US accuses Chinese exporters of masterminding ‘Great Transshipment Scam’

The Trump administration has released a report alleging that Chinese exporters have been orchestrating a complex scheme involving illegal transshipment of goods through over 40 third countries to avoid US tariffs, dubbing it "The Great Transshipment Scam." The 25-page document contends that Chinese firms have been rerouting products through lower-tariff jurisdictions since the US initiated its trade war with China in 2018.

The White House report claims that exporters rely on tactics such as limited assembly, relabelling, repackaging, re-invoicing, and false country-of-origin declarations to misrepresent the origin of Chinese-origin products and secure more favorable tariff treatment upon entering the US. The report estimates that the annual value of goods involved in illegal or dubious transshipment ranges from $40 billion to $303 billion, with a model-based illustration suggesting around 450,000 American jobs lost and up to $150 billion in GDP lost.

Applying illustrative tariffs of 25 to 45 percent, the report projects annual US revenue losses in the "tens of billions of dollars." The administration plans to bolster its use of artificial intelligence to monitor trade and identify transshipped goods, a project dubbed "Detective Border." The report arrives as Washington intensifies efforts to address what it perceives as a major loophole in its tariff regime, particularly with Mexico due to its free trade agreement with the US and increasing Chinese investment.

Concerns about transshipment have also been raised regarding Asian manufacturing hubs like Vietnam and Thailand, which are now under increased scrutiny. A recent analysis by the Coalition for a Prosperous America estimated that approximately $14 billion in Chinese trade was diverted and transshipped to the US following the 2025 tariff hikes, with ASEAN countries accounting for the majority.

The US has already taken steps to tighten regulations, imposing a 40% tariff on goods suspected of transshipment in a 2025 framework agreement with Vietnam, twice the rate applied to regular Vietnamese-origin shipments. US President Donald Trump's trade adviser Peter Navarro has described Vietnam as "essentially a colony of communist China" and claimed that roughly a third of its exports to the US are Chinese products given a local label.

Similar measures have been incorporated into other bilateral agreements and executive actions targeting indirect shipments. In July, an executive order expanded a 40% penalty tariff to goods determined by US Customs and Border Protection to have been transshipped for the purpose of evading duties, in addition to any applicable country-of-origin tariffs.

The administration has also started publishing lists of countries and facilities linked to suspected tariff evasion schemes. The White House report followed a day after Senator Bernie Moreno, a Republican from Ohio, urged Homeland Security Secretary Markwayne Mullin to intensify the crackdown, describing the practice as a deliberate scheme by foreign manufacturers, predominantly based in China, to falsify product origins, reroute them through a third country, re-label them, and dump them into the American market.

Moreno cited instances of Chinese auto parts routed through Thailand affecting manufacturing in Ohio.