Trump White House targets $26 bn tariff evasion scheme

The Trump administration has released a report highlighting nations' attempts to circumvent US tariffs through a scheme known as transshipping, resulting in estimated tax revenue losses of $19 billion to $26 billion annually. Chinese exports, in particular, have been routed through third countries such as Mexico and Malaysia for packaging and limited assembly, creating an illusion of reduced US imports from China while allowing Beijing to further develop its manufacturing sector.

White House trade adviser Peter Navarro stated that China is utilizing over 40 countries to launder its exports, though he emphasized that the report primarily addresses other nations enabling tariff avoidance. The report comes before Chinese President Xi Jinping's planned September visit to the US, where Trump had previously described Xi in positive terms during their May visit to Beijing.

China has maintained its partnership with the US as one of "strategic stability," yet its policies supporting the export of manufactured goods have negatively impacted American industries like auto, metals, and electronics. Navarro warned that other nations like India could also engage in transshipping to evade new tariffs, and new trade frameworks under the Trump administration will include provisions to penalize trade partners involved in the practice.

The administration has imposed high tariffs on numerous countries in an effort to protect US manufacturers, affecting both allies and adversaries with import taxes. The report provides a range of estimates for transshipped goods, with figures between $34.2 billion and $303 billion annually.