The White House accused over 40 countries of enabling China to evade U.S. tariffs through transshipment, estimating annual tax revenue losses between $19 billion and $26 billion, according to a report titled The Great Transshipment Scam.
The White House has accused more than 40 countries of facilitating China’s evasion of U.S. tariffs through transshipment, a practice that costs the federal government between $19 billion and $26 billion annually in lost tax revenue, according to a newly released report. The document, titled The Great Transshipment Scam,
details how Chinese exporters reroute goods through third countries like Mexico, India, and Vietnam to avoid tariffs imposed under the Trump administration, allowing Beijing to maintain economic leverage while masking the true origin of products.
The Scope of the Transshipment Network
After their imposition, Chinese exporters increasingly routed goods through third countries,
the report states, noting that this practice contributed to the development of a complex network of production hubs, logistics platforms, and re-export centers. The White House’s central estimate of $75 billion in transshipped goods translates to $19 billion to $26 billion in annual tax revenue losses, according to the report.
U.S. Response and Enforcement Measures
Peter Navarro, the White House trade adviser, emphasized that the era of untraceable illegal transshipment is over,
citing the AI’s ability to flag mismatches between declared and actual cargo through container markings, packaging patterns, and X-ray imaging.
The report also outlines plans to penalize trading partners that engage in transshipment. Navarro warned that new trade frameworks would include provisions to hold countries accountable for enabling tariff evasion. For years, the great transshipment scam has let communist China launder its exports,
he said, echoing the report’s characterization of the practice as a systemic threat to U.S. economic sovereignty.
Global Implications and Chinese Response
The report names Canada, European Union members, Japan, and South Korea as countries with an “elevated risk” of facilitating transshipment, though it acknowledges these nations also engage in legitimate trade. The Chinese embassy in Washington condemned the allegations, stating that any efforts to strike a deal at China’s expense
would be met with necessary measures to safeguard its legitimate rights and interests.
The White House’s findings come ahead of Chinese President Xi Jinping’s planned September visit to Washington, which could test the fragile U.S.-China trade relationship. The report also notes that U.S. imports from China fell to a 16-year low of $308.7 billion in 2025, while imports from Mexico and Vietnam surged, suggesting a shift in trade patterns driven by transshipment. The administration argues that these trends undermine domestic industries, displacing an estimated 450,000 U.S. jobs.
Unresolved Questions and Next Steps
While the White House asserts its measures will curb transshipment, the effectiveness of the AI system and the willingness of trading partners to cooperate remain unclear. The report’s wide range of estimates—$34.2 billion to $303 billion in transshipped goods—reflects the complexity of tracking such practices. Meanwhile, China’s response to the accusations could escalate tensions, particularly as Xi Jinping prepares to meet with President Trump.
The situation underscores the broader challenge of enforcing tariffs in a globalized economy, where supply chains and trade routes are increasingly opaque. As the U.S. and China navigate these tensions, the focus will remain on whether new enforcement tools can close the loopholes that have allowed tariff evasion to persist for years.
Keep reading
