US accuses over 40 countries of aiding China in avoiding tariffs

The Trump administration just named and shamed more than 40 countries for allegedly helping Chinese exporters dodge US tariffs through what it calls an elaborate transshipment network. The White House Office of Trade and Manufacturing Policy released its findings in a report titled “The Great Transshipment Scam.”

The core allegation: Chinese goods are being relabeled, rerouted, and stamped with false country-of-origin claims before entering the US, effectively sidestepping the steep duties Washington has imposed. The list of accused enablers includes Mexico, Canada, the EU, India, Japan, and South Korea.

The numbers behind the accusation

According to the report, approximately $75 billion in goods were improperly transshipped between February 2025 and February 2026. That figure translates into an estimated $19 billion to $34 billion in lost US tariff revenue over the same period.

The report, spearheaded by trade adviser Peter Navarro, argues that the practice isn’t just passive negligence by these countries. It contends that the nations involved have a direct financial incentive to look the other way, because transshipment generates fees, creates local jobs, and produces tax revenue for the host countries facilitating the rerouting.

How the scheme allegedly works

The mechanics are straightforward, even if the scale is staggering. A Chinese manufacturer produces goods subject to, say, a 145% tariff when entering the US directly. Instead of shipping straight to an American port, the goods take a detour through a third country. There, they get new paperwork, a fresh country-of-origin label, and are shipped onward to the US at a fraction of the original duty rate.

Sometimes the goods are minimally processed in the intermediary country, just enough to technically qualify for a different origin classification. Sometimes they’re simply repackaged. The report alleges both practices are widespread across the 40-plus nations identified.

This isn’t a new phenomenon. Transshipment concerns have shadowed US trade policy for decades, particularly after the initial wave of China tariffs began in 2018. But the White House is arguing that the problem has accelerated dramatically as tariff rates have climbed higher, making the financial incentive for circumvention proportionally larger.

The AI-powered response

The administration isn’t just publishing angry reports. It’s building technology to address the problem. The White House outlined plans for an AI-driven “detective border” system designed to flag suspicious import patterns in real time.

The system would analyze shipping data, origin documentation, and trade flow anomalies to identify likely cases of fraudulent origin claims before goods clear customs. If a country that historically exported $50 million worth of a particular product suddenly starts exporting $500 million of it shortly after China gets hit with new tariffs, the system would flag that spike for investigation.

What this means for global trade

The diplomatic fallout could be significant. Accusing allies like Canada, Japan, South Korea, and EU member states of facilitating Chinese trade evasion is not the kind of thing that gets brushed aside at the next bilateral meeting. These are countries with their own complex trade relationships with both the US and China, and being publicly named in a White House report puts them in an uncomfortable position.

For businesses, the implications are more immediate. Companies that have restructured their supply chains to route through third countries may face heightened scrutiny at the border. Compliance costs are likely to rise as importers invest in more thorough documentation to prove legitimate origin claims.

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