By: Staff Writer
August 18, 2026
The Trump White House released a report detailing the People’s Republic of China’s rerouting of goods through Latin American countries in efforts to bypass the Trump tariffs aimed towards it.
Last week Thursday, the White House’s Office of Trade and Manufacturing Policy released a report titled “The Great Transshipment Scam,” which claimed that rerouting Chinese-made goods through a network of 40 different jurisdictions cost the U.S. as much as $303 billion.
The report identifies Costa Rica, Panama and the Dominican Republic along with other South American countries as enablers to China’s transshipment scam.
The report said: “The countries that comprise China’s Shadow Transshipment Network include many of America’s largest trading partners. China’s biggest enablers range from Mexico and Canada on U.S. land borders to the European Union, India, Japan, and South Korea…
“More surprising is the sheer number of smaller countries scattered across the globe that also enable the Great Transshipment Scam.
“These countries—from Costa Rica and the Dominican Republic in Latin America, to Kenya and Morocco in Africa, to Kazakhstan in Central Asia, to Jordan and the United Arab Emirates in the Middle East—do not move the largest dollar volumes.
“But China-linked exporters gravitate to them because each offers a specialized comparative advantage: cheap labor, permissive free-tradezone rules, weak customs enforcement, strategic port access, bonded warehousing, niche assembly capacity, and/or preferential access to the U.S. market relative to China.”
The report also noted: “Goldman Sachs provides the narrowest estimate by isolating the rerouting channel. The White House Council of Economic Advisers estimates potential illegal transshipment in a range of $34.2 billion to $89.6 billion, and this report uses a rounded midpoint of $60 billion.
“Exiger develops a central estimate of approximately $75 billion based on product-level and shipment-flow analysis. The Department of Commerce identifies a broader $109 billion trade-transfer benchmark and separately estimates approximately $67 billion in 2025 illegal transshipment through leading hubs. Altana’s $303 billion estimate represents a broad upper-bound exposure measure.”
China’s Shadow Transshipment Network is a distributed system of finishing hubs, logistics platforms, processing corridors, free-zone operators, and re-export centers that allow Chinese goods to enter the U.S. market under new national identities.
The roughly 40 countries identified as participants in the Great Transshipment Scam can be grouped loosely into three tiers.
Tier 1 consists of the Diversified Scale Leaders: countries and trading blocs that account for large absolute volumes of China-linked goods while maintaining diversified industrial bases and major U.S.-bound export platforms. In these jurisdictions, illegal transshipment risk is embedded within broad legitimate trade flows. Tier 1 includes Canada, the European Union, India, Israel, Japan, Mexico, South Korea, and Taiwan.
Tier 2 consists of the Scale Leaders with Significant Economic Integration with China. These countries combine significant illegal transshipment volumes with deeper integration into China linked supply chains, input sourcing, manufacturing platforms, logistics systems, or regional rerouting channels. Tier 2 includes Brazil, Indonesia, Malaysia, Thailand, Turkey, and Vietnam.
Tier 3 consists of the Small, Opportunistic Chinese Targets. These are smaller economies with lower absolute illegal transshipment volumes but specific weak-link advantages—including low cost labor, free zones, port or border access, bonded warehousing, niche assembly capacity, preferential U.S. access, or limited customs enforcement capacity—that make them attractive opportunistic targets for China-linked rerouting.
Tier 3 is the largest tier by number of countries. Cambodia offers low-cost labor and export processing zones. Laos and Myanmar provide China-adjacent border corridors and lower-capacity enforcement environments in which relatively small rerouting flows can be economically significant. Panama and Costa Rica offer maritime access, free-zone logistics, and re-export platforms. Azerbaijan and Georgia provide rail and dry-port transit, consolidation, and over land to-maritime connections. Jordan offers preferential trade access and niche assembly capacity