White House report reveals transshipment scam costing US $26B in lost tariff revenue

The White House dropped a report on Thursday with a title that reads more like a Netflix documentary than a policy paper: “The Great Transshipment Scam.” The findings paint a picture of a sprawling, multi-country shell game in which Chinese exporters allegedly funnel goods through dozens of intermediary nations to dodge US tariffs, costing the federal government somewhere between $19 billion and $26 billion in lost revenue every year.

The central estimate puts the total value of illegally transshipped goods at roughly $75 billion annually.

How the scam works

Transshipment, in its simplest form, is tariff laundering. A product made in China gets shipped to a third country, where it undergoes minimal cosmetic changes like relabeling, repackaging, or light assembly. It then enters the US market under the third country’s origin label, sidestepping the steep tariffs that would have applied to Chinese-made goods.

The White House report identifies more than 40 countries as posing elevated transshipment risk. Panama, Mexico, and Colombia top the list alongside China itself. Brazil, Argentina, Chile, Peru, Costa Rica, and the Dominican Republic also appear among the flagged nations.

The practice isn’t new, but it accelerated sharply after 2018 when the US implemented Section 301 tariffs targeting Chinese imports. US Customs and Border Protection has reported a sharp increase in post-release discrepancy cases, a polite way of saying goods are arriving with paperwork that doesn’t match reality.

The report estimates that transshipment practices displace approximately 450,000 American jobs and drag down US GDP by between $113 billion and $150 billion annually. Electrical equipment and plastics are singled out as particularly affected sectors.

Enforcement is already ramping up

The report didn’t arrive in a vacuum. In June 2026, the White House issued Executive Order 14411, aimed specifically at strengthening customs enforcement against transshipment fraud. Thursday’s report effectively provides the data justification for that order, quantifying the scale of a problem that trade hawks have complained about for years.

What this means for markets and supply chains

The $19 billion to $26 billion in recovered tariff revenue, if enforcement succeeds, would represent a meaningful addition to federal coffers at a time when budget debates are intensifying.

Consumer prices in affected product categories could rise as the tariff arbitrage disappears. For sectors like electronics and plastics, where transshipment appears most concentrated, the price adjustments could be noticeable.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.