Chinese companies are increasingly routing shipments to the United States via other nations to avoid President Donald Trump’s tariffs, the White House said Thursday.
Such efforts began during Trump’s first term and have accelerated over the past year as he imposed higher taxes on Chinese imports.
The United States is missing “tens of billions of dollars” in tariff revenue from the practice, as merchandise worth roughly $75 billion skirts Trump’s tariff wall, the White House said in a report.
Different tariff rates for goods from different nations are a key part of the president’s trade policy. But the varying rates also “create opportunities for arbitrage and evasion,” the report said.
To avoid high tariffs, exporters in China send a product to another nation, such as Vietnam or Mexico, where it is repackaged or minimally processed and sent on to the U.S.
“Communist China has engaged in an extremely sophisticated set of actions that are designed essentially to transship and thereby evade the tariffs,” said Peter Navarro, the White House trade adviser who led the study.
The report comes little more than a month before Chinese President Xi Jinping is expected to meet Trump in Washington.
The administration has tried to discourage the practice in trade deals reached over the past year with nations including Vietnam and Indonesia.
But distinguishing between permissible transshipment — when goods move from one vessel to another like passengers boarding a connecting flight — and fraudulent practices is difficult.
The administration is working on an artificial intelligence system that would scrutinize shipments to identify suspect cargos, the report said.
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