Seoul: U.S. President Donald Trump's administration has identified South Korea, Japan, Taiwan, and the European Union among dozens of economies facing transshipment risks involving China-linked products. This revelation comes as part of a White House report aimed at curbing schemes used to evade U.S. tariffs and other trade remedies.
According to Yonhap News Agency, the White House Office of Trade and Manufacturing Policy released a report titled "The Great Transshipment Scam," which highlights approximately 40 countries associated with "elevated" transshipment risks. The report notes that Chinese exporters are routing goods through third countries using methods like relabeling, repackaging, and false country-of-origin claims.
The report discusses plans to develop a "detective border" which will use artificial intelligence to aid U.S. Customs and Border Protection. By integrating shipment data and routing histories, the technology aims to identify high-risk shipments and facilitate duty collection and other regulatory measures.
Countries identified in the report are categorized into three tiers based on their involvement in China-linked trade, economic integration with China, and susceptibility to rerouting activities. Tier 1, or "diversified scale leaders," includes South Korea, Japan, Taiwan, the EU, India, Canada, Mexico, and Israel. This tier is noted for its significant industrial bases and substantial U.S.-bound export platforms.
Tier 2, described as "scale leaders with significant economic integration," includes Brazil, Indonesia, Malaysia, Thailand, Turkey, and Vietnam. These countries have deeper integration into China-linked supply chains and are involved in illegal transshipment volumes.
Tier 3, termed "small, opportunistic Chinese targets," includes Switzerland, Singapore, the Philippines, the United Arab Emirates, Chile, and Colombia. These economies have lower transshipment volumes but possess specific "weak-link advantages" like low-cost labor and preferential U.S. access.
The report highlights South Korea's semiconductor industry as a potential conduit for integrated circuits, affecting production in U.S. cities like Phoenix and San Jose. It states that China's rerouting activities involve jurisdictions with cheap labor, weak customs oversight, and preferential U.S. trade access.
U.S. Trade Representative Jamieson Greer condemned transshipment practices, stating they undermine American competitiveness and threaten the gains made by President Trump's trade deals. He emphasized that the report underscores continued focus on the matter.
A senior administration official clarified that the report is separate from U.S. trade investigations under Section 301 of the 1974 Trade Act, which could lead to new tariffs. The official noted that the report serves as a valuable information source for the USTR during trade negotiations.
Estimates of potential transshipment or related trade-transfer exposure range from $40 billion to $303 billion annually, according to government and private-sector assessments.