White House report flags China and dozens of nations for tariff-avoidance via transshipment
A White House Office of Trade and Manufacturing Policy report warns that China and more than 40 other countries are using transshipment to evade U.S. tariffs, estimating annual revenue losses of $19-$26 billion.
The White House Office of Trade and Manufacturing Policy released a 25-page report on Thursday warning that exporters are routing goods through third-country intermediaries to avoid U.S. tariffs. The document identifies China, Panama, Mexico, Colombia and over 40 additional nations as presenting a high risk of transshipment, a practice that can involve limited processing or relabeling to change a product’s declared origin.
According to the report, after the 2018 Section 301 tariffs on China were imposed, Chinese exporters increasingly used third-country routes, creating a global network of production hubs, logistics platforms, free-trade zones, bonded warehouses and re-export centers. The analysis estimates that transshipment costs the U.S. Treasury between $19 billion and $26 billion in lost revenue each year, with broader estimates of the value of goods shifted ranging from $34.2 billion to $303 billion annually.
"The Trump administration has taken steps to strengthen transshipment enforcement," the report states.
Trade adviser Peter Navarro said U.S. Customs and Border Protection is testing an artificial-intelligence prototype to detect transshipment and that importers found to falsify origin information could face retroactive tariffs for about a year. Navarro also noted that other countries, including India, could employ similar tactics and that future trade frameworks may include penalties for partners that engage in the practice.
The report is timed ahead of a planned September visit to Washington by Chinese President Xi Jinping, following President Donald Trump’s May trip to Beijing. Fox News has requested comment from the White House.