White House accuses China and 40+ countries of tariff evasion costing up to $26B annually

Aug 13, 2026

The Trump White House released a report on August 13, 2026, accusing China of routing exports through more than 40 countries to evade U.S. tariffs. This "transshipment scam" costs the federal government $19 billion to $26 billion annually in lost revenue and has resulted in 450,000 lost American jobs. In response, the administration is deploying an AI-enabled "detective border" system to identify illegal shipments and retroactively collect duties.

Transshipment tariff evasion scheme

▪The Trump White House released a report on August 13, 2026, titled "The Great Transshipment Scam," detailing how goods are illegally routed through third countries to conceal their Chinese origin and evade U.S. tariffs.
▪The White House report estimates the annual value of illegally transshipped goods at $34.2 billion to $303 billion, depending on the methodologies used, with a central figure of $75 billion.

Federal revenue losses

▪The White House report estimates that illegal transshipments cause a $113 billion to $150 billion reduction in annual U.S. gross domestic product.
▪The White House report estimates that illegal transshipments result in annual federal revenue losses of $19 billion to $26 billion.

China export laundering operations

▪China responded to U.S. tariffs in 2018 by sending goods to other nations for packaging and limited assembly, making it appear that U.S. imports from China had dropped while allowing Beijing to grow its manufacturing sector.
▪White House trade adviser Peter Navarro stated that China systematically evades U.S. tariffs by laundering its exports through more than 40 countries using relabeling, repackaging, re-invoicing, or minor processing.

Third-country routing networks

▪Tier 2 of the White House report's transshipment list includes Brazil, Indonesia, Malaysia, Thailand, Turkey, and Vietnam, which have significant volumes of illegal transshipment and deeper integration into China-linked supply chains.
▪The White House report groups 40 countries involved in transshipment into three tiers, with Tier 1 including major partners like Canada, the European Union, India, Israel, Japan, Mexico, South Korea, and Taiwan.

AI customs enforcement system

▪Under the new enforcement initiative, the U.S. government can retroactively collect tariffs on every shipment over the past year if an exporter is found to have made illegal transshipments.
▪U.S. Customs and Border Protection has deployed a prototype artificial intelligence-enabled "detective border" system to identify products transshipped illegally, aiming for full-scale implementation by the end of 2026.

Job losses from evasion

▪The Chinese government's policies supporting manufactured exports have destabilized the automotive, metals, and electronics sectors in America, Europe, and Japan, according to the White House report.
▪The White House report states that illegal transshipments of Chinese goods result in the loss of 450,000 U.S. jobs.