A new White House report accuses foreign exporters, led by China, of dodging up to $26 billion in annual U.S. tariffs by routing goods through dozens of third-party countries, a scheme the administration now calls "The Great Transshipment Scam."
The 25-page report, released Thursday by the White House Office of Trade and Manufacturing Policy, identifies more than 40 countries that pose a high transshipment risk and lays out what it describes as a sprawling global network built to disguise the true origin of Chinese-made goods. Peter Navarro, the trade adviser who leads the office, put the accusation in blunt terms.
Navarro told the Associated Press:
"For years, the great transshipment scam has let communist China launder its exports."
The practice works like this: after the United States imposed Section 301 tariffs on Chinese imports in 2018, Chinese exporters began shipping goods to intermediary countries, Panama, Mexico, Colombia, Brazil, and others, where the products undergo minimal changes. Workers may repackage, relabel, or lightly assemble the items, then ship them to the United States under the intermediary country's name, which carries a lower tariff rate. The goods are functionally Chinese. The paperwork says otherwise.
The report's own language describes what grew out of that evasion. Chinese exporters, it states, built "a global network of production hubs, logistics platforms, free-trade zones, bonded warehouses, processing corridors, and re-export centers" across the world. That infrastructure did not appear by accident. It appeared because billions of dollars in avoided tariffs made it profitable.
The financial damage, as the White House frames it, falls squarely on the U.S. Treasury and the American workers whose industries the tariffs were meant to protect. The report estimates that transshipment costs the federal government between $19 billion and $26 billion in tariff revenue every year. The value of goods transshipped to dodge duties runs far higher, somewhere between $34.2 billion and $303 billion annually, depending on whether you use government or private-sector estimates. A central estimate cited in the report lands at roughly $75 billion.
That range is enormous, and it raises its own questions about how precisely anyone can track goods deliberately disguised to avoid detection. But even the low end, $19 billion a year in lost revenue, represents real money that American taxpayers never see and that was supposed to level the playing field for domestic manufacturers.
The report also estimates the scheme displaces approximately 450,000 U.S. jobs and reduces GDP by $113 billion to $150 billion annually. The White House report, authored by Navarro, frames each lost dollar as theft: "Every dollar lost to this Great Transshipment Scam is a dollar stolen from American workers, manufacturers, and taxpayers."
The administration has been willing to use executive power aggressively on trade, and this report fits that pattern. President Trump has already imposed new tariffs on 60 economies, including Canada, over what the administration describes as forced labor practices. Those tariffs are projected to generate revenue estimated at $950 billion over a decade, numbers that only hold up if foreign exporters actually pay the duties instead of finding workarounds through third-party countries.
The timeline in the report tells a straightforward story. After Section 301 tariffs hit Chinese goods in 2018, the direct U.S. trade deficit with China fell in 2019 and 2020. On paper, that looked like progress. In practice, the report argues, much of the trade simply moved underground, rerouted through countries with lower tariff exposure.
The countries named as high-risk intermediaries span Latin America and beyond: Panama, Mexico, Colombia, Brazil, Argentina, Chile, Peru, Costa Rica, and the Dominican Republic all appear on the list. Fox News Digital reported that Navarro singled out India as another country that could use transshipment to skirt American tariffs, a warning that the problem extends well past Beijing's orbit.
The administration's concern about foreign financial networks exploiting gaps in U.S. oversight is not limited to trade. Congressional investigators have separately been probing millions of dollars flowing through nonprofits tied to foreign influence, a different channel, but the same underlying problem of money moving through intermediaries to avoid scrutiny.
China, the report says, "offers the most developed historical example" of transshipment. That phrasing is diplomatic for a document that otherwise treats the practice as deliberate, systematic fraud. The network did not grow organically. It grew because Chinese exporters had a $26 billion annual incentive to build it.
Navarro outlined several enforcement steps the administration is taking. U.S. Customs and Border Protection has begun using artificial intelligence in a prototype program designed to flag goods whose declared country of origin does not match their actual supply chain. The details of how the system works remain thin, the report does not describe the technology in depth, but the concept targets the paperwork fraud at the heart of transshipment.
Importers caught falsifying a product's origin face tariffs applied retroactively for roughly a year, Navarro said. That penalty creates a financial risk for companies gambling on fraudulent documentation, though whether it is steep enough to deter a scheme worth tens of billions annually is an open question the report does not fully answer.
The administration also signaled that new trade frameworks under negotiation will include provisions to penalize trading partners that enable transshipment. That language suggests Washington intends to hold intermediary countries accountable, not just the Chinese exporters routing goods through them. A country like Panama or Mexico that allows its ports and free-trade zones to serve as laundering points for Chinese goods could face consequences in future trade deals.
The White House has shown a willingness to use executive authority to reshape enforcement across multiple fronts, from election security to trade. Whether these enforcement tools can actually close a $26 billion gap depends on execution, and on whether the bureaucratic machinery at CBP can keep pace with exporters who have had years to refine their evasion techniques.
The report's release comes with a diplomatic backdrop. Chinese President Xi Jinping is planning a visit to Washington in September, following President Trump's trip to Beijing in May. Publishing a 25-page document accusing China of running a global export-laundering operation weeks before a head-of-state visit is not subtle. It puts the transshipment issue on the table before the two leaders sit down.
The timing may also serve a domestic purpose. With tariff revenue projections built into the administration's fiscal outlook, demonstrating that billions are leaking out through evasion strengthens the case for tougher enforcement, and makes it harder for critics to argue the tariffs are not working simply because trade flows shifted rather than shrank.
The administration has faced legal and political resistance on multiple executive actions this year, from federal judges blocking postal directives to internal Republican disagreements over the scope of presidential authority. Trade enforcement, however, sits on firmer legal ground, Section 301 tariffs have survived court challenges, and customs enforcement is a core executive function.
The report raises as many questions as it answers. The gap between the low and high estimates of transshipped goods, $34.2 billion versus $303 billion, is wide enough to suggest that even the government is not certain how large the problem truly is. Which estimates come from federal agencies and which from private-sector analysts is not broken out clearly.
The full list of the "more than 40 countries" flagged as high-risk is not published in the reporting available. Nor does the report detail what specific enforcement steps, beyond the AI prototype and retroactive tariffs, the administration has already implemented. Navarro's language about future trade framework provisions suggests some of the toughest measures are still in the planning stage, not yet operational.
Fox News Digital reached out to the White House for comment on the report. Whether additional details will emerge ahead of Xi's September visit remains to be seen. The administration has not been shy about using trade policy as both an economic and a diplomatic lever, and internal debates over executive authority have not slowed the pace of action on tariffs.
For years, foreign exporters treated American tariffs as a problem to route around rather than a cost to absorb. The White House just put a price tag on the workaround, and the bill belongs to every taxpayer who assumed the rules were being enforced.