The White House announced on 21 August 2025 that more than 40 countries had assisted China in avoiding US tariffs by rerouting exports through nations facing lower American import duties. The report named Canada, India, Mexico, Japan and South Korea among the countries allegedly involved, stating that the practice allowed China to dodge tens of billions of dollars in tariff payments owed by importing companies.
White House trade adviser Peter Navarro argued that the scheme had inflicted direct harm on the American economy.
"American jobs and billions in revenue"
A spokesperson for the Chinese embassy in Washington, responding to media queries, rejected the accusations and pushed back against the broader tariff strategy.
"trade wars have no winners"
The spokesperson went on to say that Beijing opposes the tariff measures themselves and objects to the use of state power to single out Chinese firms, adding a further caution about how any crackdown should be carried out.
"any unilateral actions or agreements concerning transshipped goods must not target or harm the interests of third parties"
How did China allegedly evade the tariffs?
The White House described the practice as transshipping — moving cargo through an intermediary country before it reaches its true final destination — and said China exploited this method by funnelling goods through nations with more favourable tariff rates. Government and private-sector estimates cited in the report put the value of goods rerouted this way at somewhere between $30bn (£22.2bn) and roughly $300bn. According to the White House, Chinese exporters used third countries as stopovers and relabelled products to disguise their true origin, a tactic officials termed "fraud cloaked in paperwork".
"What has changed in today's Great Transshipment Scam is not merely the speed and scale of this modern form of smuggling, but the breadth, depth, and sophistication of the global Shadow Transshipment Network through which China's tariff evasion now moves"
Officials said Washington has begun deploying artificial intelligence tools specifically to detect and trace these transshipment routes.
Additional detail reported separately indicates the scale of the alleged scheme: according to Crypto Briefing, the White House report — which it says labelled the network "The Great Transshipment Scam" — estimated that roughly $75 billion in goods were improperly transshipped between February 2025 and February 2026, translating into an estimated $19 billion to $34 billion in lost US tariff revenue over that period.
Which countries have been used as rerouting hubs?
Research cited by the Washington Post found that Vietnam, Malaysia, Indonesia and Thailand had all seen notable export growth tied to China's use of third countries to keep goods moving toward the US market despite tariff barriers. Separately, a statement from House Republicans, cited by Representative Arrington's office, said tariff evasion schemes can take the form of setting up production facilities in third-party countries, or shipping goods to an intermediary nation and relabelling them before final export to the United States.
How does this fit into the broader US-China tariff dispute?
This latest report lands amid a broader pattern of escalating trade friction between Washington and Beijing that has played out over recent months. In July 2025 the US imposed new tariffs of 10% to 12.5% on roughly 60 trading partners over forced labour claims, a list that included several of the same countries — the UK, EU, Canada, Japan and India — now named in the transshipment report. That move prompted a legal backlash, with twenty-five US states suing the Trump administration over tariffs affecting goods from 60 trading partners including the UK, China and the EU.
Despite a pause on most tariffs following talks in May 2025, the US and China have continued exchanging retaliatory measures, including American restrictions on humanoid robot shipments and tighter Chinese controls on drone exports. In April 2025, President Trump introduced sweeping levies on dozens of trading partners, rooted in his long-standing view that tariffs create American jobs and strengthen the domestic economy. Those particular measures were later struck down by the US Supreme Court, though Trump has since reintroduced tariffs through alternative legal authority to preserve the policy.
What happens next?
The report is likely to become a sticking point in talks as President Trump and Chinese leader Xi Jinping prepare to meet in Washington in September 2025. No new sanctions or countermeasures tied specifically to this transshipment report have been announced.
Key Facts
- More than 40 countries were named in the White House report published on 21 August 2025, including Canada, India, Mexico, Japan and South Korea.
- Estimates for the value of rerouted goods range from $30bn to roughly $300bn, according to government and private-sector figures cited by the White House.
- A separate estimate put transshipped goods at about $75 billion between February 2025 and February 2026, implying $19bn–$34bn in lost tariff revenue.
- Vietnam, Malaysia, Indonesia and Thailand have been identified as key rerouting hubs tied to the practice.
- Trump and Xi are expected to meet in Washington in September 2025 amid ongoing trade tensions.
