Full Breakdown
White House Report Accuses China of Global “Transshipment Scam”
8/14/2026, 8:35:44 AM
The Alleged Scheme and Its Scope
On August 13, 2025, the White House Office of Trade and Manufacturing Policy released a 25-page report titled *The Great Transshipment Scam*. The document alleges that Chinese exporters systematically route products through more than 40 third-country “shadow transshipment” nodes—such as Canada, Mexico, Japan, South Korea, India, the European Union and Singapore—to disguise origin and obtain lower U.S. tariff rates.
Background & Context
The practice intensified after the Trump administration imposed Section 301 tariffs on Chinese goods in 2018. Direct U.S. imports from China fell in 2019-2020, while the share supplied by identified transshipment countries rose sharply, according to the report.
Data & Statistics
- The report estimates annual tariff-revenue loss at $19 billion to $26 billion.
- Government and private-sector analyses cited in the report place the value of transshipped goods between $30 billion and $300 billion per year.
- Exiger, an AI-supply-chain firm, estimated $75 billion in illegally transshipped goods between February 2025 and February 2026.
- The same estimate is used to calculate 450,000 displaced U.S. jobs and up to $150 billion in reduced annual GDP.
- U.S. Customs and Border Protection (CBP) observed a 245 percent rise in shipments flagged with post-release discrepancies and a 169 percent increase in associated revenue assessments during the 526-day period after the 2018 tariffs.
Official Statements & Responses
Trade adviser Peter Navarro described the scheme as a “great transshipment scam” that has let “Communist China launder its exports” and warned that the United States is strengthening enforcement, including an AI-driven “Detective Border” prototype to screen bills of lading, shipping manifests and certificates of origin. CBP officials said the AI system will integrate shipment data, routing histories and product classifications to identify high-risk cargo.
A spokesperson for the Chinese embassy in Washington responded that “trade wars have no winners,” opposing U.S. tariff measures and urging that any unilateral actions not harm third-party interests.
Singapore Customs emphasized that Singapore’s transshipment framework complies with international best practices and seeks transparency for businesses.
Verbatim Quotes
- “For years, the great transshipment scam has let communist China launder its exports,” — Peter Navarro, trade adviser
- “Singapore’s legislative and regulatory framework governing transshipment is consistent with international best practices and rules, including those from the World Customs Organization, and seeks to facilitate trade through greater transparency and predictability for businesses.” — Singapore Customs
- “For years, the great transshipment scam has let Communist China launder its exports through more than 40 countries,” — Peter Navarro, trade adviser
- “A Chinese pump that leaves Pune as Indian is a pump not machined in Cincinnati, Dayton or Columbus,” — Peter Navarro, trade adviser
What’s Next
The report arrives weeks before a planned September meeting in Washington between President Donald Trump and Chinese President Xi Jinping, a summit expected to address broader trade tensions.
