White House Report Accuses Other Nations of Helping China Evade Tariffs, Says Navarro
Peter Navarro, a White House trade adviser, released a report criticizing China and alleging that other countries are aiding tariff avoidance through transshipment. He described the practice as a 'great transshipment scam' that allows China to launder its exports. The report focuses more on the role of intermediary nations than on China itself.
The report calculates annual tariff revenue shortfalls between $19 billion and $26 billion, while estimates for goods routed through third countries range from $34.2 billion to $303 billion, with a $75 billion midpoint used for tax loss projections. Customs authorities have begun testing an artificial intelligence prototype to identify mislabeled origins, allowing retroactive duties extending back roughly one year.
The publication precedes a scheduled September meeting with Chinese leader Xi Jinping. Although Beijing characterizes the bilateral relationship as strategically stable, its manufacturing policies have unsettled industrial sectors across several major economies. The administration's import taxes have encountered judicial setbacks, including Supreme Court reversals in February, even as the overall trade deficit has contracted relative to the prior year.
This report could intensify scrutiny on intermediary nations, potentially altering their trade agreements with Washington. Businesses relying on complex supply chains may face higher compliance costs and retroactive penalties, while consumers could experience sustained inflationary pressures from tariffs. The focus on transshipment might also complicate diplomatic negotiations ahead of the September meeting, as enforcement efforts aim to alter global trade flows without escalating broader geopolitical tensions. The success of AI-based detection could determine whether these measures meaningfully reshape commerce or merely add friction.