The Transshipment Alibi: What the White House Report Leaves Unasked
The White House on Tuesday accused Chinese exporters of using transshipment on an “industrial scale” to evade US tariffs, diverting trade through third countries to dodge higher levies on direct imports from China.
Source: Global Trade Alert · August 17, 2026 at 5:26 PM · AI-assisted report
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WASHINGTON, 18 AUGUST 2026 —
The White House on Tuesday accused Chinese exporters of using transshipment on an “industrial scale” to evade US tariffs, diverting trade through third countries to dodge higher levies on direct imports from China.
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The 89-page study, titled The Great Transshipment Scam, alleged that tariff differentials created by Washington’s 2018 and 2025 surcharges on Chinese goods pushed exporters to reroute merchandise via lower-tariff economies, transforming what it called “smaller-scale evasion into industrial-scale customs fraud.”
Figures cited in the report show US manufacturing payrolls fell further in 2025 despite the tariffs, with total employment shrinking from the prior year by 1.2% nationwide and by 2.8% in the Rust Belt states, according to Bureau of Labor Statistics data.
“What began as smaller-scale tariff evasion became industrial-scale customs fraud and then a global business model,” the White House argued, while conceding it could not precisely quantify the value of redirected Chinese exports.
US manufacturing construction spending also declined in real terms in 2025, falling 18% from its 2024 peak, according to Department of Commerce figures cited alongside the report. Inward foreign direct investment into new greenfield plants totaled US$4.6 billion in 2025, while expansions of existing foreign-owned facilities reached US$9.6 billion—both down sharply from previous years.
The White House said the tariffs were intended to protect US workers and industry, but independent analysts question whether transshipment alone explains the shortfall. Simon J. Evenett, Professor of Geopolitics & Strategy at IMD Business School and founder of the St. Gallen Endowment for Prosperity Through Trade, said the administration’s focus on fraud deflects attention from domestic constraints.
“Talk about foreign cheating crowds out discussion of deficiencies in the US business environment that hold American manufacturers back,” Evenett wrote in an accompanying commentary. He noted that 44% of manufacturers reported difficulty attracting and retaining quality workers in a National Association of Manufacturers survey for the first quarter of 2026.
The report acknowledged that some post-2018 trade diversion reflected lawful shifts in production and sourcing, yet it did not estimate how much demand shifted to US producers versus independent foreign suppliers.
Trade lawyers warn tighter transshipment enforcement could add compliance costs and delays for exporters to the United States, increasing uncertainty in cross-border commerce.
The administration has yet to detail how it plans to measure or curb transshipment flows, and the report did not specify whether any new enforcement tools will be introduced.
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