The United States government has accused Canada, Mexico, India and 37 other countries of helping Chinese exporters circumvent American tariffs, alleging that the practice has cost the country billions of dollars in lost tariff revenue.
The allegation was contained in a White House report titled “The Great Transshipment Scam,” released on Thursday. According to the report, Chinese goods are allegedly routed through countries with lower tariffs before being shipped to the U.S. market.
The report said some of the goods are relabelled, repackaged or re-invoiced to falsely indicate a different country of origin. This, it said, allows importers to avoid the higher duties that would apply if the products were correctly identified as Chinese-made.
The Office of Trade and Manufacturing Policy estimated that the United States loses tens of billions of dollars each year through illegal transshipment involving more than 40 lower-tariff jurisdictions. It said Chinese-origin products have historically accounted for a significant portion of the trade.
According to the office, Mexico and Canada are among China’s major enablers, alongside the European Union, India, Japan and South Korea. Cambodia, Indonesia, Malaysia, Thailand and Vietnam were also listed as important links in the alleged networks.
Other countries named in the report include Costa Rica, the Dominican Republic, Kenya, Morocco, Kazakhstan, Jordan and the United Arab Emirates. The report said Chinese-linked exporters are attracted to some of these countries because of low labour costs, free-trade zones, limited customs enforcement and access to strategic ports.
Five estimates from government and private-sector sources reviewed in the report suggested that between $40 billion and $303 billion worth of goods could be passing annually through the identified countries.
U.S. producers of electrical equipment, electronics, plastics, aluminium and motor components were identified as some of the industries most affected by the alleged practice.
The trade office, led by Peter Navarro, described the scheme as harmful to American workers, manufacturers and taxpayers. It said the affected countries had been “put on notice” and that artificial intelligence would be deployed to detect suspected transshipment operations and examine questionable trade flows.
The countries named in the report had not responded to the allegations at the time of publication.
The latest accusations come amid President Donald Trump’s broader tariff campaign. During his first administration, the U.S. introduced Section 301 tariffs of 25 per cent on a range of Chinese imports in 2018, after which the U.S.-China trade deficit declined in 2019 and 2020.
Since returning to office, Trump has expanded tariffs on several economies, arguing that trading partners have taken advantage of the United States. The administration recently announced new tariffs on goods from 59 countries, including Nigeria, and the European Union, citing concerns over their failure to effectively prohibit and enforce restrictions against goods produced wholly or partly through forced labour