White House: China-linked transshipments cost US billions in tariffs, jobs

The United States loses between $19 billion and $26 billion in tariff revenue each year because of illegal transshipments, largely involving Chinese goods rerouted through third countries, according to a new White House report.

Titled The Great Transshipment Scam and released on August 13, the report estimates that such practices also cost the US economy about 450,000 jobs. It stressed that the employment figure was a model-based estimate rather than a count of specific jobs lost.

The report accuses China of operating what it calls a "Shadow Transshipment Network" involving major US trading partners. It alleges that Chinese goods are routed through countries including Mexico, Canada, members of the European Union, India, Japan and South Korea, as well as Southeast Asian countries such as Cambodia, Indonesia, Malaysia, Thailand and Vietnam.

"China's biggest enablers range from Mexico and Canada on U.S. land borders to the European Union, India, Japan, and South Korea," the White House alleges.

The report said Chinese exporters use third countries for minor processing, relabeling, repackaging, reinvoicing or changes in shipping routes to make goods appear to originate outside China.

“China began using these third countries for minor processing, relabeling, repackaging, reinvoicing, or routing changes that created the appearance of a new national origin while leaving the underlying Chinese content largely intact. By routing around the tariffs, China and its statesupported manufacturers and trading firms could push goods into jurisdictions with cheap labor, weak customs oversight, permissive free zones, or preferential U.S. trade access,” the report reads.

Washington said the network extends beyond Southeast Asia to smaller countries in Central Asia, the Middle East and Latin America, which it said can offer lower labour costs, weaker customs enforcement and preferential access to the US market.

The report was spearheaded by White House trade and manufacturing adviser Peter Navarro. In a post on X, Navarro said the report exposed how goods were being transshipped through more than 40 countries to evade US tariffs and said President Donald Trump's administration was "putting a STOP to it."

By Sabina Mammadli