The White House has accused more than 40 countries of aiding Chinese exporters to evade US tariffs by shipping goods through third countries with lower import duties.

In a report released Thursday, the administration said Chinese goods have been routed through countries such as Canada, India, Mexico, Japan and South Korea before reaching the US market. The practice has cost the US government tens of billions of dollars in potential tariff revenue, the White House said.

The administration's argument centres on transshipment, a legal aspect of international trade in which goods pass through an intermediary country before arriving at their final destination. Some Chinese exporters have used the practice to conceal the true origin of goods and avoid higher tariffs, US officials say.

White House trade adviser Peter Navarro said the activity had cost the US jobs and revenue. The alleged network was a sophisticated means to circumvent trade restrictions, the administration said.

China spurned the US approach. A spokesman for the Chinese embassy in Washington said trade wars have no winners and opposed U.S. unilateral actions against Chinese companies or third countries.

The White House report estimated that third countries routed hundreds of billions of dollars’ worth of goods to reduce tariff exposure. The wide range reflects varying government and private-sector estimates, not some single definitive number. According to the administration, recent reporting puts the potential annual US revenue loss at around $19 billion to $26 billion.

US pushes for stricter enforcement

Chinese exporters have responded to US tariffs by shifting shipping routes, repackaging products and in some cases doing limited processing in other countries before shipping goods to the United States, the administration says.

Some of these practices have been labelled as customs fraud by the White House. However, there is a big difference between legal restructuring of supply chains and illegal misdeclaration of origin. Simple transshipping is not evidence of a crime in itself; it requires looking at the declared origin of the shipment and how it was processed and documented to determine whether it violates U.S. customs law.

The administration said it is using artificial intelligence tools to identify suspicious trade patterns and detect potential tariff evasion. The technology is made to look at shipping routes, origin data and other trade data for unusual activity.

The report is particularly focused on countries that have become more closely integrated into Chinese supply chains since the United States started imposing sweeping tariffs on Chinese imports in 2018.

Some of the changes in trade flows could be genuine investment and manufacturing shifts rather than attempts to dodge tariffs, economists said. Companies have moved production and assembly operations to other Asian and North American markets as they adjust to changing trade rules.

New headwinds ahead of US-China talks

The report comes as Washington and Beijing continue negotiations on trade and other economic issues, with Chinese President Xi Jinping expected to visit Washington in September.

The allegations could give the Trump administration another issue to raise in negotiations, particularly if Washington is seeking tougher rules demanding that trading partners prevent Chinese products from being routed through their countries.

“The issue may bolster Washington’s negotiating position by giving US officials a case to argue that Chinese exports are still indirectly making it to the American market,” said Chang Pao Li, associate professor of economics at Singapore Management University.

Countries listed in the report may also face further pressure from Washington even if their businesses are involved in legitimate supply chain activities.

The spat comes after years of mounting US-China trade restrictions. Washington has pressed ahead with tariffs and other trade measures since the US Supreme Court ruled in February that the president could not use the International Emergency Economic Powers Act to impose tariffs. The ruling applied only to tariffs imposed under that particular law, not to the U.S. government's broader authority to impose tariffs under other statutes.

The administration then looked to other legal authorities for further trade actions. The US Court of International Trade also ruled against a separate 10% global tariff imposed under Section 122 of the Trade Act of 1974 in May.

More recently, the administration has employed tariffs and investigations under other provisions of US trade law, including Section 301.

The latest White House report is, therefore, not just an effort to crack down on alleged tariff evasion but a broader effort to reshape how the United States monitors the origins of imported goods.