The White House has flagged growing abuse of transshipment rules that let foreign exporters reroute goods through third countries to dodge U.S. tariffs, naming more than 40 nations it sees as high risk and estimating billions in lost revenue. The 25-page report, titled “The Great Transshipment Scam,” lays out how goods once shipped directly to the United States now move through intermediaries where minor finishing or paperwork changes create the appearance of a different origin.
Washington’s findings put China at the center of a sophisticated system of rerouting, but the list also includes hubs across the Americas like Panama, Mexico, Colombia, Brazil, Argentina, Chile, Peru, Costa Rica, and the Dominican Republic. The concern is straightforward: when origin is masked, tariff policy designed to protect U.S. industries gets hollowed out and domestic manufacturers pay the price. Republicans are pushing hard on enforcement because letting this stand rewards bad actors and undercuts American workers.
The report traces the pattern back to 2018 and the Section 301 tariffs on China, noting that trade flows shifted as exporters searched for loopholes. “After their imposition, Chinese exporters increasingly routed goods through third countries,” the report says, with previously direct shipments being diverted through jurisdictions where slight assembly, relabeling or documentation tweaks could alter the claimed origin. That’s not clever trade, it’s an exploit of weak oversight.
Officials warn this practice has grown into a global logistics web that helps move goods past tariff walls. “Over time, these practices contributed to the development of a global network of production hubs, logistics platforms, free-trade zones, bonded warehouses, processing corridors, and re-export centers,” the report said, and the result is lost tariff revenue and hollowed-out protections. The authors estimate annual losses to the U.S. Treasury between $19 billion and $26 billion, with broader estimates of the value of avoided tariffs ranging much higher.
Peter Navarro, who leads the Office of Trade and Manufacturing Policy, frames the problem bluntly and calls for tougher measures to stop it. “For years, the great transshipment scam has let communist China launder its exports,” Navarro said, according to The Associated Press. That language reflects a Republican view that enforcement failures have allowed strategic competitors to keep gaming the system.
Part of the enforcement push includes modern tools and retroactive penalties aimed at deterring fraud. U.S. Customs and Border Protection has piloted artificial intelligence systems to spot suspicious routing and patterns, and importers found to have falsified origin can face tariffs applied retroactively for roughly a year. Those steps signal a shift from passive monitoring to active disruption of illicit supply chains.
The report also warns that China is not the only user of transshipment; countries like India could exploit the same channels to avoid tariffs unless rules are tightened. The Trump administration says new trade agreements and enforcement frameworks will include provisions to penalize partners that allow or facilitate transshipment. That approach blends trade policy with national security, treating tariff evasion as a strategic vulnerability.
Beyond penalties and tech, the paper calls for sharper customs intelligence and closer scrutiny of logistics hubs, free-trade zones, and bonded warehouses where origin laundering can be engineered. Strengthening documentation rules and increasing audits of suspicious shipments are practical steps the administration believes can make a measurable difference. The aim is to restore integrity to trade rules so tariffs actually protect American jobs and industry.
The report arrives as high-level visits between the United States and China are on the calendar, including a planned September trip by Chinese President Xi Jinping and recent visits by U.S. leaders. With diplomacy underway, the trade angle matters: if enforcement is lax, tariffs become window dressing rather than a tool of leverage. The debate now is whether tougher rules and sharper enforcement will follow the report’s warnings.
