The White House has accused more than 40 countries, including Canada, Mexico, Japan and EU member states, of helping China evade US tariffs by rerouting exports through lower‑tariff jurisdictions — a practice it labels “The Great Transshipment Scam” . The report estimates that such transshipment covers about $60bn in trade, with other US and private analyses placing the range between $40bn and $303bn .
Peter Navarro, head of the White House trade office, said China has developed “extremely sophisticated” methods to bypass duties since tariffs were first imposed in 2018, and that recent tariff differentials have encouraged exporters to continue rerouting goods . He argued the practice deprives the US Treasury of tens of billions and undermines American workers .
US customs authorities are deploying an AI‑powered system, “Detective Border,” to better detect mislabelled imports and enforce tariff rules, a move the administration says could boost revenue and create jobs . Washington is also adding anti‑transshipment provisions to new trade agreements and working to tighten rules of origin standards.
The White House Office of Trade and Manufacturing Policy has published a report accusing more than 40 countries, including Thailand, of facilitating a “global Shadow Transshipment Network” that allows Chinese exporters to dodge US tariffs. The report, titled “The Great Transshipment Scam” and released on August 13, puts Thailand in the same tier as Brazil, Indonesia, Malaysia, Türkiye and Vietnam, and warns that goods found to have been illegally rerouted through these economies could face an additional 40 percent duty.
Three tiers, one accusation
The report divides the 40-plus named economies into three tiers based on scale and depth of integration with Chinese supply chains. Tier 1 covers major US-bound export platforms where the White House says transshipment risk sits inside broad, otherwise legitimate trade flows: Canada, the European Union, India, Israel, Japan and Taiwan. Tier 2, where Thailand sits alongside Brazil, Indonesia, Malaysia, Türkiye and Vietnam, is described as economies with significant transshipment volumes and deeper integration into China-linked production, sourcing and logistics networks. Tier 3 groups smaller, “opportunistic” economies such as Singapore, Cambodia, Laos, Myanmar and the Philippines, which the report says offer specific advantages, including low-cost labour, free zones and bonded warehousing, that make them attractive for rerouting even if current volumes are lower.
Being named does not, on its own, amount to a finding of wrongdoing against every exporter in a listed country. The report itself acknowledges that a shift in trade patterns is not proof of illegal transshipment by itself.
How the scheme is said to work
According to the White House, Chinese-made goods are relabeled, repackaged, reinvoiced or given minor processing in a third country before being shipped to the United States under an altered country of origin, allowing them to clear customs at a lower tariff rate than would apply to goods declared as Chinese. White House trade adviser Peter Navarro offered a concrete illustration: Chinese components shipped to a country such as Vietnam, assembled into a recliner, then declared as Vietnamese-made on export to the US.
The administration puts the annual cost of the practice at between $19 billion and $26 billion in lost federal tariff revenue, alongside estimates of $113 billion to $150 billion in reduced US GDP and roughly 450,000 American jobs. A separate Commerce Department estimate cited in the report put transshipment through Mexico, India and Vietnam alone at about $67 billion in goods last year, equivalent to roughly $28 billion in foregone tariffs.
To catch it, the administration says it is developing an AI-enabled system, dubbed “Detective Border,” that would let Customs and Border Protection cross-reference shipping routes, product data and ownership records to flag suspicious shipments before they enter the country.
Where this lands for Thailand
Thailand’s Tier 2 placement comes as the kingdom is already running its own, separately motivated crackdown on foreign nominee arrangements. The Department of Business Development’s enforcement drive under Order No. 2/2026 has targeted companies using Thai proxies to work around the Foreign Business Act, with billions of baht in assets seized in cases involving Chinese-linked firms.
The transshipment report adds a second, US-driven layer of scrutiny on top of that domestic one, arriving just as Thailand is courting a fresh wave of Chinese manufacturing investment rather than trying to slow it down. Chinese firms accounted for the largest number of newly approved businesses in Thailand in the first half of 2026, and the government has fast-tracked Board of Investment and Eastern Economic Corridor approvals for a new humanoid-robot component cluster built by five Chinese companies. That combination, an EEC actively recruiting Chinese manufacturers on one hand and a Washington report questioning the origin of goods moving through the same corridor on the other, is likely to sharpen the compliance burden facing exporters trying to demonstrate genuine Thai value-add rather than pass-through assembly.
Washington has already set a template for how Tier 2 exposure can translate into policy. A 2025 framework agreement with Vietnam imposed a 40 percent tariff specifically on goods judged to have been transshipped, twice the rate applied to ordinary Vietnamese-origin exports. Thai exporters and their US-based buyers now face the prospect of a similar carve-out, with customs documentation and supply-chain traceability becoming a live commercial issue rather than a paperwork formality.
Beijing’s response, and what happens next
A representative for the Chinese Embassy in Washington told reporters China would act to safeguard its rights and interests, and accused the US of economic coercion that disrupts global industrial and supply chains. The report does not announce immediate new tariffs or country-specific action; it functions as a policy document and enforcement signal rather than a rule change. “The message to the world is simple,” the report states. “The age of untraceable illegal transshipment is over.”
The report lands about a month ahead of an expected summit between President Donald Trump and Chinese President Xi Jinping, adding trade-enforcement friction to a bilateral relationship already under strain over tariffs and export controls.
