Seoul: U.S. President Donald Trump's administration has flagged South Korea, Japan, Taiwan, and the European Union among several economies linked to transshipment risks involving China-related products. The White House report released Thursday highlights the administration's efforts to curb schemes aimed at bypassing U.S. tariffs and other trade measures.
According to Yonhap News Agency, the White House Office of Trade and Manufacturing Policy published a report titled "The Great Transshipment Scam." This report identifies approximately 40 countries associated with heightened transshipment risks, noting that Chinese exporters are routing goods through third-party countries utilizing methods such as relabeling, repackaging, and false country-of-origin claims.
The report emphasizes the development of a "detective border" employing artificial intelligence (AI) to bolster U.S. Customs and Border Protection. This system aims to integrate shipment data, routing histories, and additional information to identify high-risk shipments and facilitate duty collection and other enforcement measures.
Countries identified as participants in the "Great Transshipment Scam" are categorized into three tiers based on the scale of China-linked trade, economic integration with China, and vulnerabilities to rerouting activities. Tier 1, termed "diversified scale leaders," includes South Korea, Japan, Taiwan, the EU, India, Canada, Mexico, and Israel. These countries have diversified industrial bases with significant U.S.-bound export platforms where transshipment risk is embedded within legitimate trade flows.
Tier 2 consists of countries described as "scale leaders with significant economic integration," comprising Brazil, Indonesia, Malaysia, Thailand, Turkey, and Vietnam. These nations are noted for combining illegal transshipment volumes with deeper integration into China-linked supply chains and regional rerouting channels.
Tier 3 involves "small, opportunistic Chinese targets," smaller economies with lower transshipment volumes but specific "weak-link advantages." This group includes Switzerland, Singapore, the Philippines, the United Arab Emirates, Chile, and Colombia.
The report specifically mentions South Korea's semiconductor belt in Gyeonggi Province near Seoul, which can act as a conduit for integrated circuits, potentially impacting semiconductor production in U.S. cities like Phoenix, Austin, Portland, and San Jose.
The report warns that by circumventing tariffs, China and its state-supported manufacturers and trading firms could channel goods into jurisdictions with cheap labor, weak customs oversight, permissive free zones, or preferential U.S. trade access. Over time, these lower-tariff countries have become the launchpads for a new evasion architecture: products predominantly made in China, minimally altered abroad, and exported to America under new identities.
Government and private-sector estimates suggest potential transshipment or related trade-transfer exposure ranges from $40 billion to $303 billion annually.