Desk. The Donald Trump administration has identified more than 40 trading partners of the US, including India, Canada and the European Union. They are accused of helping China avoid tariffs by running a 'shadow trans-shipment network', which could pose a risk. The US has pledged to use artificial intelligence to detect and penalize such illegal activities.
The White House report titled 'The Great Transshipment Scam' criticizes long-standing concerns about 'illegal transshipment'. It states that to avoid the high tariffs imposed by President Donald Trump, goods can be sent via a third country where America's tariffs are lower. Other countries cited in the report include Taiwan, Mexico, Japan, South Korea and Vietnam.
The report of Peter Navarro, Chief Trade Advisor to President Donald Trump, states that after 2018, transshipment (sending goods from one country to another) started increasing. This happened after the Trump administration imposed tariffs on China under Section 301 to counter unfair trade practices. Navarro told reporters, 'For years, because of this huge transshipment scam, Communist China has been sending its exports to other countries through more than 40 countries and selling them as its own goods.'
The report mentions more than 40 countries where the risk of illegal transshipment is high. It said that for some economies, transshipment risks have become part and parcel of large-scale legitimate trade. Some other countries were found to be more connected to the supply chain linked to China. A third group enjoyed special access to the United States, making them attractive and convenient targets for rerouting goods.
“China began using these third countries to perform minor processing, re-labeling, re-packaging, re-invoicing, or routing changes that made the goods appear to be from a new country, while in fact the Chinese content remained the same,” Navarro said in the report.
To avoid tariffs, he said, China and its state-backed manufacturing and trading companies may ship goods to areas with cheaper labor, less customs surveillance, lax free zones, or that receive special trade privileges with the United States.
According to Navarro's report, the White House is working with US Customs and Border Protection on an AI-based detective border. Its purpose is to determine whether a shipment contains transshipped goods (goods moved from one place to another). According to the report, this system will use information like shipment data, routing history and other tools.
Experts say that during Trump's first term, around 2018, there was a tariff war going on between Washington and Beijing. Since then, the process of shifting the supply chain from China to other places had started. Economists said that when companies spread their supply chains to different places, countries like Vietnam benefited from it. Since returning to the White House last year, Trump has imposed heavy tariffs on countries that trade with the US, adding to the already burdensome tariffs on Chinese goods.