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Nayan Seth

The Trump administration on Thursday released a sharply worded report accusing Chinese exporters of orchestrating a system of “illegal transshipment” through more than 40 third countries to dodge US tariffs, branding the practice “The Great Transshipment Scam”.
The 25-page document claims Chinese firms have systematically diverted goods through lower-tariff jurisdictions since the US kicked off its trade war with China in 2018.
It alleges that exporters use limited assembly, relabelling, repackaging, re-invoicing and false country-of-origin declarations to disguise Chinese-origin products and secure more favourable tariff treatment on entry into the US.
The White House report says that Chinese exporters have “increasingly routed goods through third countries … where limited assembly, finishing, repackaging, relabelling or documentation changes could create the appearance of a different national origin.”


“For years the great transshipment scam has led Communist China to launder its exports through more than 40 countries, rob our treasury of tens of billions of dollars, and steal the paychecks of American workers,” said Peter Navarro, the White House senior counsellor for Trade and Manufacturing.
“This report rips the mask off.”
The Chinese embassy in Washington said that Beijing opposed the “overstretching of the concept of national security” and the use of state power to suppress Chinese enterprises”.
It also warned that any “unilateral actions or agreements concerning transshipped goods must not target or harm the interests of third parties.”
“We firmly oppose any party seeking to strike a deal at China’s expense or engaging in baseless economic coercion that severely infringes upon the legitimate rights and interests of relevant enterprises and gravely disrupts the stability of global industrial and supply chains,” embassy spokesperson Liu Chang told the South China Morning Post.
“Should such situations arise, China will resolutely take necessary measures to safeguard its legitimate rights and interests.”
Major US trading partners Canada, Mexico named in scam
The 40 countries named as participants in the China-linked “Great Transshipment Scam” include major US trading partners such as Canada and Mexico, as well as allies such as Japan, South Korea, the European Union and Israel.
Most Southeast Asian countries are also on the list, among them Indonesia, Malaysia, Thailand, Vietnam, Singapore, Cambodia, Laos, Myanmar and the Philippines. South Asian countries such as India, Bangladesh and Sri Lanka are also named.
The findings come amid tit-for-tat economic actions between Washington and Beijing and a month before Chinese President Xi Jinping is expected to visit Washington for a leader-level summit with US President Donald Trump.
The report cited a range of third-party estimates for the annual value of goods involved in illegal or suspect transshipment, spanning roughly US$40 billion to US$303 billion.
Assuming US$75 billion in annual illegal transshipment, the administration estimates that roughly 450,000 American jobs have been displaced and up to US$150 billion of GDP has been lost. These figures are described as model-based illustrations rather than observed counts.
Applying illustrative tariffs of between 25 to 45 per cent, the report estimates annual US revenue losses in the “tens of billions of dollars”.
The report says that the administration will increase the use of artificial intelligence to monitor trade and spot transshipped goods, an initiative it calls the “Detective Border”.
The publication coincides with Washington’s efforts to close what it sees as a major loophole in its tariff regime.


Mexico has drawn particular scrutiny because of its free trade pact with the US and rising Chinese investment and flows of Chinese-made components into Mexican factories.
Those concerns are now central to the ongoing joint review of the United States-Mexico-Canada Agreement (USMCA). The US has declined an automatic 16-year extension of the pact, citing issues including concerns over Chinese transshipment.
China accused of using ‘extremely sophisticated set of actions’
Navarro termed Mexico as “one of the biggest transshippers,” where China uses the USMCA “tariff rates of nothing” and “sneak stuff in”.
“Communist China has engaged in an extremely sophisticated set of actions that are designed essentially to transship and thereby evade the tariffs,” Navarro added.
Asian manufacturing hubs such as Vietnam and Thailand are also under growing scrutiny.
Trade data earlier this year showed a roughly US$112 billion gap between China’s reported exports to the US and arrivals recorded by US Customs and Border Protection, a discrepancy widely seen as a sign of large-scale tariff circumvention.
An analysis by the Coalition for a Prosperous America, a lobby group for the US manufacturing industry, estimated that about US$14 billion in Chinese trade was diverted and transshipped to the US after the 2025 tariff escalation, with Asean countries accounting for the majority.
Washington has already moved to tighten the rules. A 2025 framework agreement with Vietnam imposed a 40 per cent tariff on goods deemed to have been transshipped, twice the rate applied to ordinary Vietnamese-origin shipments.
Similar anti-transshipment provisions have been included in other bilateral arrangements and executive actions targeting indirect shipments.


In July last year, an executive order extended a 40 per cent penalty tariff to goods that US Customs and Border Protection determines were transshipped to evade duties. The penalty is imposed on top of any country-of-origin tariff.
The administration has also begun publishing lists of countries and facilities linked to suspected tariff evasion schemes.
The White House report came a day after Senator Bernie Moreno, a Republican from Ohio, urged Homeland Security Secretary Markwayne Mullin to intensify the crackdown.
In an August 12 letter, Moreno called the practice “a deliberate scheme by foreign manufacturers, overwhelmingly based in China, to falsify where their goods are made, launder them through a third country, slap on a new label and dump them into the American market.”
He said that Chinese auto parts routed through Thailand had affected manufacturing in Ohio.


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A container ship is moved into position at the port in Qingdao, in China’s eastern Shandong province, on May 26. Photo: AFP

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White House alleges that companies are systematically routing trade through third-party nations to evade US tariffs


White House alleges that companies are systematically routing trade through third-party nations to evade US tariffs.


US accuses Chinese exporters of masterminding ‘Great Transshipment Scam’

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}White House alleges that companies are systematically routing trade through third-party nations to evade US tariffs

White House alleges that companies are systematically routing trade through third-party nations to evade US tariffs