A 25-page White House report released Thursday details what officials call a sophisticated global network designed to obscure the true origin of goods entering U.S. markets—a scheme that the administration estimates costs American taxpayers between $19 billion and $26 billion annually in lost tariff revenue.
The report, titled "The Great Transshipment Scam" and produced by the White House Office of Trade and Manufacturing Policy under trade adviser Peter Navarro, identifies more than 40 countries as posing elevated transshipment risk. China, Panama, Mexico, Colombia, Brazil, Argentina, Chile, Peru, Costa Rica and the Dominican Republic are among the named jurisdictions.
Transshipment operates through a deceptively simple mechanism: goods manufactured in one country are routed through intermediary jurisdictions where minimal processing—relabeling, repackaging, documentation changes—creates the legal appearance of originating elsewhere. By the time products reach U.S. ports under this manufactured origin, they qualify for lower tariff rates than they would if their true source were disclosed.
The practice became particularly visible following the Trump administration's 2018 imposition of Section 301 tariffs targeting Chinese goods. Direct trade flows from China to the United States contracted in 2019 and 2020, as expected. But rather than representing genuine trade reduction, the numbers masked a structural shift. Chinese exporters, facing higher duties, began funneling identical products through what the report calls "a global network of production hubs, logistics platforms, free-trade zones, bonded warehouses, processing corridors, and re-export centers." The goods themselves remained substantially unchanged; only their paperwork did.
Government and private-sector estimates cited in the report suggest the annual value of transshipped goods ranges from $34.2 billion to $303 billion. The lower estimates for revenue loss focus specifically on tariff avoidance, but the broader figures capture the scope of what amounts to coordinated misrepresentation of product origin across global supply chains.
The report names India as a jurisdiction with transshipment potential, indicating the administration views this as a broader structural problem rather than one confined to specific adversaries.
U.S. Customs and Border Protection has begun deploying artificial intelligence in a prototype program designed to identify transshipment schemes. The agency has also established that importers caught falsifying product origin face retroactive tariff application covering roughly one year of prior shipments. Whether these enforcement mechanisms can scale to address an estimated $300 billion annual problem remains unclear.
The report arrives ahead of a planned September visit by Chinese President Xi Jinping to Washington, following President Trump's May trip to Beijing. Trade reports alleging foreign malfeasance often serve multiple purposes simultaneously as evidence in ongoing negotiations, as justification for future tariff actions and as political messaging to domestic constituencies.
If exporters can systematically route goods through intermediary countries with minimal processing and successfully obscure their origin, U.S. tariff policy operates on a foundation of incomplete information. Tariff revenue projections, trade deficit calculations and assessments of which countries actually benefit from U.S. trade relationships all become unreliable if significant volumes of goods enter under false origin declarations.
