Washington accuses China of building a global tariff-evasion network via 'transshipment'

The Trump administration has accused Chinese exporters of establishing a vast system to evade US tariffs by using transshipment, a practice where goods pass through multiple countries before reaching their final destination. In a 25-page report, the White House alleged that Chinese companies have utilized over 40 nations as intermediaries, concealing the true origin of products destined for the US and reducing or bypassing tariffs.

The administration estimates that as much as $303 billion in goods annually might be moving through these channels, resulting in a loss of $19 billion to $26 billion in tariff revenue for the US annually. Peter Navarro, a trade adviser to the Trump administration, stated that these 40 countries are "robbing the United States of tens of billions of dollars a year and countless manufacturing jobs."

Transshipment itself is not illegal, but when exporters deliberately route goods through another country and alter paperwork or manufacturing processes, they falsely claim a different country of origin, exploiting the loophole in the US tariff system. Washington is expanding its target to include 40 economies, such as Canada, Mexico, Japan, and South Korea, which have elevated risks associated with Chinese transshipment.

The administration argues that some countries have become significant links in supply chains, allowing Chinese-origin products to enter the US while obscuring their true origin. The report comes as the administration aims to make tariffs a permanent tool for economic policy, arguing that tariffs can protect American factories and encourage production to return to the US.

The administration plans to use artificial intelligence, dubbed "Detective Border," to analyze trade data and identify suspicious patterns, helping to distinguish legitimate supply-chain restructuring from illegal tariff evasion.