US Report Accuses China of Transshipment Evasion via 40+ Countries, Imposes 40% Tariff on Vietnam

Trade adviser Peter Navarro released a report on August 13, 2026, accusing Chinese exporters of systematically transshipping goods through more than 40 third countries to avoid US tariffs, labeling the practice the "Great Transshipment Fraud." The report states that since the US-China trade war began in 2018, Chinese companies have used methods such as limited assembly, relabeling, repackaging, re-invoicing, and false declarations of origin to conceal Chinese-made goods and obtain more favorable tariff treatment upon entry into the United States. The 40 countries listed include Canada, Mexico, Japan, South Korea, the European Union, Israel, and most Southeast Asian and South Asian nations.

Chinese exporters route goods through countries such as Vietnam and Thailand, which have become key hubs for tariff evasion, according to the report. US Customs and Border Protection data indicates a discrepancy of approximately $112 billion between China-reported exports to the US and US-recorded arrivals, pointing to large-scale tariff circumvention. The US said it will expand the use of artificial intelligence to monitor trade and identify transshipped goods under a program called "Border Detective."

Liu Chang, a spokesman for the Chinese Embassy in Washington, said Beijing opposes "overstretching the concept of national security" and "using state power to suppress Chinese companies," warning that any unilateral actions or agreements regarding transshipment must not target or harm the interests of third parties. Liu said China firmly opposes any party reaching deals at China's expense or engaging in unfounded economic coercion, and would resolutely take necessary measures to safeguard its legitimate rights and interests. The US had previously tightened rules, reaching a framework agreement with Vietnam in 2025 that imposes a 40% tariff on identified transshipped goods, double the rate for ordinary Vietnamese products. Additionally, a 2025 executive order imposed a 40% punitive tariff on transshipment-related tariff evasion.

Mexico has drawn particular attention due to its free trade agreement with the US and inflows of Chinese investment and parts into its factories, becoming a core concern in the joint review of the US-Mexico-Canada Agreement. The US has refused to automatically extend the agreement for 16 years, citing concerns over Chinese transshipment. The report concludes that the net effect of US tariffs and anti-transshipment policies remains uncertain, but tariff pressures persist. Republican Senator Bernie Moreno, in an August 12, 2026 letter, urged Homeland Security Secretary Mark Wayne Marin to intensify enforcement efforts, stating that Chinese auto parts transshipped through Thailand are affecting Ohio's manufacturing sector.