The United States has raised allegations against 38 countries along with the European Union, accusing them of being complicit in a “shadow transshipment network.” This network allegedly facilitates the entry of Chinese goods into the U.S. market, bypassing high tariffs by routing them through third countries. A report, “The Great Transshipment Scam,” suggests that this potentially illegal practice could be valued at approximately $60 billion, causing substantial losses in U.S. tariff revenue.
The report identifies a diverse group of countries and territories involved in this network. Among those named are Canada, India, Japan, Mexico, South Korea, Taiwan, and several others spanning continents, including Brazil, Indonesia, and Vietnam. Additionally, the list features nations from the Middle East, such as Israel and Turkey, and European territories like the European Union and Switzerland. The report claims that these countries facilitate the transshipment of goods, allowing Chinese products to evade the tariffs imposed by the United States.
It is estimated in the report that around $67 billion worth of goods destined for the U.S. were allegedly rerouted through major hubs such as Mexico, India, and Vietnam by 2025. This rerouting may have led to a loss of approximately $28 billion in U.S. tariff revenue. The report particularly emphasizes the Pune-Gujarat-Chennai corridor in India, where it alleges that Chinese shipments of items like electric pumps and compressors have bolstered local businesses but simultaneously intensified competitive pressure on U.S. manufacturers.
In response to these findings, the United States is considering several measures to counteract the alleged transshipment activities. Proposed actions include implementing stricter inspection protocols and interdiction strategies, imposing additional tariffs, and applying sanctions. Furthermore, the U.S. may contemplate restricting market access for countries that appear to be facilitating tariff evasion, thereby exerting pressure to curb these practices.