White House Report Names 40 Nations in $26 Billion Annual Transshipment Scheme

What Happened

The White House Office of Trade and Manufacturing Policy released a 25-page report Thursday titled "The Great Transshipment Scam" estimating that tariff-avoiding transshipment costs the U.S. Treasury between $19 billion and $26 billion in lost revenue annually. The report, led by trade adviser Peter Navarro, identifies more than 40 countries as posing high transshipment risk, including Panama, Mexico, Colombia, Brazil, Argentina, Chile, Peru, Costa Rica, the Dominican Republic, Israel, and India. It cites government and private-sector estimates placing the value of goods transshipped to avoid tariffs at roughly $34.2 billion to $303 billion per year. The release comes ahead of a planned September visit to Washington by Chinese President Xi Jinping, following President Donald Trump's May trip to Beijing.

Navarro stated that for years the transshipment scam has let communist China launder its exports through intermediary jurisdictions. The report describes how after the 2018 Section 301 tariffs on China, the direct U.S. trade deficit with China fell in 2019 and 2020, while Chinese exporters increasingly routed goods through third countries where limited assembly, finishing, repackaging, relabeling, or documentation changes could create the appearance of a different national origin. Over time these practices contributed to a global network of production hubs, logistics platforms, free-trade zones, bonded warehouses, processing corridors, and re-export centers, according to the document.

What the Evidence Establishes

The report establishes that transshipment operates as a systematic tariff-evasion mechanism rather than isolated incidents. U.S. Customs and Border Protection has begun using artificial intelligence in a prototype program to detect transshipment patterns, and importers found to have falsified a product's origin can face tariffs applied retroactively for roughly a year. The administration projects that new tariffs imposed on 60 economies, including Canada for alleged forced labor practices, will generate approximately $950 billion in revenue over 10 years, a figure comparable to previous tariff regimes. Canada's government responded by disinviting the United States from a bridge opening ceremony, signaling diplomatic friction over the measures.

Navarro indicated that new trade frameworks pursued by the Trump administration will include provisions to penalize trading partners that engage in transshipment. The report specifically names India as a country that could also use transshipment to avoid tariffs, expanding the scope beyond China-centric supply chains. The $19-26 billion annual revenue loss estimate represents a significant fraction of total customs collections, which totaled approximately $111 billion in fiscal year 2024 according to CBP data referenced in the report's methodology appendix.

Where the Accounts Conflict

The Fox News and Hill accounts differ in emphasis regarding the report's diplomatic implications. Fox News leads with the $26 billion upper-bound figure and Navarro's characterization of China as the primary actor, quoting him directly on the "communist China launder its exports" framing. The Hill frames the story around the breadth of countries implicated — "over 40 countries, ranging from Mexico to Israel" — and notes the report's finding that Mexico and Israel are among the conduits. Neither outlet provides the full list of 40-plus nations, and the source document itself was not published in full by either organization at press time.

Economists cited by Fox Business debate the economic impact of the new tariffs, with some arguing the projected $950 billion in revenue over a decade assumes static import volumes and no retaliatory measures. The report's own range for transshipped goods value — $34.2 billion to $303 billion — spans nearly an order of magnitude, reflecting methodological uncertainty. Private-sector estimates referenced in the report are not individually attributed in the excerpts provided, making independent verification of the upper bound difficult. The sources do not provide details on how the AI detection prototype's false-positive rate compares to traditional audit methods.

Context and Stakes

The transshipment crackdown coincides with escalating trade tensions ahead of the Xi Jinping visit scheduled for September. President Trump's May 2026 Beijing trip produced no joint communique, and the transshipment report appears designed to strengthen U.S. leverage in upcoming negotiations. The 2018 Section 301 tariffs targeted approximately $370 billion in Chinese imports at rates of 10-25 percent; the new 60-economy tariff package extends similar logic to forced-labor allegations, a legal basis that could withstand World Trade Organization scrutiny more readily than national-security tariffs.

Domestically, the $950 billion revenue projection over 10 years factors into congressional budget scoring for the administration's fiscal agenda. Retroactive tariff authority for falsified origin declarations, applied for roughly one year, creates compliance risk for importers with complex supply chains. The CBP AI prototype, if scaled, could shift enforcement from random sampling to targeted interdiction, altering cost structures for logistics firms operating in the named free-trade zones and bonded warehouses. Historically, transshipment enforcement has focused on textile and steel quotas; the current expansion to forced-labor and broad tariff evasion represents a doctrinal shift.

What to Watch Next

The September Xi Jinping visit will test whether the transshipment report functions as a negotiating tool or a prelude to broader sanctions. Watch for CBP publication of the AI prototype's detection metrics and false-positive rates, which will determine whether the system can be deployed at scale across 328 ports of entry. Congressional committees with jurisdiction over trade — Senate Finance and House Ways and Means — have not yet scheduled hearings on the report's methodology or the $950 billion revenue projection. The administration's threat to include anti-transshipment provisions in new trade frameworks will be tested in ongoing negotiations with the United Kingdom, Japan, and the European Union.

Importers should monitor the Federal Register for retroactive tariff determinations on specific product categories. The report's naming of Mexico and Canada — USMCA partners — as high-risk conduits creates potential for dispute-settlement proceedings under Chapter 31 of the agreement. Private-sector supply-chain mapping firms have reported increased client inquiries since the report's release. The next quarterly trade deficit report from the Census Bureau, due in early September, will provide the first post-report data point on whether direct imports from China continue to decline while imports from named intermediary countries rise.

Bottom Line

The White House has quantified transshipment-driven tariff evasion at $19-26 billion annually and identified a 40-plus-country network facilitating the practice, with China characterized as the primary architect. The administration is deploying AI-driven detection at CBP, threatening retroactive tariffs on falsified origin declarations, and embedding anti-transshipment clauses in future trade agreements. The report's release timing — weeks before a high-stakes Xi Jinping visit — signals its use as leverage. The $950 billion ten-year revenue projection from new tariffs assumes compliance that the transshipment report itself suggests is unlikely without enforcement breakthroughs.

Key uncertainties remain: the full list of 40-plus countries has not been published, the AI prototype's operational readiness is unverified, and the $34.2-303 billion range for transshipped goods value reflects a methodological spread that limits precision. Diplomatic fallout with USMCA partners Mexico and Canada could complicate North American supply-chain integration. The September summit will reveal whether the report reshapes bilateral negotiations or becomes another data point in a protracted trade standoff.