The Trump administration has identified more than 40 countries allegedly helping China route goods through third countries to skirt US tariffs, with AI firm Exiger estimating $75 billion in illegally transshipped goods between February 2025 and February 2026.
The White House is deploying an AI-powered "detective border" to scan shipment data, verify production capacity, and analyze packaging and X-ray imaging to catch tariff evasion.
The crackdown names major enablers including Mexico, Canada, the European Union, India, Japan, South Korea, Indonesia, Thailand, Brazil, and Malaysia, and represents a significant shift toward automated enforcement of trade rules.
What happened
The White House Office of Trade and Manufacturing Policy released a report Thursday identifying more than 40 countries allegedly part of China's "shadow transshipment network" — routing goods through third countries to evade US tariffs. AI supply chain firm Exiger estimated $75 billion in illegally transshipped goods flowing between February 2025 and February 2026, corresponding to $19 billion to $34 billion in lost tariff revenue. Major enablers named include Mexico, Canada, the European Union, India, Japan, South Korea, Indonesia, Thailand, Brazil, and Malaysia.
Why it matters
The administration is deploying an AI-powered "detective border" to scan shipment data, confirm production capacity and ownership, and analyze packaging and X-ray imaging to catch mismatches between declared and actual container contents. Tariff evasion through transshipment has historically been difficult to detect because determining country of origin is complex, especially when components come from multiple countries. The scale — $19 billion to $34 billion in lost revenue annually — signals enforcement is becoming a core trade priority under Trump's return to office.
What to watch
The report acknowledges that Trump's own "tariff differentials" (varying rates by country) create incentives to illegally transship. Success will depend on whether the AI tools can distinguish legitimate manufacturing and global supply-chain shifts from illicit origin-shifting — a distinction the report itself notes is legally and operationally challenging. Enforcement authorities have historically pursued only the highest-payout cases, which take years to build.
On Thursday, the White House Office of Trade and Manufacturing Policy released a report accusing dozens of countries of enabling China to skirt US tariffs through illegal transshipment — the practice of routing goods through third countries to evade levies and other trade remedies. The report, issued by Peter Navarro's office, identified more than 40 countries as being associated with elevated illegal transshipment risk, with China's biggest enablers ranging from Mexico and Canada on US land borders to the European Union, India, Japan, and South Korea. Other named countries include Indonesia, Thailand, Brazil, and Malaysia. These countries offer advantages that can be exploited: some have lower labor costs, strategic port access, lax customs enforcement, or free trade zones that facilitate rerouting activity. AI supply chain firm Exiger provided a mid-range estimate of $75 billion in illegally transshipped goods flowing between February 2025 and February 2026, which corresponds to a loss of tariff revenue between $19 billion and $34 billion. Navarro told Bloomberg Television on Thursday that the report amounted to "basically a warning to the world — don't try to cheat America." The White House report acknowledged that illegal transshipment enriches not only China but also the transshipping countries themselves, whose local firms capture assembly fees, warehousing revenue, logistics margins, port charges, customs brokerage income, and other returns, while governments benefit from jobs, tax receipts, foreign investment, and trade growth. To combat the practice, the Trump administration is deploying an AI-powered "detective border" that will scan shipment data against routing histories, confirm production capacity and ownership relationships, and analyze packaging patterns and X-ray imaging at ports to detect mismatches between what is declared and what is actually in a container. Historically, US trade enforcement authorities have focused limited resources on cases with the biggest payout potential, and such cases are complex and often take years to build, meaning illicit goods continue flowing into the US market at below fair-market prices. The report acknowledged that Trump's own "tariff differentials" — varying rates aimed at different trading partners — can increase the incentive to illegally transship. However, the report also noted that illegal transshipment is notoriously hard to detect and determining country of origin is complex, especially when imports are made from components manufactured in multiple countries. The trend of tariff evasion through transshipment is not new; during Trump's first term, when he imposed high tariffs on Chinese exports, many businesses responded by diversifying their supply chains and pursuing a "China +1" strategy, moving some manufacturing outside China when possible, often through Chinese-owned factories in Vietnam, Cambodia, and other countries. Upon returning to office, Trump unleashed a wave of country-specific duties with some of the highest rates aimed at US allies and major trading partners, with tens of billions of dollars in tariffs hitting compliant importers especially hard. The White House's report concluded that "effective enforcement therefore requires distinguishing legitimate manufacturing and substantial transformation from pass-through trade and origin shifting."
The Trump administration's focus on tariff evasion through transshipment reflects a longstanding challenge in trade enforcement: illegal goods often flow into the US market at below fair-market prices, undercutting US commerce, yet detection has historically required years of complex casework. The report's identification of more than 40 countries engaging in "shadow transshipment" is not entirely new — when Trump imposed high tariffs on Chinese exports in his first term, businesses responded by pursuing a "China +1" strategy, moving manufacturing to Vietnam, Cambodia, and other countries. Many of these operations were Chinese-owned, creating the infrastructure for the current evasion network. The White House's deployment of AI-powered detection tools — analyzing shipment data, production capacity, ownership, packaging patterns, and X-ray imaging — represents an effort to automate and scale enforcement beyond the limited, high-payout cases that have traditionally consumed resources. However, the report itself acknowledges a fundamental tension: it is often difficult to distinguish legitimate global supply-chain transformation from illicit origin-shifting, especially when components are manufactured in multiple countries. The scale of the problem — $19 billion to $34 billion in annual tariff revenue loss — underscores why the administration has prioritized this enforcement mechanism.
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