Post by : Badri Ariffin

The Donald Trump administration has identified more than 40 US trading partners as potential risks for helping Chinese goods bypass American tariffs through what the White House describes as a “shadow trans-shipment network.”

India, Canada and the European Union are among the economies named in the report, along with Taiwan, Mexico, Japan, South Korea and Vietnam.

The administration said it plans to use artificial intelligence to strengthen efforts to identify and penalise illegal transshipment, in which Chinese goods may be routed through another country to avoid higher US tariffs.

White House Report Details Transshipment Concerns

The report, titled “The Great Transshipment Scam,” was prepared by Peter Navarro, a senior trade adviser to President Donald Trump.

It focuses on the longstanding issue of illegal transshipment. Under this practice, goods originating in one country can be sent through a third country with lower US tariffs or other trade advantages before being exported to the United States.

The report identified more than 40 countries with elevated illegal transshipment risk. It also noted that, in some economies, the risk is difficult to separate from legitimate international trade flows.

“For years, the great transshipment scam has let Communist China launder its exports through more than 40 countries,” Navarro told reporters.

China’s Supply Chain Routes Under Scrutiny

According to Navarro's report, transshipment activity became more widespread after 2018, when the Trump administration introduced Section 301 tariffs on Chinese goods in response to what Washington described as unfair trade practices.

The report said Chinese manufacturers and trading companies began using third countries for activities such as minor processing, relabeling, repackaging, reinvoicing and changes to shipping routes.

These steps could create the appearance that goods originated in another country even when much of their Chinese content remained unchanged.

The report said countries could become attractive routes because of lower labour costs, weaker customs controls, permissive free-trade zones or preferential access to the US market.

India Among Countries Mentioned in Report

The report specifically referred to India's Pune–Gujarat–Chennai production belt while discussing supply-chain risks involving Chinese products.

Navarro said Chinese pumps and compressors entering supply chains through India could affect US industrial manufacturing.

“A Chinese pump that leaves Pune as Indian is a pump not machined in Cincinnati, Dayton or Columbus,” Navarro said.

The report did not describe all trade through the countries listed as illegal. Instead, it said some economies have transshipment risks that are embedded within wider legitimate trade activity, while others are more closely connected to China-linked supply chains.

A separate group was described as having advantages, including preferential US market access, that could make them attractive locations for rerouting goods.

Estimated Value of Illegal Transshipment

The White House report estimated the annual value of illegally transshipped goods at between approximately $40 billion and $303 billion.

It stressed that the wide range depends on the methodology and definition used to calculate the value of goods involved in illegal transshipment.

The report said the practice has become an important concern as companies have changed their supply chains in response to US-China tariff policies.

White House Plans AI-Based Border Detection System

The Trump administration is also working with US Customs and Border Protection on an AI-enabled system described in the report as a “detective border.”

The proposed system would use information including shipment data and routing histories to help determine whether goods entering the United States had been transshipped.

The administration said artificial intelligence could help authorities identify suspicious shipments and strengthen enforcement against tariff evasion.

Tariff Dispute Drives Supply Chain Changes

Supply-chain diversions involving Chinese goods have been a concern since Trump's first presidency, when Washington and Beijing entered a tariff dispute beginning around 2018.

Economists have previously pointed to countries such as Vietnam as beneficiaries of companies seeking to diversify their supply chains.

Since returning to the White House last year, Trump has introduced broad tariffs affecting US trading partners, adding to existing duties on Chinese imports.

#Global News #Donald Trump #Trump News #World Update