The U.S. government releases its report on transshipping and tariff avoidance by importers.
This month, the Trump administration released its report into illegal transshipping and tariff avoidance, entitled "The Great Transshipment Scam". A refreshingly honest, although hardly tactful, report title. This report is part of a larger overhaul of import controls ordered by The White House in June 2026, under Executive Order 14411.
The report defines transshipping as 'smuggling disguised as trade - fraud cloaked in paperwork....'. Essentially, it involves a country that is subject to heavy U.S. tariffs rerouting its exports through a low tariff country, in the hope of avoiding heavy penalties/fees when goods are imported into the U.S.
The US government estimates that, conservatively, transshipping costs the U.S. economy $60 billion/year in lost revenue, as well as 450,000 displaced jobs and $113 billion to $150 billion in reduced GDP. The report doesn't beat around the bush, directly naming Canada, Mexico, the E.U., Japan, India, South Korea and many more as 'enablers' in this entire process, and accusing them of accommodating 'The Great Reallocation' - essentially, ensuring funds meant to go into the U.S. via duties and tariffs are being illegally kept offshore. Each country is allocated to a specific tier, depending on how actively and aggressively they have (allegedly) been participating in this process.
In some cases, suppliers are shipping stock to a 3rd party in another country with lower tariffs, and then 'exporting' the shipment from that country into the U.S.A.
On other occasions, companies are sending stock that is 95% complete to a 3rd party country and completing very minimal assembly and finishing work, before trying to send the stock to the U.S. as a legitimate manufactured export. The report refers to these as "screwdriver factories".
The U.S. government is implementing what it has called The 'AI Detective Border', which it says will assist CBP as they seek to identify the various countries, suppliers and companies that are avoiding tariffs via transshipping. It promises to "...help distinguish legitimate foreign direct investment and near shoring from illicit transshipment" and "...produce more precise estimates of the value of illicit transshipment".
Either way, this is another step in the U.S. government's plan to rigorously monitor ALL shipments coming into the U.S, via the broader terms of Executive Order 14411. As I've already mentioned in a previous article, this will force all importers to closely reexamine their current logistics setups, and possibly restructure to ensure they can continue to access the large U.S. domestic market.
