The White House, one month before President Xi Jinping’s visit to Washington, accuses China of routing billions of dollars worth of goods through other countries to evade tariffs imposed by President Donald Trump in 2018, causing the US to lose between 19 and 26 billion dollars in revenue annually.
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In the 24-page report, titled ‘The Great Transit Scam’ on a photo of the Trojan horse, the US administration identifies over 40 countries, from Mexico to Israel and Europe, involved in what is defined as a “global shadow transit network through which Chinese tariff evasion moves.”
The reported scheme involves routing goods through a third country to benefit from a lower tariff rate. Exporters are able to mask the origin of a product by repackaging or relabeling it and up to partial assembly in another country before shipping it to the US.
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The report cites Canada, EU, Japan, and South Korea among the countries at high risk of redirecting Chinese goods, acknowledging that all, important US trading partners, maintain significant legitimate trade.
The report cites various estimates on the extent of the phenomenon. For example, an analysis by the Department of Commerce hypothesized that about 67 billion worth of goods transited from China through Mexico, India, and Vietnam last year, resulting in a loss of about 28 billion dollars in revenue.
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