US Alleges Over 40 Nations Aided China in Tariff Evasion Scheme

A new report released by the White House alleges that over 40 countries assisted China in evading tariffs imposed during the administration of former US President Donald Trump. The report states that Chinese exporters sought to bypass these duties by routing their products through third countries with lower tariff rates, a practice known as transshipment, rather than shipping directly to the United States.

Dubbed "The Great Transshipment Scam," the report was compiled under the leadership of White House trade adviser Peter Navarro. According to the findings, China employed highly sophisticated methods to counteract the tariffs initially imposed by Trump in 2018 and subsequently increased last year. These tactics included sending goods to countries like Vietnam or Mexico for repackaging, minimal processing, or altering country-of-origin labels. The White House estimates that approximately $75 billion worth of goods were illegally transshipped between February 2025 and February 2026, resulting in an annual loss of $19 billion to $26 billion in tariff revenue for the US Treasury.

The report names several key trading partners, including Mexico, Canada, European Union (EU) member states, India, Japan, South Korea, Vietnam, Malaysia, and Thailand, as allegedly facilitating these evasion activities. In response, the Chinese Embassy in Washington stated its opposition to any party seeking to strike a deal at China's expense or disrupt industrial supply chains, vowing to take necessary measures to safeguard its legitimate rights and interests.

This phenomenon has led to a noticeable decline in direct US imports from China, while imports from countries such as Mexico and Vietnam have sharply increased. The White House report suggests that this transshipment scheme has led to the displacement of approximately 450,000 US jobs, both direct and indirect. To combat this, the US Customs and Border Protection (CBP) agency has begun deploying an AI-powered system called 'Detective Border' to better detect suspicious shipments.

These developments are poised to further escalate existing trade tensions between Washington and Beijing. The Trump administration had levied high tariffs on many countries with the aim of protecting American manufacturers. The varying tariff rates across different nations created an incentive for Chinese exporters to resort to such evasion methods. The timing of the report, ahead of an anticipated September visit by Chinese President Xi Jinping to Washington, could introduce a new source of strain in the relationship between the two economic powers.

Analysts and market observers anticipate that future US trade frameworks may include punitive provisions for trading partners involved in such transshipment practices. As AI systems are deployed to curb tariff evasion, the implications for global supply chains and international trade relations will continue to be closely monitored. The coming period may see stricter controls and new sanctions in US trade policy.