Key Highlights

  • A White House report accuses more than 40 countries, including Canada, Mexico, and Japan, of helping China evade US tariffs through transshipment.
  • The report estimates $60 billion in trade has been affected, while other estimates cited in the report range from $40 billion to $303 billion.
  • US Customs and Border Protection is deploying an AI-powered system called "Detective Border" to better identify mislabeled exports.
  • The report comes six weeks before President Xi Jinping's expected reciprocal visit to Washington.

Report Alleges Widespread Transshipment Scheme

The White House has accused more than 40 countries, including Canada, Mexico, and Japan, of helping China illegally avoid US tariffs by rerouting trade through nations subject to lower Import duties. The report, titled "The Great Transshipment Scam," estimated that $60 billion in trade has been affected, citing other government and private sector estimates ranging from $40 billion to $303 billion. Peter Navarro, head of the White House office of trade and Manufacturing policy that issued the report, said China had used increasingly sophisticated methods to engage in transshipment since tariffs were first imposed in 2018.

New AI Tool Deployed to Detect Mislabeled Exports

US Customs and Border Protection has begun using an AI-powered system called "Detective Border" to more accurately determine the composition of exports and ensure correct Tariff labeling, according to the report. Officials said the effort is expected to generate tens of billions of dollars in additional tariff revenue. The US Trade Representative's office has included transshipment reduction provisions in many recent trade deals, though the agency is still finalizing "rules of origin" definitions needed to determine where products are actually manufactured for tariff purposes.

Report Comes Ahead of Planned Xi Jinping Visit

The report was released roughly six weeks before President Xi Jinping's expected reciprocal visit to Washington, following Trump's earlier visit to Beijing in May. Trade tensions between the two countries remain elevated despite a one-year truce reached last October. US officials have separately raised concerns about China's commitments on rare earth exports, while China has expressed frustration over new US national security measures, including a ban on the import of Chinese robots. The White House report also warned that other countries facing higher US tariffs may increasingly adopt similar transshipment strategies to reduce their own duty exposure.