A new White House report says Chinese exporters are using transshipment networks spanning more than 40 countries to conceal the origin of U.S.-bound goods, potentially costing billions in tariff revenue and displacing hundreds of thousands of American jobs.
By yourNEWS Media Newsroom
The White House is escalating its campaign against tariff evasion by Chinese exporters, alleging that goods originating in China are being routed through more than 40 countries before entering the United States with altered or misleading country-of-origin information.
A report released Thursday by the White House Office of Trade and Manufacturing Policy describes an extensive system in which products may be relabeled, repackaged, reinvoiced, subjected to minor processing or otherwise presented as originating somewhere other than China.
The report, titled “The Great Transshipment Scam,” says the practice deprives the federal government of tariff revenue while allowing Chinese goods to enter the American market without paying duties imposed specifically on imports from China.
The administration says the potential consequences extend beyond customs collections to American manufacturing, employment and economic output.
Using an analysis by supply-chain intelligence company Exiger, the White House estimated that illegal Chinese transshipment could displace approximately 450,000 U.S. jobs, reduce annual gross domestic product by between $113 billion and $150 billion, and cost the federal government between $19 billion and $26 billion in revenue.
Those estimates are part of a wider range produced by government agencies and private-sector analysts attempting to quantify a practice that is inherently difficult to measure.
Five separate analyses cited by the White House arrived at substantially different figures.
Goldman Sachs estimated illegal Chinese transshipment at approximately $40 billion annually.
The White House Council of Economic Advisers placed the figure near $60 billion, while the Commerce Department estimated approximately $67 billion.
Exiger, using shipment-level data, put the amount at approximately $75 billion.
Altana, a company specializing in global supply-chain tracking, calculated total exposure of approximately $303 billion.
The White House cautioned that those figures measure the problem differently and should not be added together or treated as directly interchangeable estimates.
Commerce Department analysis cited in the report focused specifically on goods routed through Mexico, India and Vietnam in 2025.
According to that assessment, Chinese products transshipped through those three countries alone resulted in an estimated $28 billion in lost U.S. tariff revenue.
The administration says the problem expanded after President Donald Trump imposed tariffs on hundreds of billions of dollars of Chinese imports during his first term in 2018.
Following implementation of those tariffs, China’s direct share of U.S. imports declined while imports from several other countries increased.
The White House argues that some of that shift reflects Chinese goods being redirected through third countries before arriving in the United States.
The report, however, acknowledges that changes in trade patterns do not by themselves establish illegal tariff evasion.
Some production genuinely shifted away from China as companies changed suppliers, built factories elsewhere or diversified supply chains, according to the report. The administration therefore cautioned that not every increase in imports from another country represents disguised Chinese trade.
Instead, officials identified a combination of countries presenting varying levels and types of transshipment risk.
Large and diversified economies including Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan were identified as markets where potential transshipment exists alongside extensive legitimate commerce.
Brazil, Indonesia, Malaysia, Thailand, Turkey and Vietnam were placed in another category because of their significant integration with China-linked supply chains.
The administration’s concern is that exporters can take advantage of complicated international production networks to obscure where a product was actually made.
A shipment originating in China, for example, can be sent to another country where its packaging, invoices or labeling are changed before it is exported to the United States.
Other schemes can involve limited processing intended to create the appearance that a product has undergone enough manufacturing in the intermediary country to qualify for a different national origin.
False declarations can then result in goods entering the United States under a lower tariff rate than would have applied if their Chinese origin had been properly reported.
The Trump administration is seeking to make such practices more difficult through expanded importer disclosures, tighter trade agreements and technology-assisted customs enforcement.
One of the government’s proposed tools is an artificial intelligence-enabled customs system called “Detective Border.”
The system is intended to analyze multiple types of information simultaneously, including shipment records, previous shipping routes, product classifications, corporate ownership links, business relationships and the actual manufacturing capacity of the country from which a shipment claims to originate.
One potential indicator of suspicious activity would be a country exporting a volume of a particular product that appears inconsistent with its demonstrated ability to manufacture that product domestically.
The administration hopes that combining shipment-level data with ownership and production information will allow Customs and Border Protection to identify suspicious patterns more efficiently than traditional inspections alone.
Trump also signed an executive order in June directing the Department of Homeland Security and U.S. Customs and Border Protection to strengthen requirements imposed on importers.
The order calls for additional disclosure of corporate ownership and business affiliations, information the administration says can help authorities determine whether ostensibly independent exporters are actually connected to Chinese manufacturers or related companies.
Trade negotiations are being used as another enforcement mechanism.
White House senior counsel for trade and manufacturing Peter Navarro said U.S. Trade Representative Jamieson Greer is including anti-transshipment provisions in every new bilateral trade agreement.
Such provisions are intended to prevent countries receiving favorable tariff treatment from becoming conduits through which goods from higher-tariff countries enter the United States.
The issue is particularly important to Trump’s broader tariff strategy because widespread transshipment could undermine the intended effect of country-specific duties.
If exporters can simply route products through another jurisdiction and change their declared origin, tariffs designed to alter trade behavior or protect U.S. producers become less effective while the government loses the revenue those duties would otherwise generate.
The White House report nevertheless stops short of declaring that its current enforcement measures have already solved the problem.
Officials said it remains too early to determine the effectiveness of the administration’s newer tariff and anti-transshipment policies.
Trade statistics and customs enforcement data are reported with a lag, and several provisions remain in the process of being implemented.
That means the full effect of measures such as enhanced importer disclosures, artificial intelligence screening and new anti-transshipment provisions may not be visible for some time.
For now, the administration is presenting the report as evidence that tariff enforcement cannot be limited to shipments arriving directly from China.
The challenge, according to the White House, is tracing the underlying origin and ownership of products across increasingly complicated global supply chains — and distinguishing legitimate changes in manufacturing from deliberate efforts to disguise Chinese goods and avoid U.S. tariffs.
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