White House trade adviser claims transshipment scheme costs U.S. billions

Peter Navarro, a trade adviser to Donald Trump, released a 25-page report titled “The Great Transshipment Scam,” accusing a global network of over 40 countries of funneling Chinese-origin goods through nations such as Vietnam, Malaysia or Thailand to evade U.S. tariffs. The study highlights a Vietnamese recliner whose motor is manufactured in China but is declared Vietnamese, shaving 25 percentage points off the duty owed by the American importer.

Navarro estimates the scheme costs the United States more than $40 billion a year and reduces manufacturing employment. He contends that tariffs are ultimately borne by U.S. consumers and calls for stricter enforcement against shell companies and repeat violators. The White House is also contracting Customs and Border Protection to deploy an AI-based system, Detective Border, to flag high-risk shipments. Critics note that the report overlooks the fact that importers, not foreign producers, pay the duties and that higher tariffs raise domestic prices without spurring a manufacturing boom.