Washington Puts a Number on Transshipment, and a List of Countries Next to It

The White House Office of Trade and Manufacturing Policy released a report on Thursday that accuses dozens of countries of belonging to what it calls China's "shadow transshipment network," and describes an AI-powered "detective border" being built to catch rerouted goods ^[1][8]. More than 40 countries are tagged with elevated illegal transshipment risk, and the report's list of "China's biggest enablers" starts with Mexico and Canada and runs through the European Union, India, Japan and South Korea ^[6][7].

The headline figure comes from outside government. Exiger, an AI supply chain firm, supplied a mid-range estimate of $75 billion in illegally transshipped goods between February 2025 and February 2026, which the report links to forgone tariff revenue of $19 billion to $34 billion ^[4]. That implies a forgone duty rate of roughly 25 to 45 percent of declared value, which is a wide band and tells you the estimate is a modeled range rather than a measured one ^[5]. The report's valuations draw on two government and three private-sector sources ^[3]. Countries were sorted by the scale of their China-linked trade, the depth of their economic integration with China, and the "weak-link advantages" that make them useful for rerouting ^[2]. Indonesia, Thailand, Brazil and Malaysia are also named, and others are flagged for exploitable features such as cheap labor, strategic port access, lax customs enforcement or free trade zones ^[9].

The enforcement apparatus is the part worth reading twice. According to the report, the AI system will scan shipment data against routing histories, verify claimed production capacity and ownership relationships, and analyze packaging patterns and X-ray imaging at ports to find mismatches between what a container declares and what it holds ^[8]. That is a shift in method. US trade enforcement has for decades concentrated limited resources on the highest-payout cases, which are complex and often take years to build, during which the goods keep arriving below fair market price ^[13].

Nothing in the report imposes a new documentary rule on importers. What it does is set a standard that importers will be measured against: effective enforcement, the report says, "requires distinguishing legitimate manufacturing and substantial transformation from pass-through trade and origin shifting" ^[16]. Origin is genuinely hard to determine when a finished good draws components from several countries, and it is unclear how much of the trade shift the report describes is illicit rather than ordinary production relocation ^[14][15]. A screening model that flags routing anomalies will generate questions about legitimate supply chains, and the party holding the bill of materials, the capacity data and the ownership chart is the importer.

The incentive structure is not disputed by either side. The report concedes that tariff differentials raise the payoff to illegal transshipment, while arguing that detection and deterrence tools are being deployed ^[12]. Those differentials are the administration's own: the second-term wave of country-specific duties put some of the highest rates on allies and major trading partners, and tens of billions of dollars in tariffs have landed on compliant importers ^[18]. The first-term version of this produced China +1, with heavy investment in Vietnam and Cambodia, often by Chinese-owned factories ^[17]. The report also argues that transshipment enriches the intermediary countries themselves, through assembly fees, warehousing, logistics margins, port charges, brokerage income, land rents and export-processing-zone investment, plus jobs and tax receipts for their governments ^[11]. Peter Navarro, whose office produced the report, told Bloomberg Television it is "basically a warning to the world" and added, "don't try to cheat America" ^[10].