The US administration stated in a new report released on Thursday that several countries are using third countries to route their exports to the United States in order to avoid US tariffs.
The White House report stated that in response to the new tariffs in 2018, China sent its goods to other countries, from Mexico to Malaysia, for packaging and assembly before exporting them to the United States, a practice known as "transshipment."
This approach has given the impression of declining U.S. imports from China, but it has allowed Beijing to continue expanding its industrial sector in ways that could threaten American factories and jobs, according to the Associated Press.
White House trade adviser Peter Navarro told reporters during a conference call that "China is diverting its exports through more than 40 countries," claiming that the issues raised in the report actually concern other countries that facilitate the evasion of U.S. tariffs.
Navarro continued: "For years, a massive fraud by way of transit shipping allowed communist China to divert its exports" to the U.S. market without being subject to the imposed tariffs, as he described it.
The report comes ahead of a planned visit by Chinese President Xi Jinping to the United States in September, after he was praised by President Donald Trump during his visit to Beijing last May.
For its part, the Chinese government has described its relationship with the United States as based on "strategic stability," but its export-supporting government policies have destabilized the automotive, metals, and electronics sectors in the United States, Europe, Japan, and other countries, according to the Associated Press.
Navarro explained that other countries, such as India, may also resort to transit shipping to avoid the new US tariffs, adding that the new trade agreements concluded by the Trump administration will include clauses that ensure that trading partners who allow this practice will be penalized.
The report includes a range of estimates for the volume of transit shipments used to evade customs duties, based on figures from both the public and private sectors, estimating the value of goods shipped annually at between $34.2 billion and $303 billion. The report uses a central figure of $75 billion to estimate the amount of tax revenue lost.
To address this challenge, Navarro said that U.S. Customs and Border Protection has begun using artificial intelligence in a pilot program to halt transit cargo operations.
He pointed out that when it is found that an importer has forged a certificate of origin for a commodity, customs duties can be imposed on his exports retroactively for a period of one year.
