On Thursday, the White House released a contentious trade report accusing China of systematically evading hundreds of billions of dollars in U.S. tariffs through a widespread global transshipment scheme, alleging more than 40 nations — including major U.S. allies and trading partners Canada, Mexico, India, Japan and South Korea — have facilitated the practice. The document claims the alleged tariff avoidance has stripped American workers of jobs and deprived the U.S. government of billions in annual import revenue, according to White House trade adviser Peter Navarro. Transshipment, a standard logistics practice of moving cargo through an intermediate country en route to its final destination, has been exploited by China to route goods produced on its mainland through nations that face lower U.S. import duties, the White House argued. The report further alleges Chinese actors deliberately repackage shipments and falsify origin documentation to conceal a product’s actual manufacturing source, framing the practice as a “Great Transshipment Scam” and “fraud cloaked in paperwork.” “What has changed in today’s Great Transshipment Scam is not merely the speed and scale of this modern form of smuggling, but the breadth, depth, and sophistication of the global Shadow Transshipment Network through which China’s tariff evasion now moves,” the report reads. To counter the alleged scheme, the White House confirmed U.S. authorities have begun leveraging artificial intelligence tools to detect and block illicit transshipment activity. In response to inquiries from the BBC, a spokesperson for the Chinese Embassy in Washington pushed back against the accusations, stating that “trade wars have no winners.” The spokesperson emphasized China opposes both the United States’ unilateral tariff measures and the use of state power to target Chinese companies, adding that “any unilateral actions or agreements concerning transshipped goods must not target or harm the interests of third parties.” The BBC has reached out to U.S. embassies of all nations named in the report to request comment on the accusations, with no official responses released as of publication. The explosive report lands amid an ongoing cycle of tit-for-tat trade sanctions between Washington and Beijing, and just weeks ahead of a scheduled high-stakes meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Washington D.C. Experts widely expect the transshipment accusation to become a major new sticking point in bilateral trade talks ahead of the September summit. Current trade tensions between the two powers have persisted despite a May 2025 tariff pause that followed earlier negotiations. In the months since that agreement, both sides have rolled out new restrictive trade measures: Washington imposed new curbs on imports of Chinese humanoid robots, while Beijing tightened export controls on critical drone components. The current trade conflict traces back to April 2025, when President Trump unveiled sweeping new tariffs on dozens of U.S. trading partners, rooted in his long-standing position that import duties will strengthen American manufacturing and boost domestic job growth. While the Supreme Court later struck down those initial levies as unlawful, Trump has repeatedly enacted new tariffs using alternative legal authorities to advance his signature trade policy. The White House estimates that between $30 billion and as much as $300 billion in Chinese goods are annually routed through lower-tariff third countries to avoid U.S. duties, combining data from both government and private industry analysts.