The White House has publicly named more than 40 countries, including India, Canada, Mexico and Japan, accusing them of assisting China in sidestepping American tariffs. The claim centers on a practice called transshipment, where Chinese goods are routed through other nations before reaching the United States. Since those nations often face lower import duties than China, the goods effectively slip past the higher tariffs meant to apply to Chinese products.
The accusation is laid out in a White House document titled “The Great Transshipment Scam.” Per the Financial Times, the report puts the value of this rerouted trade at 60 billion dollars, though it also references other estimates, both from government sources and private analysts, ranging much wider: anywhere between 40 billion and 303 billion dollars. That gap shows just how difficult it is to pin down the true scale of the practice.
Who’s Behind the Report
Peter Navarro, who leads the White House Office of Trade and Manufacturing Policy, issued the report. He described China’s tactics as “extremely sophisticated,” noting the country has relied on these methods ever since President Trump first placed tariffs on Chinese goods back in 2018.
The FT reports that new tariff rates Trump introduced last year have only made the problem worse. By creating bigger gaps between the duties different countries pay, the policy has given exporters more incentive to reroute shipments through lower-tariff nations rather than ship directly from China.
Navarro did not hold back in his criticism. He said the scheme has allowed China to launder its exports through more than 40 countries for years, calling it a scam that has drained tens of billions of dollars from the US Treasury and cost American workers their livelihoods.
Which Countries Are Named
The White House report itself, an excerpt of which was reviewed, identifies a wide network of nations allegedly involved. Some of America’s biggest trading partners appear on the list, including Mexico and Canada due to their shared land borders with the US, along with the European Union, India, Japan and South Korea.
Southeast Asian nations also feature prominently, among them Cambodia, Indonesia, Malaysia, Thailand and Vietnam, largely because of their geographic closeness to China.
What stands out more, according to the report, is the long list of smaller countries spread across different continents that also play a role. These include Costa Rica and the Dominican Republic in Latin America, Kenya and Morocco in Africa, Kazakhstan in Central Asia, and Jordan and the United Arab Emirates in the Middle East. The report notes that while these smaller economies don’t handle huge volumes of trade, each brings something useful to the table, whether that’s cheap labor, loose free trade zone regulations, weak customs oversight, useful port locations, bonded warehousing options, specialized assembly capabilities, or simply better access to the US market than China currently has.
The report argues that every dollar lost to this system takes money directly out of the pockets of American workers, manufacturers and taxpayers. It points to specific products, such as power supplies, control panels, aluminum sheeting, valves, plastics and furniture parts, that get rerouted through countries like Mexico, Vietnam, Malaysia, Poland or the UAE. According to the report, this rerouting is costing jobs in American manufacturing towns including Milwaukee, Cleveland, Toledo, Hickory, Phoenix and Youngstown.
The Timing Matters
This report lands just six weeks before President Xi Jinping is set to travel to Washington for a reciprocal visit, following Trump’s trip to Beijing back in May. Despite a one year truce the two leaders agreed to in Busan, South Korea last October, tensions between the two countries have not cooled off.
Adding to the friction, Treasury Secretary Scott Bessent recently revealed that he and US Trade Representative Jamieson Greer pressed their Chinese counterpart, Vice Premier He Lifeng, during a call about whether Beijing is sticking to its promise not to restrict rare earth exports to the US.
Meanwhile, China has expressed its own frustrations, particularly over new US national security actions. One example cited is the Federal Communications Commission’s move to ban imports of Chinese made robots.
A New Tool to Catch Violators
To fight back against transshipment, Navarro said US Customs and Border Protection is rolling out a new AI powered system called Detective Border. The system is designed to more accurately identify what goods are actually made of, helping ensure they’re labeled correctly for tariff purposes. Navarro claimed this technology alone could generate tens of billions of dollars in tariff revenue for the US Treasury while creating thousands of additional jobs for American workers.