The White House has accused foreign exporters of increasingly using third countries to disguise the origin of goods entering the United States, saying the practice could be costing the US Treasury between $19 billion and $26 billion in lost tariff revenue each year.
The allegations are contained in a newly released 25-page report titled The Great Transshipment Scam, published on Thursday by the White House Office of Trade and Manufacturing Policy.
The report argues that China represents the most significant historical example of transshipment, while also identifying more than 40 countries that US officials say present elevated risks of being used as intermediary trade routes for goods destined for the American market.
The findings add another chapter to ongoing US-China trade tensions as both countries continue navigating tariffs, supply-chain restructuring and broader economic competition ahead of planned high-level diplomatic engagements.
What the White House means by transshipment
According to the report, transshipment occurs when goods are routed through another country before entering the United States under a different declared country of origin.
Officials say the process can involve activities such as:
- Limited assembly.
- Product finishing.
- Repackaging.
- Relabelling.
- Changes to shipping documentation.
Such modifications may allow products to qualify for lower tariff rates than they would have faced if imported directly from their original manufacturing country.
The White House argues that these practices can distort trade statistics, reduce tariff collections and undermine enforcement of US trade policy.
China identified as the primary example
The report places particular emphasis on China’s trade patterns following the introduction of Section 301 tariffs during President Donald Trump’s first administration.
According to White House officials, direct US trade deficits with China declined after tariffs were imposed in 2018.
However, they argue that some Chinese exporters subsequently redirected shipments through third countries before goods entered the American market.
The report claims those alternative routes gradually evolved into wider networks involving production hubs, bonded warehouses, logistics platforms and free-trade zones across multiple regions.
While the report argues that these developments helped obscure the original source of some goods, it does not suggest that every shipment routed through third countries necessarily constitutes illegal transshipment.
More than 40 countries listed
Beyond China, the White House identified numerous countries that officials believe face elevated transshipment risks.
Among those specifically mentioned are:
- Panama
- Mexico
- Colombia
- Brazil
- Argentina
- Chile
- Peru
- Costa Rica
- Dominican Republic
The report says these countries are among more than 40 jurisdictions that could potentially be used as transit points before products enter the United States.
The White House did not accuse every listed country of intentionally participating in tariff evasion but said they represent locations where closer monitoring may be necessary.
Billions of dollars potentially at stake
One of the report’s most significant claims concerns the financial impact of tariff avoidance.
The White House estimates that annual losses to the US Treasury range from $19 billion to $26 billion.
Officials also cited government and private-sector estimates suggesting that the broader value of goods potentially routed through transshipment networks each year could range from approximately $34.2 billion to as much as $303 billion.
The wide range reflects differing methodologies used to estimate the scale of global trade rerouting.
Navarro calls for tougher enforcement
Trade adviser Peter Navarro, whose office produced the report, described transshipment as a longstanding challenge for American trade enforcement.
According to Navarro, stronger action is needed to prevent companies from avoiding tariffs through complex international supply chains.
He argued that future US trade frameworks should include penalties for trading partners found to facilitate such practices.
Navarro also suggested that countries beyond China, including India, could become part of future enforcement discussions if similar concerns arise.
Customs expands AI-powered detection
The White House said US Customs and Border Protection has begun testing artificial intelligence tools designed to improve the detection of suspicious trade patterns.
According to Navarro, the prototype system analyses shipping information to help identify transactions that may warrant further investigation.
Officials believe AI could strengthen customs enforcement by detecting inconsistencies in documentation, shipping routes and product declarations that might otherwise be difficult to identify manually.
The technology remains part of an evolving enforcement strategy rather than a fully implemented nationwide programme.
Importers could face retroactive penalties
The report also outlines potential consequences for companies found to have falsely declared a product’s origin.
According to White House officials, importers determined to have misrepresented country-of-origin information could face retroactive tariff liabilities covering roughly one year of imports.
Such enforcement measures are intended to discourage businesses from attempting to reduce import duties through inaccurate documentation.
The administration argues that stronger penalties are necessary to protect the effectiveness of existing tariff policies.
Trade tensions remain in focus
The report arrives at a sensitive moment in US-China relations.
Its publication comes ahead of a planned September visit to Washington by Chinese President Xi Jinping, following President Donald Trump’s trip to Beijing earlier this year.
Trade remains one of the central issues shaping the relationship between the world’s two largest economies.
While both governments continue engaging diplomatically, disputes over tariffs, manufacturing, technology and supply chains remain prominent features of their broader economic competition.
Why transshipment matters
Transshipment has become an increasingly important issue as companies adjust global supply chains in response to tariffs, geopolitical tensions and shifting manufacturing strategies.
Many multinational businesses legitimately use multiple countries during production before exporting finished goods.
However, US officials argue that the line between legitimate supply-chain management and tariff evasion can become blurred when minimal processing is used primarily to alter a product’s declared origin.
Determining whether goods qualify for a different country-of-origin designation often depends on customs rules governing substantial transformation during production.
International implications
The White House report signals that transshipment enforcement is likely to become a more prominent element of future US trade policy.
Countries serving as major manufacturing or logistics hubs may face greater scrutiny as customs authorities examine shipping patterns more closely.
Businesses operating across international supply chains could also encounter increased documentation requirements and compliance checks as enforcement expands.
For Washington, the report reinforces its broader objective of ensuring that tariff policies achieve their intended economic impact.
For trading partners, it highlights the growing importance of transparent supply-chain documentation as international commerce becomes increasingly interconnected.
As customs authorities continue expanding enforcement tools, including artificial intelligence, the debate over transshipment is likely to remain an important part of US trade policy discussions in the months ahead, particularly as Washington prepares for another round of high-level engagement with Beijing.
