U.S. flags S. Korea, Japan, EU, others over transshipment risks involving China-linked goods

On August 13, 2021, the White House released a report titled "The Great Transshipment Scam," identifying 40 countries, including South Korea, Japan, Taiwan, and the European Union, as facing elevated transshipment risks involving goods linked to China. The report aimed to address schemes that evade U.S. tariffs and other trade remedies by exploiting third countries as transshipment points.

China's exporters use methods such as relabeling, repackaging, and falsely claiming country of origin to move goods through these nations. The White House Office of Trade and Manufacturing Policy classified South Korea, Japan, Taiwan, the EU, India, Canada, Mexico, and Israel as "diversified scale leaders" due to their diversified industrial bases and major export platforms to the U.S., where transshipment risks are embedded within legitimate trade flows.

Brazil, Indonesia, Malaysia, Thailand, Turkey, and Vietnam were categorized as "scale leaders with significant economic integration," combining illegal transshipment volumes with deep integration into China-linked supply chains. Smaller economies like Switzerland, Singapore, the Philippines, the UAE, Chile, and Colombia were deemed "small, opportunistic Chinese targets" with weaker transshipment volumes but specific weaknesses, such as low-cost labor, port or border access, niche assembly capacity, and preferential U.S. trade access.

These countries became the "launchpads and hubs" of an evasion architecture, with products made largely in China, lightly touched abroad, and exported to the U.S. under new identities.