US accuses Chinese exporters of orchestrating large-scale transshipment scheme to dodge tariffs

The White House trade adviser Peter Navarro, who has long taken a hard line on Chinese trade practices, has labeled the practice the "Great Transshipment Scam." He argues that the scheme is designed to circumvent duties imposed by the Trump administration and to undermine American efforts to protect domestic industries. Navarro's framing echoes years of administration rhetoric about Beijing's trade behaviour and signals that tariff enforcement will remain a central plank of US economic policy heading into the next political cycle.

Background on the transshipment allegations

The Chinese government has described its relationship with the United States as one of "strategic stability," a formulation that Beijing has used in past diplomatic exchanges to signal a desire to manage tensions rather than allow them to escalate. Chinese officials have not directly responded to the latest White House allegations, but the language suggests Beijing may seek to keep the dispute within managed channels rather than allow it to spiral into broader confrontation. The contrasting rhetoric — Washington speaking of scams and Beijing speaking of stability — underscores the deep diplomatic gap between the two governments.

The report's central allegation is that routing goods through third countries allows Chinese exporters to pay lower tariff rates than they would face if the products were declared as Chinese-made. By relabelling or lightly modifying goods in countries with more favourable trade arrangements, the exporters can effectively launder the origin of their products. Trade lawyers note that the practice is not new, but the scale alleged by the White House is unprecedented, and the report claims it has grown rapidly in recent years.

How the scheme allegedly works

Under US trade law, goods that have been substantially transformed in another country can be considered products of that country. The White House argues that the changes made to Chinese goods in third countries are too superficial to qualify as substantial transformation. The report points to operations in Southeast Asia, where minimal assembly or relabelling is said to take place before goods are shipped to the United States, as a particular flashpoint.

The accusation lands as the two economic superpowers continue to negotiate over a range of trade issues, including tariffs, technology transfer and market access. The Trump administration has imposed tariffs on hundreds of billions of dollars of Chinese goods, and Beijing has retaliated with duties on American exports. The transshipment allegations raise the prospect of additional measures targeting not only Chinese exporters but also the third countries that host the rerouting operations.

Implications for US trade policy

Industry analysts say the report could pressure US Customs and Border Protection to step up origin verification at American ports. It may also prompt the administration to seek cooperation from countries where the alleged assembly and relabelling operations are based. Some legal experts caution that proving transshipment on a case-by-case basis is difficult, but the White House appears to be signalling that it will treat the practice as a priority enforcement target.