient last-mile delivery in localized supply chains. As companies prioritize speed and agility, XPO's digital infrastructure and scalable operations position it to capture market share.

Why It's Undervalued: Despite strong revenue growth, XPO's stock trades at a discount to its peers due to market skepticism about its debt load. However, its strategic alignment with e-commerce and nearshoring trends makes it a compelling long-term play.

2. Rockwell Automation (ROK)

Sector: Industrial Technology
Rockwell provides automation solutions critical for modern manufacturing. As reshoring accelerates, demand for its smart factory technologies—enabling predictive maintenance, robotics, and IIoT integration—is surging.

Valuation Edge: ROK trades at a price-to-earnings (P/E) ratio of 22x, below its five-year average of 28x. With free cash flow growth of 12% YoY, the stock offers a balance of value and growth.

3. C.H. Robinson (CHRW)

Sector: Freight & Supply Chain Services
CHRW's AI-driven freight brokerage platform is ideal for managing complex, localized supply chains. Its third-party logistics (3PL) services are in high demand as companies seek flexible, nearshore solutions.

Key Catalysts: The company's investments in automation and cost-efficient operations enhance scalability. CHRW's 2024 revenue growth of 8% outpaces the industry average, yet its stock remains undervalued relative to its growth potential.

4. Huntington Ingalls Industries (HII)

Sector: Defense & Shipbuilding
HII, a leading U.S. naval shipbuilder, benefits from reshoring of critical infrastructure. With rising defense budgets and a focus on secure supply chains, HII's government contracts ensure stable cash flow.

Valuation Edge: HII's P/E ratio of 15x is a discount to its historical average of 20x. Its strong alignment with U.S. national security priorities makes it a defensive play in a volatile trade environment.

Key Trends Driving Growth

• Automation and AI: Technologies that reduce labor costs and enhance efficiency are critical for domestic manufacturing competitiveness.
• Sustainability: Green logistics and ESG-focused operations are gaining traction, with companies like UPS and DHL investing in electric fleets.
• Government Incentives: Tax breaks and subsidies for domestic production (e.g., the CHIPS Act for semiconductors) are accelerating reshoring.

Investment Advice

The 40% transshipping tariff on Vietnam is a catalyst for structural shifts in global supply chains. While the policy introduces short-term volatility, it creates long-term opportunities for companies enabling nearshoring and reshoring. Investors should prioritize stocks with strong digital capabilities, sustainable practices, and clear alignment with domestic production trends.

For a balanced portfolio, consider a mix of logistics enablers (e.g., XPO, CHRW) and industrial technology leaders (e.g., ROK, HII). These companies are not only adapting to the new trade environment but are actively shaping it. As the U.S. continues to prioritize supply chain resilience, the winners of this transition will be those that innovate and scale in the nearshoring era.