According to the report, China began shifting its strategy after new U.S. tariffs were imposed in 2018 by sending goods to countries such as Mexico, Malaysia, and others for minimal processing or repackaging before shipping them to the United States. The practice, known as transshipping, allows products to avoid being identified as Chinese exports.
The report argues that while official trade statistics appeared to show declining imports from China, the strategy enabled Beijing to continue expanding its manufacturing base while undermining American factories and threatening U.S. jobs.
White House trade adviser Peter Navarro told reporters during a conference call that China is disguising the origin of its exports through more than 40 countries, although he emphasized that the larger problem is the willingness of other nations to facilitate the tariff-avoidance scheme.
“For years, the great transshipment scam has let communist China launder its exports,” Navarro said.
The report was released just weeks before Chinese leader Xi Jinping is expected to visit the United States in September. During his own trip to Beijing in May, President Donald Trump spoke favorably about Xi.
Although Beijing has characterized its ties with Washington as one of “strategic stability,” the report contends that Chinese industrial policies promoting manufactured exports have disrupted key industries—including automobiles, metals, and electronics—not only in the United States but also across Europe, Japan, and other major economies.
Navarro said China is not the only country employing such tactics, warning that nations including India could also use transshipping to circumvent tariffs. He added that trade agreements negotiated by the Trump administration will include provisions to punish countries that participate in the practice.
Since returning to office, the Trump administration has imposed steep tariffs on imports from countries around the world in an effort to strengthen domestic manufacturing. While the policy has targeted both allies and adversaries, economists have also pointed to the tariffs as contributing to higher inflation in the United States.
The White House report estimates that the value of goods routed through third countries each year ranges from approximately $34.2 billion to as much as $303 billion, based on government and private-sector data. Using a midpoint estimate of $75 billion in transshipped goods, the administration calculated annual tariff revenue losses of between $19 billion and $26 billion.
Navarro said U.S. Customs and Border Protection has begun testing an artificial intelligence system designed to detect transshipping operations. He added that importers caught falsely declaring a product’s country of origin can be required to pay tariffs retroactively for imports dating back roughly one year.
Several of Trump’s tariff policies enacted during his second term have been challenged in court, and the Supreme Court struck down some of those measures in February.
Despite the ongoing disputes over tariffs, the U.S. trade deficit has narrowed considerably. Although America continues to import more goods than it exports, the trade gap has totaled $371 billion so far this year—about $189 billion lower than during the same period a year ago.
{Matzav.com}
