White House Report Says China-Linked Tariff Dodge Costs US Up to $26 Billion a Year

.

A Global Network Built to Dodge Tariffs

The White House released a report on Thursday accusing China of using dozens of countries as middlemen to avoid U.S. tariffs. The 25-page document, titled "The Great Transshipment Scam," was produced by the White House Office of Trade and Manufacturing Policy under trade adviser Peter Navarro.

The report identifies more than 40 countries as posing a high risk of facilitating this practice, known as transshipment. Alongside China, the list includes Panama, Mexico, Colombia, Brazil, Argentina, Chile, Peru, Costa Rica and the Dominican Republic. According to the report, many of these countries are linked to minimally processing, relabeling and repackaging Chinese-origin components before the goods continue on to the United States.

Transshipment works by routing goods through an intermediary country before they reach American shores. Once there, limited assembly, repackaging or new paperwork can make it appear the product originated somewhere other than China, potentially qualifying it for lower tariffs.

.

How the Practice Took Hold

The report traces the scheme back to 2018, when the first Trump administration imposed Section 301 tariffs on Chinese goods. Chinese exporters responded by shipping goods to third countries — from Mexico to Malaysia — for repackaging or limited assembly before sending them on to the United States.

That shift made it look, on paper, as if American imports from China were falling. In reality, it allowed Beijing to keep expanding its manufacturing base in ways the report says could threaten American factories and jobs. Over time, this pattern helped build out an entire infrastructure of production hubs, logistics platforms, free-trade zones and bonded warehouses designed to obscure a product's true origin.

.

Billions in Lost Revenue — and a Wide Range of Estimates

The White House put the direct cost to the U.S. Treasury at between $19 billion and $26 billion in lost tariff revenue every year. The broader scale of the problem is harder to pin down: the report cites government and private-sector estimates ranging from $34.2 billion to as much as $303 billion worth of goods transshipped annually.

Navarro's report uses a "central case estimate" of $75 billion in transshipped goods as the basis for its $19 billion to $26 billion revenue-loss figure — and that central estimate translates to roughly 450,000 U.S. jobs displaced, both directly and indirectly, according to the report.

Navarro did not mince words about who he holds responsible. "For years, the great transshipment scam has let communist China launder its exports," he told reporters Thursday. At the same time, he acknowledged on a call with reporters that the broader issue was less about China itself than about other nations enabling the avoidance of U.S. tariffs.

U.S. Trade Representative Jamieson Greer also weighed in, framing the practice as an attempt to exploit the administration's trade deals. He described transshipment as a form of free-riding on President Trump's trade agreements, driven by exporters acting in bad faith — the very reason tariffs exist in the first place, in his view.

.

Beijing Pushes Back

China's response was swift. The Chinese embassy in Washington said it opposes any party seeking to strike a deal at China's expense or that disrupts industrial supply chains, warning that Beijing would "resolutely take necessary measures to safeguard its legitimate rights and interests" should such a situation arise.

It's a familiar posture from Beijing. China's Commerce Ministry has previously warned that the country would "not accept" being cut out of global supply chains and would respond with countermeasures if it felt sidelined by U.S. trade deals.

.

New Tools, New Penalties

To fight back against the practice, the administration is turning to technology. The report outlines plans for U.S. Customs and Border Protection to deploy an AI-enabled system nicknamed "Detective Border" to help agents flag suspicious shipments. Navarro added that importers caught falsifying a product's country of origin can now face tariffs applied retroactively for roughly a year.

Navarro also flagged that the problem isn't limited to the countries named in the report. He said nations like India could exploit the same loophole, and that new trade frameworks under negotiation will include provisions specifically designed to penalize partners engaged in transshipment.

.

What Comes Next

The report lands at a sensitive moment in U.S.-China relations. It was released roughly three months after President Trump's own visit to Beijing in May, and just weeks before Chinese President Xi Jinping is expected to travel to Washington in September for high-level talks.

Greer's office is also said to be weighing new unilateral tariffs following a separate investigation into excess industrial capacity involving China, the European Union and 16 other trading partners — with Navarro suggesting this week's transshipment report could feed directly into that probe.

Whether the report leads to concrete enforcement action or simply hardens the administration's negotiating position ahead of the Xi visit remains to be seen. But it signals that transshipment — long flagged by trade experts across the political spectrum as a weak point in tariff enforcement — is now firmly on the White House's radar heading into a critical diplomatic stretch.

.

Sources

1. Reuters (via BNN Bloomberg): https://www.bnnbloomberg.ca/tariffs/2026/08/14/white-house-says-transshipped-goods-cost-us19b-26b-in-lost-tariffs/
2. Associated Press (via U.S. News & World Report): https://www.usnews.com/news/business/articles/2026-08-13/trump-white-house-says-its-losing-19b-26b-a-year-in-revenue-as-countries-dodge-tariffs
3. Yahoo Finance / Fox Business report on trading partners: https://finance.yahoo.com/markets/article/white-house-claims-over-40-us-trading-partners-are-helping-china-evade-tariffs-by-acting-as-middlemen-165400091.html
4. The Hill: https://thehill.com/homenews/administration/6029126-china-tariff-evasion-white-house-report/
5. Original White House report ("The Great Transshipment Scam"): https://www.whitehouse.gov/wp-content/uploads/2026/08/The-Great-Transshipment-Scam.pdf

.