WASHINGTON—The White House released a report on Aug. 13 detailing what it called a “transshipment scam” involving communist China and more than 40 countries.
The report describes how goods are illegally routed through third countries to conceal their Chinese origin before being shipped to the United States.
The report, titled “The Great Transshipment Scam,” estimates the annual value of illegally transshipped goods at $40 billion to $303 billion, depending on the methodologies and definitions used by government and private-sector sources.
“For years the great transshipment scam has led communist China to launder its exports to more than 40 countries, rob our treasury of tens of billions of dollars, and steal the paychecks of American workers,” Peter Navarro, an assistant to President Donald Trump and senior counselor for trade and manufacturing, said during a call with reporters.
“This report rips the mask off.”
The report states that China systematically evades U.S. tariffs and other trade measures by routing goods through third-party countries using “relabeling, repackaging, re-invoicing, minor processing, false country-of-origin claims, or other actions.”
According to the report, these transshipments result in the loss of 450,000 U.S. jobs, a $113 billion to $150 billion reduction in annual gross domestic product, and $19 billion to $26 billion in lost federal revenue.
According to Navarro, Chinese components are shipped to countries such as Vietnam, assembled into a recliner, for example, and then falsely declared as Vietnamese-made when exported to the United States.
This allows importers to avoid higher tariffs on Chinese goods.
Navarro described the practice as modern-day smuggling and said it’s far more widespread than many people claim, involving more than 40 countries.
“It’s really a clinic in economics,” Navarro said.
The report also highlights the administration’s initiative to deploy the AI-enabled “Detective Border” system to help U.S. Customs and Border Protection more effectively identify products transshipped illegally.