US accuses over 40 countries of helping China bypass tariffs

The administration of US President Donald Trump has stated that China is using more than 40 countries to circumvent American import tariffs. According to the White House, Chinese goods are routed through third countries where they are repackaged, partially processed, or had their certificates of origin altered, after which they are supplied to the US at lower tariffs.

These conclusions are contained in a new report by the White House Office of Trade and Manufacturing Policy. Among the countries through which, according to the US administration's assessment, Chinese goods pass are major US trading partners, including Canada, Mexico, and Japan. The report also mentions the European Union.

The White House estimates the volume of trade related to the alleged tariff circumvention at approximately $60 billion. However, estimates from other government agencies and the private sector cited in the report vary significantly—from about $40 billion to over $300 billion annually.

To assess budget losses, the administration uses an indicator of about $75 billion in goods passing through such schemes each year. Based on that, the US may be missing out on roughly $19–26 billion in customs revenue annually.

White House trade adviser Peter Navarro said that the practice began to actively develop after the first major US tariffs on China were imposed in 2018. According to him, Chinese manufacturers exploit the differences in tariff rates among various countries, routing products through those with lower US import duties.

One method is the so-called transshipment: a Chinese-origin good is sent, for example, to Mexico or a Southeast Asian country, where it undergoes limited processing or repackaging, and then exported to the US as a product of another country. However, not all trade through third countries is a violation; it becomes illegal if the origin of the good is intentionally misrepresented to evade tariffs.

US to step up cargo inspections using AI

US Customs intends to expand its use of artificial intelligence to identify suspicious shipments. A new tool called Detective Border is expected to compare the declared country of origin, shipping routes, product composition, and other international trade data.

The administration hopes to detect discrepancies that are difficult to spot during routine customs inspections. If US authorities determine that the origin of a good was deliberately concealed, the importer may face retroactive duties for previous shipments and additional sanctions.

Washington has already introduced an elevated tariff for goods that customs identifies as being transshipped through a third country to evade US duties. Such shipments may be subject to an additional 40% rate, as well as other fines and fees.

The White House also plans to consider anti-circumvention efforts when entering new trade agreements. Navarro warned that the problem is not limited to China: other countries with high US tariffs may also try to use countries with lower rates as intermediate transshipment points.

The new report comes amid ongoing trade tensions between Washington and Beijing. Despite negotiations between the two countries, the US continues to accuse China of industrial policies and trade practices that, according to the US administration, give Chinese manufacturers unfair advantages in the global market.

Based on materials from: Financial Times, The Washington Post, White House